Financial Crime World

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Cambodia Makes Progress in AML/CFT Framework

Phnom Penh, Cambodia - The Cambodian government has made significant progress in strengthening its Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) framework, according to a recent evaluation by the Financial Action Task Force (FATF).

FATF Report Highlights

The FATF report highlighted that Cambodia’s AML/CFT framework is largely compliant with international standards, with only minor gaps remaining. The report noted that while there is no prohibition on executing wire transfers that do not comply with originator and beneficiary information requirements, this gap is not significant enough to warrant a rating of Partially Compliant.

Implementation of Remittance Directive

The report praised Cambodia’s efforts in implementing the Remittance Directive, which requires financial institutions (FIs) to retain records of originator and beneficiary information for at least five years after the account has been closed or the business relationship with the customer has ended. The report noted that FIs acting as intermediaries must ensure that this information is retained and made available upon request.

Internal Controls

In addition, the report commended Cambodia’s efforts in implementing internal controls to prevent money laundering and terrorist financing. The Directive on Internal Controls for Reporting Entities, which entered into force in January 2022, requires FIs to establish internal policies, procedures, and systems to manage compliance arrangements and to appoint an AML/CFT Compliance Officer at a senior management level.

The report also noted that Cambodia’s legal framework has undergone significant changes since the previous Mutual Evaluation Report (MER) was published. The Law on AML/CFT and the Directive on Internal Controls for Reporting Entities have entered into force, strengthening Cambodia’s AML/CFT framework.

Key Findings

  • Cambodia’s AML/CFT framework is largely compliant with international standards.
  • Minor gaps remain, including no prohibition on executing wire transfers that do not comply with originator and beneficiary information requirements.
  • The Remittance Directive has been implemented, requiring FIs to retain records of originator and beneficiary information for at least five years.
  • The Directive on Internal Controls for Reporting Entities has entered into force, strengthening internal controls to prevent money laundering and terrorist financing.

FATF Recommendations

  • Cambodia should consider prohibiting the execution of wire transfers that do not comply with originator and beneficiary information requirements.
  • Cambodia should ensure that law enforcement can compel the immediate production of information related to domestic wire transfers in all circumstances.

Conclusion

Cambodia’s progress in strengthening its AML/CFT framework is commendable. While minor gaps remain, the country’s efforts demonstrate a commitment to combating money laundering and terrorist financing. Further work is needed to address these remaining gaps and ensure that Cambodia’s AML/CFT framework is fully compliant with international standards.