The embassy also suspected that local non-profit AFESIP which operates shelters in Cambodia for victims of sex trafficking, and which Somaly Mam co-founded in 1996 had "mismanaged" its funding.
Labor Ministry officials said Friday that a draft law, which could be wrapped up soon, will help support union organization.
Phnom Penh Municipal Court this week continued hearings of a group of six political activists accused of inciting violence in a demonstration in July 2014.
Diplomats, including the US ambassador, have called on the government to make the draft public and to have more discussion before it is finalized.
About 700 people gathered in Siem Reap town to deliver a petition to the provincial government office, but they encountered about 100 police, who blocked them from entering the building.
The law should not impose excessive burdens on NGOs or “arbitrary elements” for registration, Silvio Gonzato, EU's top diplomat for human rights and democracy, told reporters Friday.
The draft law, which has been leaked but never publicly released, would give the government tight control of NGOs.
Critics worry laws to curb cyber-crime and govern telecommunications will clamp down on few opportunities for free speech.
Government officials say they are moving forward with a law to regulate the NGO sector, despite widespread fears such legislation could be used to punish dissent.
After canceling visit, Pyongyang announces it is capable of miniaturizing nuclear bomb to fit on missile.
The government continues to prepare a law on cyber-crimes and a law on telecommunications, but critics worry these will clamp down on one of the few places for true free speech in the country.
Cambodian immigration officials are awaiting the final go-ahead to permit four refugees from the Pacific Island of Nauru to move to Cambodia.