BizCLIR

Money laundering and terrorist financing have not been significant problems in Cambodia, in part because its financial system is relatively small and unsophisticated. Cambodia is beginning to take positive steps to put in place protections against a growth of financial crimes that may occur with growth in its banking sector and economy. The government has made strong statements of commitment to fighting financial crimes. If enacted, several draft laws will start Cambodia down a track toward compliance with international standards on financial crime preventions. These include a draft law on anti-money laundering and anti-terrorism financing, and a draft law to create a financial intelligence unit (FIU).

At the moment, however, Cambodia has few financial crime controls in place. There is currently no statute that specifically sanctions money laundering and terrorism financing. Nor are there rigorous controls on sources or destinations of funds. Smuggling of drugs, timber, and fuel is a problem, and much of the commercial activity in Cambodia is conducted in cash, which may be easily hand-carried across Cambodia’s relatively porous borders with Thailand and Vietnam. Cash proceeds may also be converted into real estate or luxury sports utility vehicles without passing through the formal banking sector. Casinos also operate in a gray area of regulation with large sums of cash changing hands relatively unaccounted for. Thus, even with adequate controls over official financial institutions, Cambodia presents opportunities for laundering or other financial crimes.

The most significant problem Cambodia faces with respect to financial crimes is enforcement. The National Bank of Cambodia (NBC) has primary regulatory authority over the banking sector, but lacks capacity to investigate or monitor complex financial transactions. More importantly, the court system lacks capacity to investigate and prosecute complicated financial crimes, and has been wholly inadequate in enforcing serious crimes generally. A prominent pattern of corruption and impunity for businesspeople with political connections indicates that if significant financial crimes do occur that involve prominent government or military figures or their business associates, little will happen to prosecute those illegal transactions.