Financial Crime World

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International Organisation Members Must “Pay Special Attention” to Transactions Conducted by Politically Exposed Persons

In a move aimed at bolstering efforts to combat money laundering and terrorism financing, international organisations have been required to pay special attention to transactions conducted by politically exposed persons.

New Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) Law 2020

Under the new AML/CFT Law 2020, which came into effect earlier this year, reporting entities are now expected to exercise enhanced due diligence measures when dealing with individuals who hold public office or have a close relationship with those in power.

Expanded List of High-Risk Transactions and Business Relationships

The law has expanded the list of high-risk transactions and business relationships that require increased scrutiny. These include dealings with foreign politically exposed persons, as well as their family members and close associates.

Enhanced Customer Due Diligence Measures

Reporting entities are now required to conduct enhanced customer due diligence (CDD) measures on these individuals. This may involve obtaining additional information about the individual’s:

  • Identification
  • Source of funds
  • Transaction purpose
  • Intended nature of the business relationship

Increased Penalties

The new law introduces significantly higher penalties for legal entities found to be in violation of its provisions. These include:

  • Warnings
  • Fines (up to KHR 1,000,000,000 or approximately $245,500)
  • Revocation of business licenses
  • Removal of managers or officers from their positions

Individuals who commit money-laundering crimes are now subject to imprisonment from two to five years and an increased fine of between KHR 100,000,000 and KHR 500,000,000 (approximately $24,500 to $122,700).

Expanded List of Reporting Entities

The 2020 AML/CFT Law also expands the list of reporting entities to include:

  • Trustees
  • Who were previously not required to report suspicious transactions

This move aims to increase awareness and cooperation among all stakeholders in the fight against money laundering and terrorism financing.

Enhanced Customer Due Diligence Measures

Reporting entities are now required to conduct enhanced CDD measures on customers who fall into high-risk categories, including those with whom they have no face-to-face contact during identification procedures. This may involve obtaining additional information about the customer’s:

  • Identity
  • Source of funds
  • Transaction purpose

Reporting Suspicious Transactions

The law also requires reporting entities to report large cash transactions and other suspicious transactions that exceed the threshold established by the Cambodian Anti-Money Laundering and Combating the Financing of Terrorism Authority (CAFIU). These reports must be made within 24 hours if a reasonable grounds exist to believe that the transaction is connected to money laundering or terrorism financing.

Conclusion

The 2020 AML/CFT Law marks a significant milestone in Cambodia’s efforts to combat money laundering and terrorism financing. The expanded list of reporting entities, enhanced customer due diligence measures, and increased penalties are all designed to improve transparency and accountability in the country’s financial sector.

International organisations are now required to “pay special attention” to transactions conducted by politically exposed persons, which is a major step forward in the fight against corruption and financial crime. The new law is expected to have a significant impact on Cambodia’s efforts to combat money laundering and terrorism financing.