Cambodia’s Struggle Against Financial Crimes Exposed: Grey List Haunts Kingdom Again

Phnom Penh - A Hub for Financial Crimes?

Despite efforts to improve its anti-money laundering (AML) controls, Cambodia remains mired in financial crimes, prompting the US Department of State to caution businesses about doing business in the kingdom. The country’s grey listing by the Financial Action Task Force (FATF) has become a recurring theme, with little progress made to address systemic corruption and money laundering.

Corruption Perceptions Index: A Grim Picture

Corruption Perceptions Index rankings from Transparency International and the World Economic Forum’s Global Competitiveness Report paint a dismal picture of Cambodia’s business environment. Ranked 160 out of 180 countries globally for corruption and 134 out of 141 countries for incidence of corruption, the kingdom is struggling to attract high-quality foreign direct investment.

China’s Emergence as Largest Foreign Investor

However, China has emerged as the largest foreign investor in Cambodia, pumping in over $2 billion in the first half of 2021. Major projects include the Phnom Penh-Sihanoukville Expressway and Siem Reap-Angkor International Airport. But China’s involvement also raises concerns about its role in Cambodia’s shady casino gaming sector.

Casino Gaming: A Hotbed for Financial Crimes

A surge in casino licenses has increased the risk of money laundering and illicit activity, with regulators struggling to keep pace. The influx of “organized crime elements” investing in gaming facilities and using them to launder money has become a significant concern.

Mitigating Risks

Before the pandemic, Cambodia was a top destination for Chinese gamblers, but the crisis has reduced international travel and China’s zero-Covid policy is likely to curb casino activity further. It is imperative that the Cambodian government reduces the footprint of the sector while implementing regulations to curb financial crime risk.

Strengthening Financial Services Sector

The kingdom’s financial services sector, which offers more benefits to the economy and people’s livelihoods than casino gaming, requires attention as well. New AML/CFT legislation has come into effect, but training for law enforcement officials is crucial to identify and mitigate financial crime risk.

Progress Remains Unclear

Cambodian authorities must strengthen their ability to combat illicit money flows, but progress in this area remains unclear. The Cambodia Financial Intelligence Unit (CAFIU) has been working to delist the country from FATF’s grey list, but specifics are lacking.

Way Forward

As Cambodia continues its struggle against financial crimes, it is essential that the government and relevant authorities prioritize anti-money laundering efforts, training, and capacity building to ensure a safer and more transparent business environment.