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Cambodia slapped on global money-laundering list by watchdog
Cambodia has been put on a global money-laundering list over worries that the country is susceptible to hiding ill-gotten gains. The country has never prosecuted a money laundering case and has been inscribed on a “grey list” put together by the Paris-based Financial Action Task Force (FATF).
Inclusion on the list could hit international investment and trades flows to Phnom Penh. The FATF is an inter-governmental watchdog with the aim of “combating money laundering, terrorist financing”, according to its website.
Cambodian authorities said they did not want to comment on its inclusion on the list with a spokesperson referring the Reuters news agency to the National Bank of Cambodia. The bank did not respond to a request for comment from Reuters.
The country “really runs the gamut”, according to FATF president Marshall Billingslea, describing “significant deficiencies”, Reuters reported. He added that the government had made commitments to address the problem.
Addition to the “grey list” comes as Cambodia also faces the loss of special trade treatment from the European Union in relation to the country’s human rights record.
The country had in 2017 been assessed as part of a FATF “mutual evaluation report” taking into account Cambodia’s efforts to tackle terrorism financing and money laundering.
Several criticisms were raised by the report including the fact that Cambodia had never ever prosecuted a money-laundering case.
The FATF report described “high levels of corruption” within the country’s judicial system, saying the authorities had “made minimal use of financial intelligence”.
Cambodia’s thriving casino and real estate sectors had not been overseen by the Cambodian Financial Intelligence Unit, despite the UN Office on Drugs and Crime having long since identified the sectors as highly exposed to money laundering by organised crime.
Inclusion on the “grey list” also marks a regression as Cambodia had previously been removed from the global money-laundering list in 2015.
The toughened stance on Cambodian financial flows comes as more challenging trade conditions hit the Southeast Asia nation.
Tariff-free trade with EU in doubt
The EU this month started a 16-month process which could potentially result in Cambodia being cut off from the EU’s “everything but arms” trade programme. The special trade regime enables the world’s poorer countries to sell goods tariff-free into the EU bloc.
The EU took action after Cambodian Prime Minister Hun Sen’s ruling party won a landslide general election, taking every seat in parliament.
Ahead of the vote, Cambodia’s main opposition party was made illegal and its leader was arrested.
Hun Sen’s government has also been criticised for silencing the media and clamping down on free speech.
The EU is the country’s biggest trading partner representing 45 percent of exports in 2018. Cambodia’s textile factories employ some 700,000 workers and clothes are a large part of exports to the bloc accounting for almost 5 billion euros.
Twelve countries are on the FATF list and Cambodia joins North Korea and Iran, who are categorised under a tougher regime.