Anti-money laundering and counter-terrorist …

1 `. Anti-money laundering and counter -terrorist financing measures cambodia Mutual Evaluation Report September 2017. The Asia/Pacific Group on Money laundering (APG) is an autonomous and collaborative international organisation founded in 1997 in Bangkok, Thailand consisting of 41 members and a number of international and regional observers. Some of the key international organisations who participate with, and support, the efforts of the APG in the region include the Financial Action Task Force, International Monetary Fund, World Bank, OECD, United Nations Office on Drugs and Crime, Asian Development Bank and the Egmont Group of Financial Intelligence Units. APG members and observers are committed to the effective implementation and enforcement of internationally accepted standards against money laundering and the financing of terrorism, in particular the Forty Recommendations of the Financial Action Task Force on Money laundering (FATF).

2 For more information about the APG, please visit the website: This mutual evaluation report was adopted by the APG at its annual meeting in July 2017. September 2017 APG. No reproduction or translation of this publication may be made without prior written permission. Applications for permission to reproduce all or part of this publication should be made to: APG Secretariat Locked Bag A3000. Sydney South New South Wales 1232. AUSTRALIA. Tel: +61 2 9277 0600. E mail: Web: Cover image courtesy of: cambodia Financial Intelligence Unit TABLE OF CONTENTS. EXECUTIVE SUMMARY .. 3. A. Key Findings .. 4. B. Risks and General Situation .. 5. C. Overall Level of Effectiveness and Technical Compliance .. 6. D. Priority Actions .. 11. E. Effectiveness & Technical Compliance Ratings.

3 13. MUTUAL EVALUATION REPORT OF cambodia .. 14. Preface .. 14. CHAPTER 1. ML/TF RISKS AND CONTEXT .. 16. ML/TF Risks and Scoping of Higher-Risk Issues .. 17. Materiality .. 18. Structural Elements .. 19. Background and other contextual factors .. 21. CHAPTER 2. NATIONAL AML/CFT POLICIES AND 30. Key Findings and Recommended 30. Immediate Outcome 1 (Risk, Policy and Coordination) .. 31. CHAPTER 3. LEGAL SYSTEM AND OPERATIONAL ISSUES .. 37. Key Findings and Recommended 37. Immediate Outcome 6 (Financial intelligence ML/TF) .. 39. Immediate Outcome 7 (ML investigation and prosecution) .. 46. Immediate Outcome 8 (Confiscation).. 51. CHAPTER 4. TERRORIST financing AND financing OF 54. Key Findings and Recommended 54. Immediate Outcome 9 (TF investigation and prosecution).

4 56. Immediate Outcome 10 (TF preventive measures and financial sanctions) .. 61. Immediate Outcome 11 (PF financial sanctions) .. 65. CHAPTER 5. PREVENTIVE MEASURES .. 67. Key Findings and Recommended 67. Immediate Outcome 4 (Preventive Measures).. 69. CHAPTER 6. SUPERVISION .. 78. Key Findings and Recommended 78. Immediate Outcome 3 (Supervision) .. 79. CHAPTER 7. LEGAL PERSONS AND ARRANGEMENTS .. 86. Key Findings and Recommended 86. Immediate Outcome 5 (Legal Persons and Arrangements) .. 87. CHAPTER 8. INTERNATIONAL 93. Key Findings and Recommended 93. Immediate Outcome 2 (International Cooperation) .. 94. TECHNICAL COMPLIANCE 102. Anti-money laundering and counter -terrorist financing measures in cambodia - 2017 APG 2017 1. Recommendation 1 Assessing Risks and applying a Risk-Based Approach.

5 102. Recommendation 2 National Cooperation and Coordination .. 104. Recommendation 3 Money laundering offence .. 105. Recommendation 4 - Confiscation and provisional measures .. 106. Recommendation 5 Terrorist financing offence .. 108. Recommendation 6 Targeted financial sanctions related to terrorism and terrorist financing .. 110. Recommendation 7 Targeted financial sanctions related to 114. Recommendation 8 Non-profit organisations .. 115. Recommendation 9 Financial institution secrecy laws .. 118. Recommendation 10 Customer due diligence .. 118. Recommendation 11 Record-keeping .. 123. Recommendation 12 Politically exposed persons .. 124. Recommendation 13 Correspondent banking .. 125. Recommendation 14 Money or value transfer services.

6 126. Recommendation 15 New 127. Recommendation 16 Wire 128. Recommendation 17 Reliance on third parties .. 130. Recommendation 18 Internal controls and foreign branches and subsidiaries .. 131. Recommendation 19 Higher-risk countries .. 131. Recommendation 20 Reporting of suspicious transaction .. 132. Recommendation 21 Tipping-off and confidentiality .. 133. Recommendation 22 DNFBPs: Customer due diligence .. 133. Recommendation 23 DNFBPs: Other measures .. 134. Recommendation 24 Transparency and beneficial ownership of legal persons .. 135. Recommendation 25 Transparency and beneficial ownership of legal arrangements .. 142. Recommendation 26 Regulation and supervision of financial institutions .. 144. Recommendation 27 Powers of supervisors.

7 146. Recommendation 28 Regulation and supervision of DNFBPs .. 147. Recommendation 29 Financial intelligence units .. 148. Recommendation 30 Responsibilities of law enforcement and investigative authorities .. 150. Recommendation 31 Powers of law enforcement and investigative 151. Recommendation 32 Cash 153. Recommendation 33 Statistics .. 156. Recommendation 34 Guidance and feedback .. 157. Recommendation 35 Sanctions .. 158. Recommendation 36 International instruments .. 159. Recommendation 37 Mutual legal assistance .. 160. Recommendation 38 Mutual legal assistance: freezing and confiscation .. 163. Recommendation 39 Extradition .. 164. Recommendation 40 Other forms of international cooperation .. 166. Summary of Technical Compliance Key Deficiencies.

8 171. Glossary .. 177. 2 Anti-money laundering and counter -terrorist financing measures in cambodia - 2017 APG 2017. EXECUTIVE SUMMARY. EXECUTIVE SUMMARY. 1. This report provides a summary of the Anti-money laundering and countering the financing of terrorism (AML/CFT) measures in place in cambodia as at the date of the on-site visit (4 to 16. December 2016). It analyses the level of compliance with the FATF 40 Recommendations and the level of effectiveness of cambodia 's AML/CFT system, and provides recommendations on how the system could be strengthened. A. Key Findings cambodia has made significant improvements to its level of technical compliance with the FATF. Standards since its 2007 mutual evaluation, including in relation to important building block'.

9 FATF Recommendations (criminalisation of money laundering and terrorist financing , customer due diligence, record-keeping and suspicious transaction reporting). However, further improvements in technical compliance are necessary to make cambodia 's regime effective in the context of serious money laundering (ML) threats and vulnerabilities. cambodia finalised its first national risk assessment (NRA) in November 2016, immediately before the assessment team's on-site visit, and has developed some understanding of its ML and terrorist financing (TF) risks. The main risks faced by cambodia include ML from fraud/scams, corruption and bribery, drug trafficking, human trafficking, illegal logging, wildlife crime and goods and cash smuggling.

10 There are gaps in the scope of the NRA with respect to risks posed by legal persons, foreign trusts, the NPO sector and dealers in precious metals and stones. The NRA also did not consider the risks associated with illicit inflow and outflow of funds (both through movement of cash and trade-based money laundering ). In terms of ML vulnerabilities, there are higher risks associated with the casino and real estate sectors, as well as the banking sector. However, the ML risks associated with banking, remittance and lawyers are higher than as assessed by cambodia . To be more comprehensive, future assessments of ML/TF risks will require better data, case studies and feedback from stakeholders, within and outside government. cambodia has not yet sufficiently shared the results of its 2016 NRA with the private sector or within the public sector, nor has it implemented a comprehensive, risk-based approach to allocating resources and implementing measures to prevent or mitigate ML/TF.