Banks and Financial Institutions Required to Report Suspicious Transactions

Introduction

The Law on Anti-Money Laundering and Combating the Financing of Terrorism has introduced new provisions requiring banks and financial institutions to report suspicious transactions. This article outlines the key requirements and responsibilities for banks and financial institutions in Cambodia.

Reporting Suspicious Transactions

According to Article 29.2, if a customer fails to complete due diligence without a reasonable excuse, the bank or financial institution must submit a suspicious transaction report to the Financial Intelligence Unit (FIU). The FIU is responsible for receiving and analyzing these reports.

Designation of Compliance Officer

Banks and financial institutions are required to designate a senior management-level officer as the compliance officer responsible for submitting these reports. This officer will serve as the point of reference for the FIU.

Reporting Requirements

According to Article 30.2, employees of banks and financial institutions must report any suspicious transactions to the compliance officer, even if they do not know precisely what underlying unlawful activity has occurred or whether such activities have taken place.

The compliance officer is required to:

• Promptly evaluate and establish whether there are reasonable grounds for suspicion
• Submit a suspicious transaction report to the FIU within 24 hours of receiving it
• Use approved forms attached in Appendix [insert appendix number]

Confidentiality and Non-Disclosure

To maintain confidentiality, banks and financial institutions must ensure that information about the suspicious transaction, customer, and reporting of the matter remains available only to staff on a need-to-know basis.

Prohibition of Tipping Off

Article 31.1 emphasizes the importance of maintaining confidentiality when submitting suspicious transaction reports. Banks and financial institutions are prohibited from informing customers or any other individuals about the existence of such reports.

Maintenance of Suspicious Transaction Reports

According to Article 32.1, banks and financial institutions must:

• Maintain a complete file on all suspicious transaction reports submitted by their employees and those that have been further submitted to the FIU
• Take reasonable measures to ensure that all officers and employees involved in conducting or facilitating customer transactions are aware of reporting procedures

Detection and Reporting of Financing of Terrorism

Article 33.1 requires banks and financial institutions to:

• Take necessary measures to ensure compliance with United Nations Security Council (UNSC) Resolutions and relevant regulations and legislation on the financing of terrorism
• Extend their suspicious transaction reporting system and mechanism to cover suspicion of terrorist activities
• Maintain a database of names and particulars of terrorists listed in the United Nations list and consolidate this with other recognized lists of designated persons

Risk Management

Finally, Article 34.1 emphasizes the importance of establishing an effective internal control system for AML/CFT compliance with legal and regulatory requirements. It is the responsibility of senior management to ensure that such internal controls are implemented and monitored regularly.

Conclusion

By implementing these provisions, banks and financial institutions can play a crucial role in combating money laundering and terrorist financing, while also ensuring the integrity and stability of the financial sector.