More Political Commitment Needed to Tackle Money Laundering

Executive Director of Transparency International Cambodia Pech Pisey warned that more needs to be done to prevent money laundering. Photo: His Facebook page.

While the Australian Embassy in Phnom Penh praised the government’s new Anti-Money Laundering legislation, experts remain unconvinced that the new laws will tackle Cambodia’s dirty money woes.

PHNOM PENH--Cambodia's new Anti-Money Laundering and Combating the Financing of Terrorism legislation passed the National Assembly unanimously on June 4, but despite tougher laws, experts remain skeptical of their efficacy. 

Pech Pisey, executive director of Transparency International Cambodia said that the adoption of the law on money laundering is a step in the right direction for Cambodia, but warned that it is just that—a step. 

“I would like to praise the government on this effort,” he said, adding that it will require a lot more political commitment from the government to counter the inflow of dirty money in Cambodia.  

“One of the main reasons that the country was placed in the grey list was due to the fact that no money-laundering case had even been prosecuted in Cambodia,” he said "Cambodia’s judicial system remains to be seen ‘highly corrupt’ and Cambodia has also made minimal use of financial intelligence to investigate money laundering.”

Interior Ministry spokesman Khieu Sopheak said that the government has not detected any new cases of money-laundering in the country for 2020, but noted that last year some $7 million was seized over the course of five cases, with the money being held by the National Bank of Cambodia until full investigations and court proceedings are finished.

“The major cases are involved Chinese nationals,” he said, adding that in April and May 2019, four Chinese nationals were detained after being caught at Phnom Penh International Airport with bags of illicit cash. 

Similarly, in July 2019, two South Koreans were stopped at Siem Reap International Airport with $2.2 million in cash which they are believed to have smuggled in from Hong Kong. An investigation into their case is still ongoing. 

Sopheak explained that the suspects intended to use that money to buy real estate in Cambodia, but declined to comment on whether the suspects who were detained last year would be charged under the new money-laundering laws. 

The Australian Embassy in Phnom Penh released a statement on July 6, 2020, praising the Royal Government of Cambodia for passing new legislation on money laundering.

Since 2018, Australia’s Department of Home Affairs and Attorney-General’s Department worked closely with Cambodian officials to improve the legislative framework to address transnational crime, including technical drafting advice for these laws.

“As a long-standing and reliable bilateral partner, I am pleased Australia could work with our Cambodian counterparts to develop these important legal frameworks,” Australian Ambassador Pablo Kang said.  

However, Transparency International’s Pisey warned that the framework alone is not enough.

“What’s even more important [than the legal framework] is the effective enforcement of the laws and regulations,” he said. “It is crucial to adopt legal measures and fully enforce regulations that require non-financial businesses trading in high-value goods to comply with anti-money laundering obligations such as due diligence—doing proper checks on customers or investments—record-keeping and reporting on suspicious activities.”

Despite numerous attempts to contact him, Chin Malin—spokesperson for the Ministry of Justice—could not be reached for comment on the new anti-money laundering laws.

According to Pisey, the impact of money laundering is difficult to calculate exactly, but he noted that can completely cripple economies, distort international finances and harms the development of a country for its citizens. He warned that this is typically done through the theft of state resources which are sold off to wealthy groups with government connections, tax evasion and land concessions that deprive citizens of access to natural resources.

“The most at-risk sectors in Cambodia are casinos, real estate, shadowy economic activities and the significant black market for smuggled goods, including drugs and imported substances,” he said. 

Money laundering usually operates in a secretive and complex underground network and therefore it is difficult to detect and know exactly the amount of money, he added, but suggested that Cambodia might have a clearer idea of how much money it was losing to criminals if it implemented financial intelligence units effectively.

“Globally, the estimated amount of money laundered in one year is 2 – 5 percent of global GDP, or between $800 billion and $2 trillion lost annually to money laundering,” explained Pisey. “The Global Financial Integrity (GFI) estimates that illicit outflows from developing countries ranged from $620 billion to $970 billion per year, which is far more than the total Official Development Assistance (ODA) at only $137.2 billion per year.”

In February 2020, Cambodia was once again placed onto the Financial Action Task Force’s infamous grey list, which the international financial watchdog deems to be a compilation of countries with weak or inadequate governance with regards to money laundering. 

 


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