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Ministry rebuts reports of Chinese money laundering through property market

A view of Phnom Penh’s construction sites from the Mekong River at the beginning of this year.
A view of Phnom Penh’s construction sites from the Mekong River at the beginning of this year. Moeun Nhean

Ministry rebuts reports of Chinese money laundering through property market

The spokesman for the Ministry of Foreign Affairs hit back at news reports about Chinese investors laundering their money through Cambodia’s real estate market on Monday, calling them “baseless”.

Speaking to a group of reporters after Foreign Minister Prak Sokhonn met with Indian Ambassador Manika Jain, Sounry said Cambodian authorities “are ready to prevent any offence” related to money laundering.

“Some countries, some institutions, do not trust the good relationship between Cambodia and China and often make accusations on this or that,” Sounry said. “What I know is Cambodia has its own authority to combat laundering activities. We have our measures, we have our principles and we have our laws.”

Sounry was apparently referring to a New York Times article published January 9 about the boom in Chinese interest in Cambodian real estate and the opportunities that Cambodia’s cash economy presents for money laundering.

One analyst quoted in the article, Bangkok-based political risk consultant George McLeod, said the lax controls among Cambodian banks allow Chinese buyers to launder cash from criminal activities through Cambodian real estate.

McLeod could not be reached today.

Cambodia ranks among the most vulnerable countries for money laundering in the world, according to the Basel Anti-Money Laundering Index, which pulls data from 17 different sources – including the World Bank, World Economic Forum and the Financial Action Task Force – to assess risk.

Out of 146 countries, Cambodia ranks 9th for risk of becoming a hotspot for money laundering, after Uganda and before Tanzania, according to the index.

Miguel Chanco, lead analyst at the Economist Intelligence Unit, called Cambodia’s law enforcement against money laundering “inadequate at best” due to widespread corruption and lack of government transparency.

“Real estate is certainly an area that is ripe for such activity given the often huge sums of money involved and the numerous players and moving parts involved for a single project,” Chanco said in an email.

Political analyst Meas Nee agreed that Chinese investment in Cambodia should raise concerns due to Cambodia’s weak monitoring of foreign investments.

“The biggest concern is that our mechanism to check investments in Cambodia isn't strong enough like other countries,” Nee said. "So, our country becomes a place where they come to do money laundering.”

Additional reporting by Daphne Chen

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