Financial Crime World

Cambodia’s Financial Sector Faces Medium Risk of Money Laundering

PHNOM PENH - A recent report by the National Risk Assessment (NRA) agency has highlighted that Cambodia’s financial sector is at medium risk of money laundering.

Vulnerability Assessment

The NRA report assesses the vulnerability of various sectors in Cambodia’s economy to money laundering and terrorist financing. While the overall risk is considered medium, certain sectors are deemed higher or lower risk due to specific factors.

High-Risk Sectors

Real Estate Sector

  • The real estate sector has been identified as a key area of concern, with a rating of medium risk.
  • The report notes that the sector has grown rapidly in recent years, driven by foreign investment and economic growth. However, this rapid growth also increases the potential for money laundering activities.

Casino Sector

  • The casino sector is also considered at medium risk, primarily due to its location along international borders and the high volume of cash transactions involved.
  • The report notes that while some casinos have implemented anti-money laundering measures, more needs to be done to ensure effective compliance.

Low-Risk Sectors

Financial Trust Sector

  • The financial trust sector has been deemed low risk, thanks to strict regulations and oversight by the Ministry of Economy and Finance (MEF).
  • The sector is composed mainly of banks and microfinance institutions that manage funds for development projects and poverty reduction initiatives.

Designated Non-Financial Businesses and Professions (DNFBPs)

Accountants, Lawyers, Trust and Company Service Providers

  • These sectors are considered at medium low risk due to their limited resources and human capital.
  • The report notes that these sectors play a critical role in the financial system and must be vigilant against money laundering activities.

Recommendations

Improve Anti-Money Laundering Measures

  • Strengthen regulations and oversight of high-risk sectors such as real estate and casinos.
  • Increase financial resources and human capital for DNFBPs to support anti-money laundering efforts.
  • Enhance cooperation between government agencies, financial institutions, and other stakeholders to share information and best practices.

By implementing these recommendations, Cambodia can further reduce the risk of money laundering and terrorist financing in its financial sector, ultimately protecting its economy and reputation.