If there’s a list that any country rather avoid, the one for states with anti-money laundering (AML) and combatting the financing of terrorism (CFT) deficiencies is certainly one of them. Unfortunately for Cambodia, it’s the newest member of the Financial Action Task Force (FATF) list for just that, as announced by the group on February 22.
The group declared in their latest announcement this segment regarding Cambodia:
“FATF has identified Cambodia as a jurisdiction with strategic AML/CFT deficiencies. The country has developed an action plan with the FATF to address the most serious deficiencies. The FATF welcomed the high level political commitment of Cambodia to its action plan.”
A big factor in the South East Asian country joining the list is the growing number of casinos there. Cambodia has more than 100 brick and mortar operators, and casinos are seen as a high-risk target for money laundering.
It should be noted though that Cambodia only joins the list as a monitored country, with no call for action. In comparison, Iran and North Korea sit on the list with open calls for action for them to change their ways. Furthermore, this list changes often, with countries joining and falling off every year, as they address the concerns the FATF raises.
In 2008, the FATF published a guide for a “Risk-Based Approach for Casinos” to help mitigate this risk. Cambodia seems to be following that guide, which the FATF commends them for, but it hasn’t kept the country off the new list.
The country, and particularly Sihanoukville, has been a hotbed for Chinese facing casinos, in part because of lax regulations. As a result of the very liberal rule-set, there have been fears that money could be laundered through Cambodia. Afraid of what that could mean for the country, some have vowed to hold back the tide of Chinese investments.
Cambodia is making a best effort to improve their gambling industry, as the FATF admits immediately. In March 2018, new legislative reforms were introduced that would set taxes for the casinos, but would also introduce incentives to bring in more investment and tourism, specifically from a broader geographical region. That effort could well change the situation, and get them off the watch-list in the very near future.