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AML/CTF compliance in Cambodia

WHAT ARE THE

Money laundering and terrorism financing laws in Cambodia?

In Cambodia, the primary legislation governing money laundering and terrorism financing is the New Law on Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT Law 2020), which was published in 2020. This law repealed the previous AML/CFT Law from 2007 and its amendment from 2013. The 2020 AML/CFT Law, which consists of nine chapters and 47 articles, aims to enhance both the scope and deterrent measures of the law, thereby improving Cambodia's capacity to prevent and combat money laundering and terrorism financing. Despite its similarities with the 2007 law, the 2020 AML/CFT Law significantly enhances Cambodia's legal framework for combating money laundering and terrorism financing, aligning it more closely with international standards.

WHAT ARE THE

Key obligations reporting entities have under Cambodian laws?

Based on the New Law on Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT Law 2020) in Cambodia, reporting entities have several key obligations:

  • Customer Due Diligence: Reporting entities are required to apply customer due diligence measures in accordance with Article 8 of the law. This includes identifying and verifying the identity of their customers, understanding the nature of their business, and assessing the risk of potential money laundering activities.

  • Prohibition on Anonymous Accounts: The law prohibits the creation or maintenance of anonymous accounts or similar products that could be used to facilitate money laundering or terrorism financing.

  • Record Keeping: Reporting entities must keep certain records as specified in Article 11 of the law. Generally, this includes records of customer identification, account files, business correspondence, and transaction records.

  • Reporting Obligations: Reporting entities are required to report cash or suspicious transactions as specified in Article 12 of the law. This includes promptly reporting suspicious transactions to the competent authorities.

  • Internal Controls and Compliance Programs: Reporting entities are required to establish and maintain internal controls and compliance programs aimed at preventing money laundering and terrorist financing.

  • Appointment of Compliance Officers: Entities must appoint compliance officers who meet fit and proper requirements. These officers are responsible for ensuring the entity's compliance with AML/CFT regulations.

Failure to comply with these obligations may result in penalties or disciplinary actions as per the law.

WHO ARE THE

ML/TF regulators in Cambodia and what functions do they perform?

In Cambodia, the primary regulator of money laundering and terrorism financing is:

  • Cambodia Financial Intelligence Unit (CAFIU): The primary regulator for anti-money laundering and combating the financing of terrorism in Cambodia. It is responsible for collecting, analyzing, and disseminating information about suspicious financial transactions.
  • Supervisory Authorities: Various government departments and agencies, such as The National Bank of Cambodia and other relevant ministries, depending on the sector. These authorities are responsible for overseeing their respective sectors, ensuring compliance with AML/CFT laws, and reporting suspicious activities to the CAFIU.

WHAT ARE THE

Industry sectors subject to ML/TF regulations?

AML/CFT Law in Cambodia generally regulates the following industry sectors:

Banks

This refers to all commercial banks, rural banks, and sharia banks. They are required to conduct customer due diligence, report suspicious transactions, and maintain comprehensive records.

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Insurance Companies

All types of insurance providers, including life, general, reinsurance, and sharia insurance companies, fall under the purview of AML/CFT laws. They need to adhere to the same standards of due diligence and reporting as banks and non-bank financial institutions.

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Securities Companies and Capital Markets

Securities underwriters, brokers, dealers, and investment managers, as well as mutual funds. They are obliged to follow AML/CFT regulations in their operations.

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Non-Bank Financial Institutions

Including money remitters, finance companies, credit unions, pawnshops, and leasing companies. Similar to banks, they are also obligated to comply with AML/CFT regulations.

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Larger Financial Institutions

Are more closely regulated due to the higher risks associated with their size and the volume of transactions they handle. This includes larger banks, insurance companies, and other financial services providers.

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WHAT ARE THE

Penalties for non-compliance with AML/CTF laws?

The penalties for non-compliance with AML/CTF laws in Cambodia includes the following:

  • Administrative Sanctions: Penalties imposed for violations of certain regulatory rules, for example, violations of obligations to keep professional secrecy.

  • Fines: Monetary penalties can be imposed for various instances of non-compliance.

  • Criminal Prosecution: In more severe cases, such as financing terrorism, non-compliance can lead to criminal charges under Article 44 of the AML/CFT Law, 2020.

 

These penalties apply to reporting entities that fail to comply with obligations including customer due diligence, record-keeping, reporting requirements, and internal controls. The specific nature and severity of these administrative sanctions, criminal charges, and applicable fines are outlined in the law.

WHAT ARE THE

Largest fines for non-compliance with AML/CTF laws?

The largest fine for non-compliance with AML/CFT laws in Cambodia as of the writing is:

  • Phnom Penh Municipal Court Case (Cambodia, 2017) - Two individuals were fined USD 1,000 each and sentenced to 96 months' imprisonment for their involvement in money laundering using counterfeit passports to establish bank accounts. The case spotlights the severe legal ramifications of financial crimes and fraudulent activities.