Cambodia: Go-ahead on draft law to curb money laundering

• May 18, 2020

The draft law on anti-money laundering and combating the financing of terrorism (AML/CFT) has been approved at a Council of Ministers meeting chaired by Prime Minister Hun Sen.

The law is designed to guarantee against AML/CFT by identifying measures to prevent it, crack down on it and combat such activities in the Kingdom. After approval by the Cabinet, it will be then sent to the National Assembly for review.

The move came after the Asia-Pacific Group (APG) on Money Laundering found that Cambodia lacked a legal basis and adequate enforcement mechanisms related to penalties over money laundering and terrorism financing and was not in line with international standards, according to government spokesman Phay Siphan.

Cambodia became a member of APG in June 2004.

As such, it is required to follow international standards on countering the proliferation of weapons of mass destruction (WMD), which was enacted by the Financial Action Task Force (FATF) – the global money laundering and terrorist financing watchdog.

According to Siphan, FATF placed Cambodia onn its first grey list in 2011, which required the Kingdom to amend the law on AML/CFT. “After the Cambodian government had put in the effort to follow and comply with the FATF team, Cambodia was removed by a unanimous vote from the grey list in January 2015,” he noted.

When the FATF places a jurisdiction under increased monitoring, it means the country has committed to resolving swiftly the identified strategic deficiencies within agreed timeframes and is subject to increased monitoring. This list is often externally referred to as the “grey list”.

Siphan added that Cambodia again was placed on the grey list in February 2019That meant FATF required Cambodia to implement action plans in order to address strategic deficiencies in due course. “Among other countries, and that includes Cambodia, the Kingdom needs to have a legal framework related to countering the proliferation of weapons of mass destruction before the end of May 2020 and The law amendment on the AML/CFT has to be implemented not later than late September this year.”

Last year, Cambodia reported that it cracked down on five fraudulent cases, seizing more than $7 million in dodgy money.

According to a FATF report, since February 2019, when Cambodia made a high-level political commitment to work with the FATF and the APG to strengthen the effectiveness of its AML/CFT regime and address any related technical deficiencies, the Kingdom has taken steps towards improving its AML/CFT regime, including demonstrating an increase in domestic coordination and cooperation to enhance money laundering investigations.

“Cambodia should continue to work on implementing its action plan to address its strategic deficiencies,” FATF stated.

Those strategic deficiencies that FATF recommended, include:

(1) providing a broad legal basis for mutual legal assistance (MLA) and conducting relevant training to law enforcement agencies (LEAs);

(2) implementing risk-based supervision for real estate and casinos;

(3) implementing risk-based supervision on banks, including through prompt, proportionate and dissuasive enforcement actions, as appropriate;

(4) amending the AML/CFT Law to address the remaining technical compliance deficiencies;

(5) enhancing its analysis of suspicious transaction reports (STRs) and increasing disseminations of them to to LEAs;

(6) demonstrating an increase in money laundering investigations and prosecutions;

(7) demonstrating an increase in the freezing and confiscation of criminal proceeds, instrumentalities and property of equivalent value; last but least, establishing and implementing a legal framework for UN targeted financial sanctions related to the proliferation of financing and enhancing the understanding of sanctions evasion.

In a meeting to review the AML/CFT draft law month, Interior Minister Sar Kheng said the lack of such laws placed Cambodia on the grey, making the country seem to be a risky place to invest.

“It also makes investors apprehensive about investing in the country, which, in turn, affects the economy,” he added.

Emmanuel Guelas, director of Assurance at Ernst & Young Cambodia, told Khmer Times previously that rapid growth in Cambodia’s casino and real estate industries make it possible to commit financial crimes.

“With the development of the casino businesses, people may consider them as a channel to clean unlawfully gained funds,” said Guelas, who said it was possible to gamble small amounts but claim big losses.

He said the government should consider sanctioning casinos involved in the business and ask them to report unusual transactions.

Guelas offered advice on how to report money laundering activities: filing a suspicious activity report, reporting suspicions to a law enforcement officer, and reporting matters of concern to financial institutions.

Source: https://www.khmertimeskh.com/50723983/go-ahead-on-draft-law-to-curb-money-laundering/