Financial Crime World

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Cambodia’s Anti-Money Laundering and Combating the Financing of Terrorism Efforts Reappraised

Phnom Penh, Cambodia - In a move to strengthen its anti-money laundering (AML) and combating the financing of terrorism (CFT) efforts, Cambodia has been re-rated as Largely Compliant in Recommendation 12, according to a recent report.

Progress Made

The report found that Cambodia has made significant progress in extending its definition of Politically Exposed Persons (PEPs) to include domestic PEPs and heads of international organizations. However, there are still some deficiencies remaining.

Deficiencies Identified

  • The definition of beneficial ownership is not consistent with FATF standards, which could lead to gaps in identifying PEPs.
  • Cambodia’s AML/CFT framework requires financial institutions (FIs) to undertake enhanced due diligence measures for higher-risk business relationships, but does not explicitly require FIs to take reasonable measures to determine whether beneficiaries or beneficial owners of life insurance policies are PEPs.

Positive Developments

  • Cambodia maintains statistics on suspicious transaction reports, ML investigations, and property frozen and confiscated.
  • The country has made progress in providing comprehensive statistics on mutual legal assistance requests sent and received between 2018 and 2020.

Minor Shortcomings

  • There is a lack of data on informal cooperation between regulators and TF investigations.

Key Findings

  • Cambodia’s definition of PEPs has been extended to include domestic PEPs and heads of international organizations, but the definition of beneficial ownership is not consistent with FATF standards.
  • FIs are required to undertake enhanced due diligence measures for higher-risk business relationships, but there is no explicit requirement to determine whether beneficiaries or beneficial owners of life insurance policies are PEPs.
  • Cambodia maintains statistics on suspicious transaction reports, ML investigations, and property frozen and confiscated.
  • The country has made progress in providing comprehensive statistics on mutual legal assistance requests sent and received between 2018 and 2020.
  • There are minor shortcomings in maintaining statistics for seizures, informal cooperation, and TF investigations.

Implications

The re-rating of Recommendation 12 highlights the importance of Cambodia’s continued efforts to strengthen its AML/CFT framework and improve its compliance with international standards. The country must continue to address the deficiencies identified in this report and work towards improving its overall performance in this area.

Next Steps

Cambodia must take concrete steps to address the deficiencies identified in this report, including:

  • Strengthening its beneficial ownership definition
  • Requiring FIs to determine whether beneficiaries or beneficial owners of life insurance policies are PEPs
  • Prioritizing maintaining comprehensive statistics on all aspects of AML/CFT, including informal cooperation and TF investigations

By doing so, Cambodia can ensure that it is fully compliant with international standards and effectively combat money laundering and the financing of terrorism.