TESS: Country Report Summary – Cambodia

Country Report Summary

Cambodia

Anti Money Laundering

FATF status

Cambodia is no longer on the FATF List of Countries that have been identified as having strategic AML deficiencies.

Latest FATF Statement - 24 February 2023

The FATF welcomes Cambodia’s significant progress in improving its AML/CFT regime. Cambodia has strengthened the effectiveness of its AML/CFT regime to meet the commitments in its action plan regarding the strategic deficiencies that the FATF identified in February 2019 related to improvements in the legal framework for international cooperation and preventive measures, risk-based supervision of FIs and DNFBPs, improving the quality and quantity of FIU disseminations, increasing and improving investigation and prosecution of ML and asset confiscation and establishing and implementing a legal framework for PF TFS. Cambodia is therefore no longer subject to the FATF’s increased monitoring process.

Cambodia should continue to work with APG to sustain its improvements in its AML/CFT system.

European Commission List of Countries with Strategic Deficiencies in their AML/CFT Regimes

Cambodia is no longer on the EU Commission list of High Risk jurisdictions which have been identified as having strategic deficiencies in their anti-money laundering and countering the financing of terrorism (AML/CFT) regimes that pose significant threats to the financial system of the European Union (‘high-risk third countries’).

Compliance with FATF Recommendations

The last follow-up Mutual Evaluation relating to the implementation of anti-money laundering and counter-terrorist financing standards in Cambodia was undertaken in 2023. According to that Evaluation, Cambodia was deemed Compliant for 2 and Largely Compliant for 31 of the FATF 40 Recommendations. It remains Highly Effective for 0 and Substantially Effective for 1 of the Effectiveness & Technical Compliance ratings.

Sanctions

There are no international sanctions currently in force against this country.

Bribery & Corruption

Rating: 0 (bad) - 100 (good)

Transparency International Corruption Index = 21

World Bank: Control of Corruption Percentile Rank = 9

Corruption in Cambodia is pervasive, significantly hindering foreign investment due to a lack of transparency and enforcement of anti-corruption laws. Despite the establishment of the Anti-Corruption Unit and the adoption of the Anti-Corruption Law in 2010, enforcement remains weak, with businesses often resorting to informal payments to navigate bureaucratic processes. The country ranks poorly on the Corruption Perception Index, indicating a challenging environment for both local and foreign investors.

Economy

Cambodia’s economy experienced a growth of 5.4 percent in GDP in 2023, with a projected increase to 5.8 percent in 2024, driven primarily by a rebound in tourism and manufacturing sectors. Despite the government’s efforts to attract foreign direct investment through various incentives, challenges such as systemic corruption, inadequate infrastructure, and a limited skilled labor supply have hindered significant U.S. investment compared to regional neighbors.

Cambodia has a liberal foreign investment regime, allowing 100 percent foreign ownership in most sectors and offering various incentives such as corporate tax holidays and duty-free imports for capital goods. However, challenges such as systemic corruption, inadequate infrastructure, and a lack of skilled labor have hindered significant U.S. investment compared to regional neighbors. Despite these issues, the country has seen substantial Chinese foreign direct investment, particularly in infrastructure projects, which accounted for approximately 90 percent of total FDI inflows in 2023.