Banks and Financial Institutions Required to Report Suspicious Transactions

The Ministry of Economy and Finance has issued a new Prakas on Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT), which requires banks and financial institutions to report suspicious transactions to the Financial Intelligence Unit.

Reporting Mechanism

According to Article 29.2, banks and financial institutions must submit a suspicious transaction report when an existing or new customer fails to complete due diligence without a reasonable excuse, regardless of whether the bank accepts, rejects, continues, or terminates the business relationship with such customer.

• The reporting mechanism is outlined in Article 30, which states that banks and financial institutions should appoint an officer at the senior management level as the compliance officer responsible for submitting suspicious transaction reports to the Financial Intelligence Unit.
• The compliance officer must be the point of reference for the Financial Intelligence Unit and ensure that all suspicious transaction reports prepared by employees are properly channeled.

Indicators of Suspicious Transactions

The Prakas lists several indicators of suspicious transactions, including:

• Large or unusual cash transactions
• Cash transactions in excess of $10,000
• Transactions involving shell companies or trusts
• Transactions with foreign countries or individuals without clear business relationships
• Unusual patterns of transactions
• Transactions involving high-risk jurisdictions

Prohibition of Tipping Off

Article 31 prohibits banks and financial institutions from tipping off customers about the existence of a suspicious transaction report. The Prakas states that staff should be aware that Article 15 of the Law on Anti-Money Laundering and Combating the Financing of Terrorism prohibits any individual with knowledge of a suspicious transaction report from communicating such information or reporting to any natural or legal person other than the Financial Intelligence Unit, except where authorized by the Financial Intelligence Unit.

Maintenance of Records

Article 32 requires banks and financial institutions to maintain complete files on all suspicious transaction reports submitted by their employees. The Prakas also states that banks and financial institutions must take reasonable measures to ensure that all officers and employees involved in conducting or facilitating customer transactions are aware of the reporting procedures.

Detection and Reporting of Terrorism Financing

Article 33 requires banks and financial institutions to take necessary measures to ensure compliance with United Nations Security Council (UNSC) Resolutions and relevant regulations and legislation on terrorism financing. The Prakas also states that banks and financial institutions should extend their suspicious transaction report system and mechanism to cover suspicion of terrorism financing.

Risk Management

Article 34 requires the Board of Directors of banks and financial institutions to establish an effective internal control system for AML/CFT compliance with legal and regulatory requirements. It is the responsibility of senior management to ensure such internal controls are in place and functioning effectively.

The Prakas aims to strengthen Cambodia’s anti-money laundering and combating the financing of terrorism regime, and to prevent the use of financial systems for criminal purposes. Banks and financial institutions must comply with these regulations to avoid penalties and reputational damage.