Cambodia’s New Anti-Money Laundering and Combating Financing of Terrorism Law: Key Changes and Updates
PHNOM PENH, CAMBODIA - The Kingdom of Cambodia has introduced a new Anti-Money Laundering and Combating Financing of Terrorism (AML/CFT) Law, effective January 1, 2020. This law updates the country’s existing AML/CFT framework to prevent money laundering and terrorist financing.
Reporting Entities Remain Unchanged
The list of reporting entities remains the same as in the 2007 law, with:
- Banks
- Financial institutions
- Brokerage firms
- Insurance companies
- Other organizations required to report suspicious transactions and maintain customer due diligence records.
- A catch-all provision allows the Cambodian Financial Intelligence Unit (CAFIU) to designate additional institutions or professions as reporting entities.
Customer Due Diligence Measures Enhanced
The new law increases the burden on reporting entities to exercise due diligence in their activities, with a broader range of transactions and business relationships classified as “high risk”. Reporting entities must:
- Obtain additional information on customers’ identification
- Information on source of funds
- Transaction purpose
- Intended nature of the business relationship
- Ongoing monitoring procedures
New Categories Added
The 2020 AML/CFT Law introduces new categories of reporting entities, including:
- “Trustees”, as defined by the Law on Trusts. This provision aims to address the growing complexity of trust structures in Cambodia.
Expanded Enhanced Customer Due Diligence Measures
Reporting entities must now conduct enhanced due diligence on:
- Business relations and transactions with institutions or persons in jurisdictions deemed high-risk
- Foreign politically exposed persons and their family members and close associates
- International and Cambodian politicians and their family members and close associates, but only for high-risk transactions.
Suspicious Transactions Reporting
The law maintains the requirement for reporting entities to report large cash transactions and other suspicious transactions that exceed the threshold established by the CAFIU. If a reporting entity has reasonable grounds to believe these transactions are connected to money laundering or terrorist financing, they must report within 24 hours.
New Penalties
Penalties for legal entities found in violation of the law include:
- Warnings
- Fines
- Revocation of business licenses
- Removal of managers or officers from their positions
The new law introduces higher fines and longer prison terms than previously imposed under the 2007 law. For example, legal entities committing money-laundering crimes are now subject to up to KHR 1,000,000,000 (approximately $245,500) in fines.
The Cambodian government’s introduction of this new AML/CFT Law aims to strengthen the country’s anti-money laundering and combating financing of terrorism framework, aligning it with international standards and best practices.