Cambodia Removed from FATF’s Grey List After Four-Year Effort

In a major victory for the Kingdom of Cambodia, the Financial Action Task Force (FATF) has removed the country from its grey list. This decision comes after four years of efforts to improve Cambodia’s anti-money laundering and combating the financing of terrorism (AML/CFT) regime.

Significant Improvements in AML/CFT Efforts

According to a FATF report released in February, Cambodia’s removal from the grey list is due to significant improvements in several key areas:

• Legal Framework for International Cooperation: Cambodia has strengthened its legal framework for international cooperation and preventive measures.
• Risk-Based Supervision of Financial Institutions: The country has implemented risk-based supervision of financial institutions and non-financial institutions.
• Enhanced Financial Intelligence Unit Disseminations: Authorities have enhanced the dissemination of financial intelligence unit information.
• Increased Investigation and Prosecution of Money Laundering Cases: Cambodia has increased investigation and prosecution of money laundering cases.
• Targeted Financial Sanctions Framework: The country has established a targeted financial sanctions framework.

Success in Casino Gaming Sector

Cambodia’s AML/CFT efforts have borne fruit in the casino gaming sector. Prior to the pandemic, Chinese gamblers flocked to Cambodia, leading to several high-profile arrests for money laundering in 2019. In response, Prime Minister Hun Sen ordered all casinos to close down in March 2020 as part of measures to combat the spread of COVID-19.

Since then:

• Around 30 casinos in Sihanoukville have either shut down completely or suspended operations due to a significant decline in Chinese gamblers.
• Authorities have had success with their crackdown on illegal gambling, shutting down 231 businesses and arresting 606 individuals since September 2022.

Implementation of New AML/CFT Legislation

The implementation of new AML/CFT legislation in June 2020 has also been a key factor in Cambodia’s improved compliance record. The law introduces more specific definitions, enhanced due diligence requirements for reporting entities, and higher penalties for non-compliance compared to its predecessor.

Impact on Fintech Companies

Cambodia’s removal from the FATF grey list is expected to make it easier for fintech companies to invest in the country, as grey-listed nations are subject to additional compliance requirements. This development marks a major step forward in Cambodia’s efforts to combat financial crimes and maintain a stable and secure financial system.