AML in Cambodia

Cambodia has a significant underground market for smuggled goods, particularly drugs and substances used in local methamphetamine production. These transactions, both legal and illegal, commonly occur outside official financial institutions, making them challenging to trace. Illicit proceeds from criminal activities are easily funneled into real estate, luxury items, vehicles, and other assets without going through formal banking channels. Casinos situated along the borders of Thailand and Vietnam also present potential avenues for money laundering. While Cambodia has not introduced major additional AML legislation since 2014, efforts have been made to prevent money laundering activities through subsequent laws. The enactment of the 2020 AML/CTF law has led to increased anti-money laundering measures across various fronts in Cambodia. For more detailed information, you can refer to the New AML/CTF laws in Cambodia.

In Cambodia, certain criminal activities are recognized as money laundering offenses, including participation in organized criminal groups, terrorism, human trafficking, migrant smuggling, sexual abuse, drug trafficking and the trafficking of psychotropic substances, illegal arms trade, trafficking of stolen goods, corruption and bribery, fraud, environmental crimes such as illegal logging, murder, robbery, theft, extortion, and tax evasion, among others. Additionally, as per the Cambodia Anti-Money Laundering and Anti-Terrorist Financing Law, money laundering is defined as intentionally engaging in actions to transform or transfer property with the intent of concealing the involvement of a person who committed a preceding crime, deliberately concealing the true nature, origin, location, or ownership of property, knowingly dealing with property derived from predicate offenses, or knowingly aiding and abetting any money laundering offense.

Institutions in Cambodia that face money laundering risks must adhere to specific regulations to mitigate these risks and safeguard themselves. These regulations are established by various regulatory bodies that oversee compliance and impose penalties on non-compliant institutions. Here are some examples of regulators in Cambodia:

Cambodia Financial Intelligence Unit (CAFIU): CAFIU plays a crucial role in organizing anti-money laundering activities in Cambodia. It is responsible for analyzing provided information and sharing relevant information with law enforcement agencies.

National Bank of Cambodia: The National Bank of Cambodia, referred to as the “Central Bank” under the Law on its Organization and Operation (1996), possesses broad supervisory powers over banks operating in Cambodia.

Anti-Corruption Unit: Certain provisions of the criminal law related to money laundering fall under the purview of the anti-corruption regime in Cambodia. The Anti-Corruption Unit (ACU) is a specialized body responsible for investigating and enforcing laws pertaining to corruption-related crimes.

National Coordination Committee: Established in 2012, the National Coordination Committee focuses on preventing and controlling money laundering and terrorist financing in Cambodia. It plays a significant role in coordinating efforts to combat these financial crimes.

These regulatory bodies ensure that institutions operating in Cambodia comply with the necessary regulations and actively contribute to the prevention of money laundering and the financing of terrorism within the country.

There is a significant risk of money laundering and terrorist financing, and organizations responsible for reporting should implement Customer Due Diligence (CDD) measures in line with the guidelines provided by the Cambodia Financial Intelligence Unit (CAFIU). These CDD measures include obtaining information about the true source of funding, gathering additional information to verify the identity of customers, conducting enhanced monitoring procedures on customer activities, and acquiring details about the genuine purpose of transactions, among others. Additionally, reporting organizations are required to apply Enhanced Due Diligence (EDD) measures in certain circumstances. For instance, EDD should be conducted for transactions exhibiting unusual patterns or showing clear signs of illegitimate intent, all business relationships and transactions involving individuals who are politically exposed or their family members and close associates, relationships with entities or individuals in jurisdictions lacking sufficient anti-money laundering and counter-terrorism financing systems, cross-border correspondent banking or similar relationships without adequate sender information, and large or abnormal transactions.