Cambodia third in global index of vulnerability to financial crime

Cambodia third in global index of vulnerability to financial crime

Phnom Penh Post Weekend | 30 August 2014

Only Afghanistan and Iran fare worse on list of countries ranked from most to least susceptible to money laundering

Corruption, a weak judiciary and lack of transparency across the finance sector has led to Cambodia retaining a third-place ranking in a global index that measures susceptibility to money laundering and terrorist funding.

The 2014 edition of the Basel Anti-Money Laundering Index, compiled by the Switzerland-based Basel Institute on Governance, put Cambodia behind only Afghanistan and Iran on a list of 162 countries ranked from most to least susceptible.

Assessed on a risk scale from zero to 10, using data from sources including the World Bank and the World Economic Forum, Cambodia scored 8.39. Finland was assessed to be the least risky country with a rating of 2.51.

Cambodia has not improved on its third-place ranking since the index was developed in 2012.

Preap Kol, executive director of Transparency International Cambodia, said yesterday that a culture of secrecy in the banking sector had combined with the country’s endemic corruption to form an “explosive cocktail” that exposed Cambodia to money laundering.

“While the government has timidly attempted to police the financial sector, the country still lacks adequate legal frameworks and mechanisms for accountability and transparency,” Kol said. “This lack of regulation can only be exploited by money-launderers.”

Kol said Cambodia’s rapid growth without the effective implementation of the anti-money laundering law (AML) left the Kingdom increasingly vulnerable to financial crime.

“A law on access to information is also much needed, as it would allow us to access and monitor financial information,” he said.

But ANZ Royal Bank CEO Grant Knuckey said Cambodia’s standing in the index was not an accurate account of the banking climate, where improvements aimed at stamping out money laundering have been instituted.

“This is not a fair assessment of the banking industry itself, as the frameworks put in place by the National Bank of Cambodia for suspicious transaction reporting and the role of the FIU (Financial Intelligence Unit) have improved monitoring and the degree of oversight of AML across the banking sector,” Knuckey said.

Knuckey said the results of the index appear to be based on a number of broader factors such as perceived corruption and general transparency that may not capture the improvements being made specifically on AML. 

As for ANZ Royal, it has tight controls to ensure AML standards are upheld, Knuckey added.

“These work both at a customer on-boarding stage and at an individual transaction level. 

The integrity of these processes is also regularly tested and audited,” he said via email.

The National Bank of Cambodia could not be reached for comment yesterday.