Countries/Jurisdictions of Primary Concern - Cambodia
Cambodia is neither a regional nor an offshore financial center. Several factors, however, contribute to Cambodia’s significant money laundering vulnerability. These include Cambodia’s weak AML regime; its cash-based, dollarized economy; its outsized and inadequately-supervised banking and financial industries sector; its porous borders; and its unregulated or under-regulated non-financial sectors including, most significantly, the gaming and real property industries. A weak judicial system and endemic corruption are additional factors negatively impacting enforcement.
Cambodia has a significant black market for smuggled goods, including drugs and imported substances for local production of methamphetamine. Both licit and illicit transactions, regardless of size, are frequently done outside of formal financial institutions and are difficult to monitor. Cash proceeds from crime are readily channeled into land, housing, luxury goods, and other forms of property without passing through the formal banking sector. Casinos along the borders with Thailand and Vietnam are other avenues to convert ill-gotten cash. Bulk cash smuggling is recognized as a growing problem as is trade-based money laundering (TBML).
For additional information focusing on terrorist financing, please refer to the Department of State’s Country Reports on Terrorism, which can be found at: http://www.state.gov/j/ct/rls/crt/
Do FINANCIAL INSTITUTIONs engage in currency transactions related to international narcotics trafficking that include significant amounts of US currency; currency derived from illegal sales in the U.S.; or illegal drug sales that otherwise significantly affect the U.S.: NO
criminalizATION OF money laundering:
“All serious crimes” approach or “list” approach to predicate crimes: Combination
Are legal persons covered: criminally: YES civilly: YES
Know-your-customer (KYC) rules:
Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: NO
KYC covered entities: Banks, microfinance institutions, and credit cooperatives; securities brokerage firms and insurance companies; leasing companies; exchange offices/money exchangers; real estate agents; money remittance services; dealers in precious metals and stones; post offices offering payment transactions; lawyers, notaries, accountants, auditors, investment advisors, and asset managers; casinos and gaming institutions; non-governmental organizations (NGOs) and foundations
Number of STRs received and time frame: Not available
Number of CTRs received and time frame: Not available
STR covered entities: Banks, microfinance institutions, and credit cooperatives; securities brokerage firms and insurance companies; leasing companies; exchange offices/money exchangers; real estate agents; money remittance services; dealers in precious metals and stones; post offices offering payment transactions; lawyers, notaries, accountants, auditors, investment advisors, and asset managers; casinos and gaming institutions; NGOs and foundations
money laundering criminal Prosecutions/convictions:
Prosecutions: 0 in 2015
Convictions: 0 in 2015
Records exchange mechanism:
With U.S.: MLAT: NO Other mechanism: NO
With other governments/jurisdictions: YES
Cambodia is a member of the Asia/Pacific Group on Money Laundering (APG), a FATF-style regional body. Its most recent mutual evaluation can be found at: http://www.apgml.org/mutual-evaluations/documents/default.aspx?pcPage=6
Enforcement and implementation issues and comments:
The National Coordination Committee on Anti-Money Laundering and Combating the Financing of Terrorism is a permanent and senior-level AML/CFT coordination and policy-setting body. In the last year, it has continued to be active in putting forward legal and policy reforms to tackle the country’s AML deficiencies. In December 2014, the Government of Cambodia revised Strategy 5 in the National Strategies on AML/CFT 2013-2017 by adding seven more actions to build the capacity of Cambodia’s Financial Intelligence Unit (CAFIU) and law enforcement agencies as well as to expand and strengthen cooperation among relevant domestic agencies in AML/CFT activities.
The law on AML/CFT excludes pawnshops from its explicit list of covered entities but does allow the FIU to designate any other profession or institution to be included within the scope of the law.
Cambodia’s AML/CFT law allows authorities to freeze assets relating to money laundering or the financing of terrorism until courts have rendered final decisions, but the AML/CFT regime lacks a clear system for sharing assets with foreign governments.
In 2015, CAFIU was admitted to the Egmont Group. CAFIU received approximately 1,000 suspicious transaction reports (STRs) and approximately 2 million currency transaction reports (CTRs) in the first 10 months of 2015.
The primary enforcement and implementation concerns involve the willingness of domestic authorities to adequately and efficiently share relevant information among themselves and to competently investigate and prosecute AML-related crimes. In addition, CAFIU oversight of financial institutions is weak. In response, the Government of Cambodia has established a Review Panel, led by the Counter-Terrorist Department of the General Commissariat of National Police, as part of the supplementary measures laid out in the National Strategies on AML/CFT 2013-2017. The Panel, which is comprised of CAFIU and relevant law enforcement agencies, serves as a mechanism to strengthen cooperation and improve information sharing among AML/CFT regulatory and law enforcement bodies.
Although gaming is illegal for Cambodian citizens, it is legal for foreigners in Cambodia. Cambodians often participate in illegal gaming. There are 57 legal casinos in the country. For example, the Cambodian town of Poipet, located along the Cambodia/Thailand border, has 10 casinos in operation. According to a UNODC report, more than 90 percent of the patrons in these casinos are Thai. No visa is required for Thai citizens, Thai baht is accepted, and daily return buses operate between Poipet and Bangkok and Pattaya, Thailand. As a result, large amounts of money flow through Poipet’s casinos; it is estimated approximately $12 million of cash destined for border casinos crosses the Poipet border every day. The casinos have weak to non-existent AML controls. Moreover, no casino located in Cambodia has ever submitted a cash or suspicious transaction report to CAFIU.
In 2015, Global Financial Integrity released a report analyzing data that shows, during the decade between 2004 and 2013, Cambodia lost at least $15 billion to illicit financial outflows via TBML. Much of the wealth was shifted offshore. More than $4 billion left the country in 2013 alone. TBML was also used to shift value into Cambodia. Most of the laundering was done via abusive trade mis-invoicing. TBML and customs fraud represent enormous income loss for the Government of Cambodia.
The Government of Cambodia should take further steps to implement adequate procedures for the confiscation of funds related to money laundering, ensure an effective CAFIU, and fully implement controls for cross-border cash movements. The government should continue its work to increase the volume and quality of reporting of STRs and CTRs from reporting entities of all types, but especially among those in high-risk sectors, such as casinos and participants in the real property industry. Given the high level of corruption and lack of public financial transparency, the government also should require enhanced due diligence for domestic politically exposed persons (PEPs). Cambodia should work to strengthen control over its porous borders and crack down on customs fraud and TBML. The government should implement effective operational procedures both within and among affected agencies, and measure the effectiveness of these procedures on an ongoing basis. It should continue to undertake measures to increase the capacity of reporting entities, law enforcement and judicial agencies, and regulatory bodies.It also should empower and require law enforcement and regulators to strictly enforce AML/CFT laws and regulations.