Strengthening Business Integrity Through AML/CFT Compliance in Cambodia
The Importance of Compliance with Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) Regulations
In today’s fast-evolving financial landscape, the implementation of robust Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) regulations has never been more critical. These regulations are meticulously crafted to prevent and combat money laundering and terrorism financing through supervision, deterrence, prevention, suppression, and eradication efforts. Adherence to AML/CFT regulations is not just a legal obligation but a cornerstone for safeguarding your business’s reputation and operational integrity.
Understanding AML/CFT Requirements
The Cambodian Law on Money Laundering and Combating the Financing of Terrorism 2020 (“AML/CFT Law 2020”) outlines a series of comprehensive requirements. Compliance with these regulations is mandatory for most businesses that process financial transactions. Failure to comply with the AML/CFT Law 2020 may result in administrative sanctions, substantial fines, and even criminal charges. Therefore, it is imperative to establish compliant internal policies or seek expert advice to ensure full compliance.
Upon establishment, businesses must ensure adherence not only to the AML/CFT Law 2020 but also to the Law on Combating the Financing of Proliferation of Weapons of Mass Destruction 2020, as well as relevant Prakas, Directives, and Guidelines.
Key Regulators in AML/CFT
In Cambodia, regulators such as the National Bank of Cambodia and the Cambodia Financial Intelligence Unit (CAFIU) are central to setting and enforcing AML/CFT standards. Navigating these regulatory frameworks can be complex, but our law firm is here to assist. We offer a tailored AML/CFT compliance service designed to help regulated businesses effectively manage and control their compliance obligations.
Industries Impacted by AML/CFT Regulations
AML regulations extend beyond financial institutions, affecting businesses that handle large transactions or engage with high-risk customers. The following industries are particularly impacted:
- Banks and Microfinance Institutions: Commercial banks and microfinance providers.
- Insurance Companies: Including life insurance, general insurance, reinsurance, and other insurance providers.
- Securities and Capital Markets: Securities underwriters, brokers, and dealers.
- Non-Bank Financial Institutions: Leasing companies, remittance services, luxury goods dealers, real estate agents, investment companies, casinos, gambling institutions, and trust companies.
- Legal and Accounting Firms: Professionals managing client funds or providing financial advisory services.
Our firm understands the unique challenges faced by each of these sectors and offers bespoke solutions to address specific compliance requirements. We work closely with our clients to develop and implement robust AML/CFT programs.
Maintaining Compliance: Key Steps
To ensure compliance, businesses must undertake the following:
- Appoint a Money Laundering Compliance Officer (in accordance with Article 16 of the AML/CFT Law).
- Conduct Client Due Diligence (CDD) on all clients (as per Article 8 of the AML/CFT Law).
- Apply Enhanced CDD where necessary (Article 8).
- Report suspicious activities and certain transactions to CAFIU (Article 12).
- Maintain accurate records to demonstrate compliance (Article 11).
Based on our extensive experience, a strong AML compliance program should incorporate the following best practices:
- Appoint a specialized compliance officer with in-depth knowledge of your sector’s risks and the applicable regulatory environment.
- Develop clear internal policies that outline AML procedures, assign specific roles and responsibilities, and establish adherence protocols.
- Invest in ongoing staff training ensuring your team is continuously educated on the latest AML regulations and reporting procedures.
- Implement continuous monitoring and conduct regular assessments to ensure the ongoing effectiveness of your AML compliance program.
If you have any questions regarding AML/CFT compliance or would like to discuss how we can assist your business, please reach out to one of our contributing authors.
Talk about to our team today. If you have any queries on the above, please feel free to reach out to any of the contributing authors below:
Contributing Authors:
Panha PISETH
Partner | Head of Compliance
+855 12 738 876
Panharith LONG
Associate
+855 12 252 189
Sopheareach PRUM
Paralegal
+855 81 886 274
prum.sopheareach@soksiphana.com
[Disclaimer: The information provided herein is for the reader information only and is not intended to offer any form of legal advice. Always obtain formal legal advice from qualified legal counsel with respect to this matter]
