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Assembly Passes Illicit Money Legislation as Lawmakers Manage to Politicize Draft Laws

FILE: A U.S. 100 dollar bill featuring Benjamin Franklin is shown with a Chinese 100 yuan banknote with the late Chinese Chairman Mao Zedong, Jan. 21, 2016.
FILE: A U.S. 100 dollar bill featuring Benjamin Franklin is shown with a Chinese 100 yuan banknote with the late Chinese Chairman Mao Zedong, Jan. 21, 2016.

The National Assembly passed two legislations on Thursday to tackle money laundering, terror funding and the financing of weapons of mass destruction, a month after the European Commission added Cambodia as a “high-risk third country” for illicit money flows.

The assembly, composed exclusively of Cambodian People’s Party lawmakers, voted unanimously to pass both legislations without any amendments proposed during the session. The bills were passed by 119 lawmakers, in the absence of Prime Minister Hun Sen.

“For Cambodia, we had not fulfilled all conditions required by this organization [APGML]. Sometime our efforts were recognized while some other time we were considered deficient that our rating turned grey,” Sar Kheng told the parliament. “This is the problem.”

Sar Kheng was referring to the Asia Pacific Group on Money Laundering, which is part of the global money laundering body Financial Actions Task Force (FATF). The deputy prime minister said the law would address weaknesses raised by the regional group’s assessments into the Kingdom’s anti-money laundering attempts.

Last February, the FATF downgraded Cambodia to their “grey list” for its failure to prevent the flow of illicit money both into and out of the country, with such a classification affecting the country’s ability to access international financial systems.

The draft laws give more power to governmental bodies, including the central bank’s Financial Intelligence Unit and relevant ministries, and to the courts to freeze, obstruct, and confiscate assets suspected or linked to money laundering or the financing of terror activities and weapons of mass destruction proliferation.

Money laundering crimes will carry up to five years in prison and 20 years for terror financing, with convictions for WMD proliferation carrying up to 15 years in jail.

The draft gives the government jurisdiction over money flows from financial institutions, real estate firms, non-governmental organizations and “politically-involved” individuals.

It was the inclusion of this last category of individuals, those who are “politically involved,” raised eyebrows among experts, with National Assembly members wasting little time to reveal their intentions with the law.

Battambang lawmaker Chheang Vun said the laws should be used to safeguard the government against “revolt,” “economic terrorism” and “political terrorism” by the outlawed Cambodia National Rescue Party to overthrow the regime.

“Financing of political plots to seize power using non-electoral means is a serious act of terror that shall receive zero tolerance no matter which country you want to talk about,” Chheang Vun said.

Banteay Meanchey CPP lawmaker Serey Kosal chose to question the “political intentions” of international assessments made by the European Commission and FATF, adding that there were a lot of domestic and foreign “worms” who were constantly attacking the government.

“They could be opportunists,” said Serey Kosal animatedly. “After we pass these laws we somehow are still in the grey [list] and it can turn black when the elections are near. We have to be mindful about hostile [forces].”

Serey Kosal also made a thinly-veiled reference to former opposition leader Sam Rainsy’s attempted return to the country last November, for which Serey Kosal said supporters had raised $300,000 to finance the event. The lawmaker alleged this was illicit money and should be targeted with the new laws.

Daniel Ferrie, a spokesperson for the banking and financial services department at the European Commission, said the bloc has reevaluated its own lists based on FATF’s view of Cambodia’s “strategic deficiencies.” He did welcome the new legislations.

“We welcome any progress in implementing measures foreseen by the FATF action plan,” Daniel Ferrie said. “As a FATF member, the Commission will monitor progress made by Cambodia in implementing the FATF action plan. Delisting by FATF is a pre-requisite for being removed from the EU list.”

Pech Pisey, executive director of Transparency International Cambodia, said the drafting and legislating process lacked inclusive consultations from relevant stakeholders, including the academia and the civil society organizations, adding that he had not seen the draft laws since his request for their contents was turned down by the government.

“If there was a broader and more inclusive participation to provide inputs that would bring betterment because we would be able to provide our constructive inputs to make sure it would be up to international standards deemed acceptable by both the EU and the FATF,” Pech Pisey said.

The law will head to the Senate, again exclusively controlled by the CPP, after which it will head to the King for promulgation.