Cambodia is on the grey list of global money-laundering watchdog Financial Action Task Force, meaning the Kingdom is susceptible to money laundering. In a February report, FATF says Cambodia’s judicial system has high levels of corruption and that it lacks the will to investigate financial crimes. However, since the report was issued, law enforcement agents have seized nearly $7 million from multiple suspects attempting to enter the country with cash.
Authorities have over the past six months apprehended dozens of suspects attempting to smuggle millions in cash into the Kingdom as they wage war against money laundering.
In February, money-laundering watchdog Financial Action Task Force placed the Kingdom on its grey list, meaning the country is perceived as an easy place to wash cash.
Since then, authorities have ratcheted up their war against the crime, catching dozens of suspects at both international airports in the country and seizing nearly $7 million in cash.
In a recent interview with Khmer Times, Interior Minister Sar Kheng noted airport authorities this year have made at least five arrests, with a dozen suspects who attempted to bring cash into the Kingdom, including from Hong Kong.
“Because they could not identify its source, we temporarily seized the cash,” Mr Kheng says. “All of the money seized are now kept at the National Bank of Cambodia and the suspects are detained.”
He notes that due to the recent Chinese extradition protests in Hong Kong, police in the special administrative region could not cooperate with Cambodian authorities.
“We can’t make any assumptions now, we need support from Hong Kong police to uncover the root of the problem,” Mr Kheng says. “It’s wrong to make judgements when we don’t have enough documents or evidence.”
On April 23, police arrested three Chinese nationals after they attempted to bring more than $3.5 million from Hong Kong into the Kingdom.
They were charged with money laundering under Articles 3 and 29 of Law on Anti-money Laundering and Combatting the Financing of Terrorism. If convicted, they could face up to 20 years in prison.
Another Chinese national was detained in May at Phnom Penh International Airport after bringing nearly $1 million in cash from Hong Kong.
On July 7, Siem Reap authorities detained two South Koreans for bringing $2.2 million through the airport. They also travelled from Hong Kong.
General Keo Vanthan, spokesman for the General Department of Immigration, says suspects in the Hong Kong case won the money through gambling, but had no supporting documents.
“Police suspect the money came from an illegal source and it was carried into the Kingdom as part of money laundering,” Gen Vanthan says. “It could be illicit money obtained from unlawful business like drugs trade, kidnapping or robbery.”
He adds that Cambodian police have sought support from Hong Kong and Macau police to further investigate the origins of the money seized, but China has a different policy regarding the transport of foreign currency.
“Chinese laws are different than Cambodia’s. Therefore, it is important for everyone to offer proper provenance when they carry large amounts of money,” Gen Vnathan says. “Otherwise, we will arrest them.”
According to a government directive issued in 1998, on the legality of exporting and importing foreign currency, there is no limitation on how much can be imported into Cambodia by any delegation, traveller, legal individual and “representatives”.
However, the money will still need to be declared.
“A traveller who imports foreign currencies equivalent to $10,000 or over shall lodge customs declaration in accordance with laws and regulations in force,” it adds. “[The traveller must] provide declaration to a customs officer for verification when foreign currencies are re-exported.”
Lieutenant General Dy Vichea, director of the Interior Ministry’s central security department, says money laundering offences increased over the past six months.
“Modern-day money laundering tends to be connected with other offences, such as theft and drugs,” Lt Gen Vichea says. “Lawbreakers will do whatever it takes to launder money.”
He adds that about $10 million in dirty money was detected flowing through banks during the past six months.
Due to concerns regarding financial crimes in the Kingdom, international groups have listed Cambodia on its countries to watch lists.
Last year, Basel Anti-Money Laundering Index, an independent annual ranking that assesses the risk of money laundering and terrorism financing in the world, rated Cambodia as one of the highest risk countries.
In 2016, the Kingdom’s first National Risk Assessment report acknowledged factors that might have enabled money-laundering activities, including Cambodia’s largely cash-based dollarised economy and widespread use of informal financial services, booming real estate sector and large casino gambling sector.
The report notes that there were no prosecution in previous money laundering cases in the Kingdom, suggesting that there’s corruption in the Cambodian judicial system.
In March, the National Bank of Cambodia’s FIU signed an MoU with the National Authority for Combatting Drugs to exchange information on money laundering and the terrorism financing.
Ngeth Sovannrith, deputy secretar-general of the FIU, says the MoU was needed because individuals launder money to cover up gains made through crime, including drug trafficking.
“They also use the money to buy property and ensure enough financial resources to continue their criminal activities, or to fund terrorists,” Mr Sovannrith says.
Kuch Kimlong, spokesman for Phnom Penh Municipal Court, says the court is handling three cases of suspected money laundering, noting that the Siem Reap Provincial Court is handling two recent cases.
“Those foreigners [Chinese and South Koreans] were charged with money laundering,” Mr Kimlong says. “These cases are still under investigation.”
Transparency International Cambodia executive director Preap Kol says money launder happens easily in Cambodia, particularly the part of transporting money via seaports and border checkpoints.
“The money is most likely used to invest in real estate development projects, given that the property sector is growing at a fast pace, land purchases and games at casinos,” Mr Kol says.
Regarding the source of the money in recent cases, Mr Kol says the authorities must be attentive, especially those posted in checkpoints and seaports.
“If this can happen at the airport, can you imagine border checkpoints? Which do not have sophisticated equipment and little procedure to mitigate risks,” he adds.
“The Financial Intelligence Unit is not tasked to investigate,” he adds. “It is only there for administrative purposes. So, although we have a law, no action can be taken.”