US Lists Cambodia as Potential Money Launderer

By Ros Sothea, VOA Khmer
Original report from Phnom Penh
12 March 2010

Cambodia has become a major country of concern for money laundering, an annual US report says.

The country’s porous borders, weak laws, limited capacity of justice officials and the National Bank and widespread corruption all put Cambodia at risk, according the US State Department, which recently published its 2009 International Narcotics Control Strategy Report.

Cambodia joins 60 other major money laundering countries, including Burma, Singapore and Thailand.

“The report is the compilation of the embassy and our outreach with both the Cambodian government and local NGOs that work with that sector, and also with researchers of the State Department in Washington, DC,” said John Johnson, a spokesman for the US Embassy in Phnom Penh.

“So the ability to follow the money is critical to successful disruption and dismantling of financial networks that support international illicit activity, including terrorism, organized crime, weapons of mass destruction proliferation, and narcotics and human trafficking,” he added.

A major money-laundering country is one whose financial institutions engage in transactions involving significant amounts of proceeds from serious crimes, the report says.

In Cambodia, the major sources of money laundering include drug trafficking, human trafficking and corruption, the report says. The country also has an active black market, where smuggling circumvents official duties and tax obligations, including with fuel, alcohol and cigarettes.

“Such proceeds are rarely transferred through the banking system or other financial institutions,” the report says. “Instead they are readily channeled into land, housing, luxury goods or other forms of property.”

Phan Ho, secretary general of government’sindependentfinancial intelligence unit, acknowledged cases of money laundering, but he said most of the money came from outside the country.

“First, we have laws and directives that allow financial institutions to report to us the suspected cases of money laundering, and we have a supervision system,” he said. “So money laundering mostly comes from outside. The money laundering in our country derived from criminal acts is very small.”

Phan Ho said his unit inspected eight commercial banks in 2009 and found they had strong monitoring systems to effectively help fight money laundering.

Khieu Sopheak, a spokesman for the Ministry of Interior, said the US report had “no evidence.”

“We want to know the names of people who launder the money,” he said. “If the report provides us with both information and evidence, we will be able to cope with it. The report only aims to destroy Cambodia’s reputation.”

Cambodia passed laws and directives to counter money laundering and cut off finances for potential terrorists in 2007. The regulations require financial institutions to report transactions more than 40,000 riel, about $10,000.

In 2009, the government’s financial intelligence unit was tipped off to 64 suspicious transactions, according to the US report. However, cash reporting has been inconsistent due to a lack of unified reporting mechanisms.

In Channy, CEO of Acleda Bank, said he believed money laundering was not transferred through the banking system, which has good monitoring.

Under Cambodian law, financial institutions can be fined and its leaders jailed for failing to report suspicious transactions, but the US report says the anti-laundering law needs improved.

“The government should issue additional decrees necessary to fully implement the law and should develop the capability of its law enforcement and judicial authorities to investigate, prosecute, and adjudicate financial crimes,” the report says. “ Cambodia should take specific steps to combat corruption.”

Phan Ho said the fight against money laundering is a new for Cambodia, and the government wants to do it effectively.

Over the past several years, the US Treasury Department has conducted financial investigation training courses for Cambodian police, judges, prosecutors, counter terrorism and banking officials.

Meanwhile, the Asian Development Bank continues to provide technical assistance for Cambodia to issue a number of regulations to combat the crime.