Cambodia was put on a money-laundering watch list by the Financial Action Task Force (FATF) on Friday after the watchdog group found “significant deficiencies” that left the country vulnerable to flows of hidden illegal money.
The Paris-based FATF, an inter-governmental organization that fights money laundering and terrorist financing, placed Cambodia back on the gray list of "jurisdictions with strategic deficiencies" after removing the country in 2015.
FATF president Marshall Billingslea said Cambodia had “significant deficiencies,” Reuters reported from Jakarta, where the list was unveiled.
Cambodia had a never prosecuted and money-laundering case and its judicial system had "high levels of corruption", the FATF said in the report, adding: "Cambodia has made minimal use of financial intelligence in investigating ML/TF," the news agency said.
Government spokesman Phay Siphan denied Cambodia was a money laundering haven and denounced the FATF report.
“We are based on the mechanism of law and cooperation with foreign partners to help monitor financial traffic,” he said.
“This is politically motivated report,” Phay Siphan added.
The FATF said, however, that Cambodia had “made a high-level political commitment” to work to increase the effectiveness of its anti-money-laundering regime and address technical deficiencies.
NGO activists who monitor corruption in Cambodia said the reinstatement of Cambodia on the gray list suggested backsliding since 2015 and suggested that China’s huge flow of investment in the country’s casinos, real estate and banks and stock exchanges include a lot of laundered cash.
“If Cambodia is on the gray list, it will decrease legitimate investors. This is a disaster for the country,” said Alejandro Gonzalez Davidson, founder of the NGO Mother Nature, who was expelled from Cambodia for reporting on illegal logging and sand-dredging.
The tougher financial scrutiny comes as Cambodia is also facing the prospect of tougher trade conditions from the EU, its largest export market, which has threatened to end the country's eligibility for a program of tariff-free exports to the 28-member bloc. The EU has cited the government of Hun Sen's broad crackdown on the political oppositiin, civil society and media since 2017.
The FATF gray list also includes Bahamas, Botswana, Ethiopia, Ghana, Pakistan, Serbia, Sri Lanka, Syria, Trinidad and Tobago, Tunisia, and Yemen.
Reported by Sovannarith Keo for RFA’s Khmer Service. Translated by Samean Yun. Written in English by Paul Eckert.