Financial Crime World

Cambodia Struggles to Meet Financial Action Task Force (FATF) Requirements

Introduction

PHNOM PENH, CAMBODIA - In a bid to avoid being added to the FATF’s “grey list”, Cambodia has been working to strengthen its anti-money laundering and counter-terrorism financing (AML/CFT) regime. However, a recent assessment by the International Monetary Fund (IMF) suggests that the country still has a long way to go in meeting the FATF’s requirements.

Areas of Improvement

According to the IMF report, Cambodia needs to improve in several areas:

Assessment of Risk and Application of a Risk-Based Approach (R.1)

  • The country requires more effective laws to combat money laundering offences
  • National cooperation and coordination is lacking
  • Confiscation and provisional measures need improvement

Laws to Combat Money Laundering Offences (R.3) and Terrorist Financing Offences (R.5)

  • Cambodia’s laws are not effective in combating money laundering and terrorist financing
  • The country needs to strengthen its AML/CFT laws and regulations
  • Lack of transparency in beneficial ownership is a major concern
  • The country requires more effective measures to increase transparency

Regulation and Supervision of Financial Institutions (R.26)

  • Cambodia’s financial intelligence unit is underdeveloped
  • Law enforcement and investigative authorities lack sufficient powers

Recommendations

Cambodia should prioritize the following areas for improvement:

  • Strengthen AML/CFT laws and regulations
    • Improve customer due diligence and record keeping
    • Enhance cooperation between financial institutions and law enforcement agencies
  • Increase transparency in beneficial ownership of legal persons and arrangements
  • Develop a more effective financial intelligence unit
  • Strengthen powers of law enforcement and investigative authorities

Conclusion

If Cambodia is successful in meeting the FATF’s requirements, it could help to strengthen its financial sector, promote transparency and accountability, and reduce the risk of money laundering and terrorist financing. By implementing these reforms, Cambodia can help to improve its international reputation and attract foreign investment.