Money Laundering Probe Hits Home for Cambodia

Interior Minister Sar Kheng meets with MEI-LIN Wang, a senior policy analyst at the Financial Action Task Force (FATF). Photo: Sar Kheng's Facebook

PHNOM PENH – Delegates from the Financial Action Task Force (FATF) — a France-based international organization combating money laundering and financial terrorism — have arrived in Cambodia on a fact-finding mission.



They have come to inspect the realities of money laundering and compare them with a report on the subject which Cambodia has submitted.



The inspection may have negative or positive results, depending on the effectiveness of the government’s practice of law and efforts in combatting corruption in money laundering, said a policy analyst and civil society group.



Speaking on Jan. 10 during the Partnership between the Royal Government and Civil Society Groups forum, Interior Minister Sar Kheng spoke of the inspection by FATF delegates from Jan. 11 to 13.



The minister said the delegates would also meet government officials and non-governmental parties such as banks, hotels, companies, and other civil society organizations after visiting the Prime Minister and Sar Kheng.



While the minister hoped Cambodia would be removed from the “grey list”, Pech Pisey, executive director of Transparency International Cambodia, said it depended on how Cambodia responded to the recommendations or specific indicators.



The tasks were provided by the FATF based on previous inspection reports. It is important to know whether each indicator has been met, or to what extent it was responded to.



“This inspection will result in new recommendations for the new updated report of Cambodia combatting money laundering,” Pisey said.



There had been a high political determination from the Prime Minister and senior government officials who put efforts into getting the country off the grey list. But the effectiveness of law practice is an important factor.



 “It is a great determination, and civil society groups welcome that,” he said.



“What is essential is enhancing the effectiveness of the implementation of the recommendations, particularly in practicing the law in an effective manner, making no exceptions, eliminating corruption and arresting suspects for punishment.”



“Thus far, we see that the legal principles are good, but the practice remains lacking. And, the organization experts focus on the law practice too,” he added.



Meas Nee, a political analyst, said there could be both negative and positive results from the inspection. If the delegates don’t see any problems, then it is a good thing for the country as well as an encouragement for the government to keep up their good work.



However, the concern is when they do see something but it is not included in the report.



This would be a big problem for Cambodia. It would not matter whether or not we accepted the report, because once it was released and sanctions were imposed, then investment, the economy, and the image of the country would be affected.



Meas Nee said corruptions and loose practice of law were factors for money laundering in the country. Efforts were recognized but more work must be done in accordance with the recommendations.



One important aspect was the control of immigrants. Meas Nee said Cambodia can control them at airports or border areas but there are illegal means for migrants, who might eventually get legal documents in the country.



“There have also been cases of money brought in illegally in suitcases through flights. There have been crackdowns on these cases but the question is whether these are a big or small part of total crime.



Sometimes, money laundering was related to drug trafficking. If the amounts were big, there would be suspicions that it has something to do with the country’s import controls.



“I am still concerned over the money laundering might occur a lot in the country due to corruption and double standards of law practice between powerful people and poor people,” Meas Nee said.



Cambodia could become an easy area for money laundering if there was not care. One of the greatest areas of suspicion was corruption related to money laundering in casinos, Meas Nee said.



Another sector is a big budget investment for a short period involving outsiders bringing a great amount of money for some business without any background check on the money or where it comes from.



Great work but more needed



To effectively practice the law, there is a requirement that the country cooperates with other countries, especially related to secret exchanges and networks of money laundering.



“So, we can look at the progress on the recommendations and indicators that we want to solve by following the instruction of the experts. We will get the country’s name off the list,” TI Cambodia’s Pisey said.



However, Pisey said there was still doubt among the public and civil society groups about whether the government’s determination will be turned into an effective operation to combat money laundering.



Meas Nee’s suggestions included restricting the entering-exiting path which is important for the Department of Immigrations to work on and background checking on the money of investors especially for casino sector.



Efforts in combatting money laundering



Sar Kheng said he expected Cambodia will be removed from the “Grey List” of the FATF after the delegates finish the inspection.



He said Cambodia had submitted a report on the efforts in combatting money laundering to the FATF. The organization had held a conference to check the report and praised the results of the operations.



Nevertheless, Sar Kheng, who is also chairman of the National Coordination Committee on Anti-Money Laundering, said Cambodia would still have tasks to accomplish even if the country was removed from the grey list on the banking sector.



“Cambodia needs to get stronger in combatting money laundering,” he said. “It doesn’t mean we can care less about money trafficking which leads to financial terrorism or crimes.”



However, the FATF’s regular work is to inspect directly in the country to monitor the real situation to compare with the submitted report.



He said countries on the grey list have to work harder on the implementation of two points among Immediate Outcomes (IO), related to money laundering.



The IO7 refers to tasks to combat crimes related to money laundering, and the IO8 refers to the tasks to freeze or seize the laundered properties of the criminals. Sar Kheng said the IO8 needed to be strengthened.



“The banks in Cambodia will be at risk in the banking operation if Cambodia is not removed from the grey list,” he said.


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