After five years, Cambodia still has some unresolved financial red flags raised by an international counter-financial terrorism group, with a final follow-up assessment coming up next month.
The Financial Action Task Force, an intergovernmental organization, put Cambodia on its “gray list” of countries that are not sufficiently monitoring and preventing money laundering and financial terrorism in 2017.
Cambodia was rated noncompliant or only partially compliant on 20 of the task force’s technical criteria at the time. Cambodia faces an October deadline to show significant progress, and so far the number of noncompliant or partially compliant technical criteria is down to eight.
However, if Cambodia’s scores next month are the same as the August report, the country will remain under FATF’s close watch, because Cambodia still has an insufficient rating in at least eight technical criteria and four effectiveness criteria.
As of August, Cambodia and 20 other countries — including Myanmar and the Philippines — are on the gray list, while only Iran and North Korea are on the blacklist.
In the August review, Cambodia asked for 10 categories to be reviewed, and five of them were upgraded to largely compliant or compliant. The five other technical criteria reviewed were deemed to still need improvement.
Cambodia still needs to improve its regulation and prevention of money laundering in banking, nonprofits, real estate, precious metals and casinos, the latest update says.
The country has developed basic laws over these industries but there are still gaps to address, such as expanding due diligence, broadening coverage of the regulations and creating bigger penalties to dissuade actors from bad behavior, it says.
Cambodia also needs to improve its cooperation with foreign governments in order to investigate money laundering, the report says.
Another major compliance gap was transparency into beneficial ownership of companies and casinos, as well as ensuring companies are not being directed by criminals.
The financial investigation organization Global Witness has alleged for over a decade that Cambodia’s elite have both known and obscured ownership over different industries, from illegal logging and the extractive sector to other industries. More recently, an investigation by Radio Free Asia flagged that a Chinese criminal on an Interpol watchlist had become close to the late tycoon Rithy Samnang, and together they opened a business repeatedly linked to human trafficking and online scam operations.
Finance Ministry spokesperson Meas Soksensan and casino department deputy director Ros Phearun did not respond to requests for comment.
After Cambodia was downgraded to the lowest rank on the U.S.’s Trafficking in Persons report, officials have expressed concern about the country’s ranking in FATF’s list, as reaching the blacklist could affect the flow of money transfers into and out of Cambodia.