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Anti-money laundering status boost anticipated

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Justice minister Koeut Rith in a meeting on expediting procedures for money laundering cases on June 28. JUSTICE MINISTRY

Anti-money laundering status boost anticipated

Cambodia's reforms and stepped-up enforcement activities to combat money laundering and the financing of terrorism and weapons of mass destruction (WMD) was given a positive assessment recently after the Kingdom took steps to freeze assets totalling $24 million while seizing assets worth $11 million as part of its efforts, according to Minister of Justice Koeut Rith.

The justice minister stated that the Kingdom is committed to moving forward on this issue beyond just being removed from the Financial Action Task Force (FATF) money laundering “grey list”, but also to secure its financial system, increase transparency and trust, as well as improve the system’s overall resilience.

The FATF is an inter-governmental body established at the 1989 Group of Seven (G7) Summit of the world’s most advanced economies that coordinates actions between countries to combat money laundering and other finance-related crimes like funding terrorist groups.

FATF maintains a “black list” for countries it deems non-cooperative in combating money laundering, but only North Korea and Iran are currently on it.

They also maintain a “grey list” that currently has 23 countries on it, including Cambodia, with strategic deficiencies in their policies and enforcement against money laundering, according to FATF’s criteria.

Speaking at a meeting regarding the progress of work undertaken to combat money laundering and related issues held on June 29, Koeut Rith noted that Cambodia has notably increased its enforcement activities and as a result the report submitted to the FATF on June 15 on progress in this area was received positively.

He said Cambodia had increased human resources dedicated to financial crimes and implemented standard operating procedures at its ministries and institutions which led to a 335 per cent increase in its financial investigations of the six high-risk crimes linked to money laundering – drug trafficking; human trafficking; fraud and breach of trust; forest and wildlife crimes; official corruption; and crimes related to customs and excise.

“Our investigations of money laundering crimes has increased by 1,900 per cent, from 22 cases in the eighth round [FATF] report to 442 cases in the ninth round report ,” stated the minister. “Criminal charges in money laundering cases has increased about 1,800 per cent – from two cases in the eighth round report to 39 cases in the report for the ninth round.”

He said convictions in money laundering cases have increased by 200 per cent from six cases in the eighth round to 18 in the ninth round, with cases related to all six of the targeted high-risk crimes included.

“The freezing of assets related to money laundering has increased to 37 cases totalling $24 million compared to just four cases in the eighth round report that totalled only $130,000,” he said. “Assets seized have increased to $11 million in value compared to the 8th round report which had just $2.5 million.”

According to the minister, the freezing and seizing of assets has been done under the jurisdiction of the Phnom Penh Municipal Court as well as the provincial courts of Siem Reap, Kampong Cham, Koh Kong, Preah Sihanouk, Kandal and Svay Rieng.

In the past, it had just been municipal court that was typically active in this area, he noted.

“The excellent results that Cambodia has achieved came from two important factors. The first was that all relevant ministries and institutions set up working groups for anti-money laundering and they provided their full cooperation on anti-money laundering activities.

“Secondly, the ad-hoc sub-committee for combating money laundering changed its strategy for each of the related crimes, expanding investigations on money laundering crimes and other high-risk crimes by following the new recommended procedures at each institution,” he said.

According to Koeut Rith, seven out of eight of the “Immediate Outcomes” (IO) which the FATF required of Cambodia were fulfilled and those issues were deemed to have been “largely addressed”. The final IO was deemed “partly addressed” and it must be accomplished by October of this year.

Cambodia was placed on the FATF “grey list” in February 2019. At the time, Cambodian officials called the decision “unfair” because the Kingdom had previously met all of the necessary requirements and been removed from the list back in 2015.

“Though we’ve generally received good grades for our actions and most of the outstanding issues were judged to be ‘largely addressed’, in order for Cambodia to be removed from the grey list we must complete all of the required steps for our tenth round report prior to the FATF’s Internal Cooperation Review Group’s on-site visit to Cambodia,” Koeut Rith said.

The minister said Cambodia must submit the 10th round report in July and must accomplish all the remaining activities for the eighth IO while continuing to report statistics that show progress on the sixth and seventh IO for review.

On June 28, the justice ministry instructed all courts to expedite the charges, investigations, trials and sentencing for crimes related to money laundering and the related high-risk crime areas – while still following the law and appropriate legal procedures – in order to freeze and seize the assets of criminals.

“Justice minister Koeut Rith has instructed all courts and prosecutors to make anti-money laundering their highest priority and responsibility, as it is necessary for the good of the nation,” the ministry statement said.

Chea Chanto, governor of the National Bank of Cambodia who attended the meeting on the FATF report, said Cambodia has done a great deal of work on improving its anti-money laundering capabilities after it became a member of the Asia/Pacific Group (APG) on Money Laundering in 2004 and by promulgating the anti-money laundering law and related laws and provisions in 2020.

He said that for the ninth round report, Cambodia achieved an “excellent result” and actually did better than most were expecting. He said Cambodia has achieved 13 out of 14 of the FATF action items required and the Kingdom intends to have the final requirement completed before the FATF working group arrives in Cambodia in January of next year for its on-site inspection.

“To get off of this grey list, Cambodia must fully implement all 14 action items and so far we have jointly accomplished 13 of them already. The last one remaining is within IO eight, which is about the freezing and seizing of criminal products and the related means of production used to commit those crimes and equivalent assets,” he said.

Chanto echoed the justice minister’s statement that Cambodia intended to go well beyond the minimum requirements for grey list removal in these efforts.

“I would like to point out that the government’s vision is not just to take Cambodia off this grey list. Our long-term goal is to achieve a permanent mechanism and working system for combating money laundering, terrorism financing and financing for WMD, based on new developments and the prevailing trends for international standards, so as to avoid Cambodia ever being placed on the grey list again in the future,” he said.

Minister of Interior Sar Kheng, in his capacity as chairman of the National Coordination Committee for Combating Money Laundering, said Cambodia has the political will and the technical know-how today to meaningfully combat money laundering, terrorism financing and finance of the proliferation of WMD, as required by the FATF.

“We are currently on the grey list, but the FATF assessments of Cambodia before and after the ninth round report are very different. We remain on the grey list for now, but they’ve recognised that we’ve made a lot of good progress,” he said.

Sar Kheng urged all officials at ministries and institutions to work together to get Cambodia off the grey list and work to improve its reputation internationally among investors and financial institutions. He recommended that everyone set anti-money laundering work as their top priority until this is accomplished.

“Our work is not just to get Cambodia removed from the grey list, but to protect our financial system and national economy by strengthening our transparency, trust and the resilience of the Cambodian financial system,” he said. “Accomplishing this will also contribute to the fight against terrorism financing and financing for the proliferation of WMD, which is a shared concern of the entire world,” he said.

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