Financial Crime World

Cambodia’s Grey List Status: A Ongoing Battle against Financial Crime and Corruption

Cambodia, a developing nation in Southeast Asia, found itself on the Financial Action Task Force (FATF) grey list once again, raising concerns for its weak anti-money laundering (AML) controls. Despite initiatives to enhance AML capabilities, Cambodia continues to face significant obstacles.

Risk Factors and Corruption Concerns

  • Cambodia listed as a high-risk country for financial crime and corruption
  • US Department of State issues warnings to businesses due to concerns in financial, real estate, casino, and infrastructure sectors
  • Ranked as the second-most corrupt country in Asia-Pacific by the World Economic Forum’s Global Competitiveness Report 2019
  • Transparency International’s 2020 Corruption Perceptions Index ranked Cambodia as the most corrupt nation among the ASEAN member states

Strong Motivations for Attracting Foreign Investment

  • China as the largest investor, committing approximately $2 billion in the first half of 2021
  • Infrastructure projects like the Phnom Penh-Sihanoukville Expressway, coal-fired power station, and Siem Reap-Angkor International Airport

Gambling Sector Risks and Opportunities

  • Significant increase in casino licenses from 2014 to 2019
  • Chinese investors play a major role in the casino sector
  • Generates jobs and revenue, but also presents opportunities for money laundering and illicit activities
  • Organized crime elements attracted to the sector
  • China’s “zero Covid” policy limits the international travel and increases risks in the sector
  • Considering regulatory measures to minimize financial crime risks

Financial Services Sector Benefits

  • New AML/CFT legislation enacted in June 2020, includes more specific definitions, enhanced due diligence measures, and higher penalties
  • Crucial for the economy and people’s livelihoods
  • CAFIU reportedly cautious about the progress made

Addressing the Challenges

  • Ongoing efforts to implement effective regulatory measures
  • Strengthening the ability to combat illicit money flows
  • Training and education essential for law enforcement officials

Conclusion

  • Cambodia faces a complex challenge in battling financial crime and corruption
  • Motivations to attract foreign investment strong
  • Balancing casino and financial services sectors
  • Need for effective regulatory measures to safeguard the economy and its people