Cambodia Vulnerable to Money Laundering

Cambodia is the third most at-risk country to money laundering and terrorist financing in the world, according to a global index released last month, trailing only Iran and Afghanistan.

The Anti-Money Laundering Index, first published by the Swiss-based Basel Institute on Governance in 2012, assigns the 162 countries surveyed this year a score between 0 and 10, with a higher score indicating greater risk.

For the third year in a row, Cambodia was deemed the third most vulnerable to money laundering worldwide, with a score of 8.39, behind only Afghanistan (8.53) and Iran (8.56).

Burma was the only other Southeast Asian country to score in the top 10, with a score of 7.89. Finland was deemed the least at-risk country for money laundering, scoring 2.51. With a score of 5.30, the U.S. ranked 53rd.

While the most at-risk countries have weak systems in place to counter laundering and terrorist financing, a report accompanying the index explains, “other factors are also common, including high rates of perceived corruption, a lack of judicial strength, a lack of resources to control the financial system, and a lack of public and financial transparency.”

The Basel Institute measures corruption, political risk and money laundering, and financial and political transparency, using 14 sources —including the World Bank, U.S. State Department and Transparency International—to come up with an overall score for each country.

The institute emphasized that the index only ranks countries’ vulnerability to laundering, and not how much laundering actually occurs. The index also does not include a breakdown of each country’s performance.

In 2007, the government passed a law on money laundering and terrorist financing and the following year established the Financial Intelligence Unit within the National Bank of Cambodia.

The U.S. State Department’s latest annual global report on financial crime, however, found that Cambodia’s cash-based and dollarized economy left the country particularly vulnerable to money laundering.

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