Cambodia Falls Short in Financial Action Task Force Compliance

Introduction

The Kingdom of Cambodia has failed to meet several key requirements set by the Financial Action Task Force (FATF), a global standard-setting body aimed at preventing money laundering and terrorist financing. A recent evaluation conducted by the FATF found that Cambodia was largely non-compliant with 13 out of the 40 recommendations.

Areas of Non-Compliance

According to the report, Cambodia’s weaknesses lie in its inability to effectively assess and mitigate risks related to money laundering and terrorist financing. The country also failed to establish an adequate system for cooperation and coordination among government agencies and financial institutions. Additionally, Cambodia’s laws did not provide sufficient measures to prevent and suppress the offence of money laundering.

Specific Areas of Non-Compliance:

• Inability to effectively assess and mitigate risks related to money laundering and terrorist financing
• Lack of an adequate system for cooperation and coordination among government agencies and financial institutions
• Laws that do not provide sufficient measures to prevent and suppress the offence of money laundering

Areas of Compliance

Cambodia was compliant in only seven areas, including:

• Efforts to target terrorist financing offences
• Confiscation and freezing assets related to terrorism and proliferation
• Imposition of sanctions on non-profit organizations involved in terrorist activities

However, the country’s progress in implementing these measures has been slow, and significant gaps remain.

Vulnerabilities in the Financial Sector

Cambodia’s financial sector is also vulnerable due to:

• Lack of effective customer due diligence practices
• Inadequate record-keeping practices and internal controls
• Failure of banks to implement adequate anti-money laundering measures, including customer identification and risk assessment procedures

Corrective Actions

In order to address its weaknesses, Cambodia has committed to implementing several corrective actions, including:

• Strengthening its legislative framework
• Improving its supervisory powers
• Enhancing international cooperation with other countries

However, the FATF has given Cambodia a deadline of one year to demonstrate significant progress in meeting its obligations.

Consequences of Non-Compliance

Failure to comply with the FATF recommendations could lead to Cambodia being added to the list of high-risk jurisdictions, which could have serious consequences for its economy and financial sector. The country’s government has promised to take the necessary steps to address these weaknesses and ensure that its financial system is compliant with international standards.