Source: 2003
Released by the Bureau for International Narcotics and Law Enforcement Affairs
The number of drug-related investigations, arrests and seizures in Cambodia increased in 2003. However, it is unclear whether this reflects increased effectiveness of law enforcement or simply an escalation in drug activity. The government is concerned at the increasing use of amphetamine-type stimulants (ATS) among middle-class youth. The government's principal counternarcotics body, the National Authority for Combating Drugs (NACD), cooperates closely with DEA, regional counterparts, and the United Nations Office on Drugs and Crime (UNODC). Cambodia is not a party to any of the major UN drug conventions but is studying all of them preparatory to becoming a party.
Cambodia has experienced a significant increase in recent years in the amount of amphetamine-type stimulants (ATS) transiting from the Golden Triangle. The UNODC estimates that 100,000 methamphetamine tablets enter Cambodia each day, some 75 percent of which are thought to be exported to Thailand. In addition, Cambodian authorities believe that foreign crime syndicates, working in concert with Cambodian nationals, have set up mobile laboratories within Cambodia that produce ATS for local distribution and export to Thailand. There is some evidence that precursor chemicals imported from Vietnam and Thailand for industrial use in Cambodia--including methanol, sulfuric acid, toluene, and ephedrine--are being diverted for illicit drug production.
Cambodia is not a producer of opiates or coca-based drugs; however, it serves as a transit route for heroin from Burma and Laos to international drug markets. The UNODC estimates that 10 to 20 kilograms of heroin are trafficked through Cambodia daily. The amount of heroin seized in the United States in recent years that is traceable to Cambodia is small.
There are no reliable figures available from either the Cambodian government or the UNODC on the current amount of marijuana produced in Cambodia, although some estimates place total production at more than 1,000 tons annually, most of which is cultivated for export. Much of the production occurs in Cambodia's northwest provinces and is reputed to be "contract cultivation" with Cambodians operating under the control or influence of foreign criminal syndicates. Analysis of seizures in recent years indicates that Europe is the major destination for Cambodian cannabis, with other destinations including the United States, Australia and Africa. Quantities coming to the United States are not sufficient to have a significant impact on the United States.
Policy Initiatives. Cambodian law enforcement agencies suffer from limited resources, lack of training, and poor coordination. The National Authority for Combating Drugs (NADC), which was reorganized in 1999, has the potential to become an effective policy and coordination unit for the government. With the backing of the Cambodian government, the UNODC launched in April 2001 a four-year $3.2 million project (revised in mid-2003 to $2 million) entitled "Strengthening the Secretariat of the National Authority for Combating Drugs (NADC) and the National Drug Control Program for Cambodia". This project seeks, inter alia, to establish the NACD as a functional government body able to undertake drug control planning, coordination, and operations.
In 2003, the NACD received a drug-testing laboratory, drug testing kits, vehicles, computers for data collection, and office equipment from the UN and other donors. In addition, the Royal Canadian Mounted Police (RCMP) donated 4 computers to establish a computer-based law enforcement training center in Battambang that became operational in September 2003. The German Agency for Technical Cooperation (GTZ) provided a technical assistant to work within the NACD for at least two years to help increase the organization's capacity and to develop demand reduction and treatment programs.
Accomplishments. In May 2003, the NACD held its first National Workshop on Drugs which focused on the need to increase drug awareness, counseling and treatment; the dangers of drug use, and the associated risk of HIV/AIDS transmission. The workshop resulted in 26 planned activities that have been incorporated into a 5-year master plan (2004-2008) focused on demand reduction, supply reduction, drug law enforcement, and expansion of international cooperation. A draft of the master plan is awaiting review by the National Assembly. During 2003, the Government of Cambodia (RGC) prepared the 1961, 1971 and 1988 UN Drug Conventions for review. It is expected that the three conventions will be ratified in the coming year.
Law Enforcement Efforts. In the first 11 months of 2003, 305 people were arrested for various drug-related offenses, compared with 240 arrests in 2002. Among those arrested in 2003 were 243 Cambodians, 44 Vietnamese, and 18 other nationals. Police arrested 22 people in heroin-related cases in 2003 and seized more than 46 kilograms of heroin, a considerable increase over 2002 seizures, which totaled just 1.9 kilograms. One particularly significant case occurred in October 2003 when police arrested seven people, including two high level military officers, and confiscated 35 kilograms of heroin, some precursor chemicals and drug-making equipment. Police arrested 297 people in methamphetamine-related cases in 2003 and seized over 210,000 methamphetamine pills. This is a significant increase over 2002 seizures, which totaled 130,000 pills. The NACD has drafted an amendment to the drug law that would stiffen sentences for drug traffickers.
Corruption. Corruption remains pervasive in Cambodia, making Cambodia highly vulnerable to penetration by drug traffickers and foreign crime syndicates. Senior Cambodian government officials assert that they want to combat trafficking and production; however, corruption, abysmally low salaries for civil servants, and an acute shortage of trained personnel severely limit sustained advances in effective law enforcement. The judicial system is weak, and there have been numerous cases of defendants in important criminal cases having charges against them dropped after paying relatively small fines.
Agreements and Treaties. Cambodia has signed but not ratified the 1961 UN Convention on Narcotic Drugs. It has not signed the 1971 UN Convention on Psychotropic Substances or the 1988 UN Drug Convention. However, the RGC has prepared all three UN Drug Conventions for National Assembly review and it is expected that the conventions will be ratified in the coming year.
Cambodia has no extradition or mutual legal assistance treaty with the United States, but the Cambodian government has cooperated with U.S. law enforcement agencies regularly in the past by rendering or deporting persons wanted in the United States for crimes upon request and presentation of an appropriate warrant. The U.S. Embassy in Phnom Penh has been assured that such cooperation will continue. The Cambodian government concluded an extradition treaty with Thailand in 1998.
Cultivation/Production. During 2003, over six hectares of cannabis plantations were destroyed and 66 growers were instructed not to plant marijuana.
Drug Flow/Transit. Cambodia shares porous borders with Thailand, Laos, and Vietnam and lies near the major trafficking routes for Southeast Asian heroin. The UNODC has reported that drugs enter Cambodia via the northern border. Some heroin and marijuana are believed to enter and exit Cambodia via locations along the gulf--including the deep water port of Sihanoukville--as well as the river port of Phnom Penh. The country's main international airport, Pochentong International Airport in Phnom Penh, and the regional airport in Siem Riep suffer from lax customs and immigration controls. Some illegal narcotics are believed to transit these airports en route to foreign destinations.
Domestic Programs (Demand Reduction). With the assistance of the UNODC, the World Health Organization (WHO), the Japanese International Cooperation Agency (JICA), and NGOs, the NACD is attempting to boost awareness about drug abuse among the populace--especially Cambodian youth--through the use of pamphlets, posters, and public service announcements. The NACD and the National Aids Authority are establishing a working group to focus on harm reduction strategies.
The government has sought outside assistance for programs on drug treatment and rehabilitation centers for drug addicts and vocational training centers for severe addicts. Several national and international NGOs operate in Cambodia with mandates that directly or indirectly relate to drug control issues, including harm reduction and demand reduction. A Japanese-funded treatment and rehabilitation project is being developed to establish centers in Phnom Penh, Battambang and Poipet to provide services to addicts and to help develop the capacity of health and human services to deal effectively with drug treatment issues. The project will link Cambodia with international treatment groups, including the National Institute for Drug Abuse (NIDA).
Cambodia is a fragile, flawed democracy. For the first time in over three decades, there has been relative political stability since the formation of a democratically-elected coalition government and National Assembly in 1998, which were followed in 2003 by national elections that were relatively free of violence. However, Cambodia is plagued by many of the institutional weaknesses that are common to the world's most vulnerable developing countries. The challenges for Cambodia include: nurturing the growth of democratic institutions and the protection of human rights; providing humanitarian assistance and promoting sound economic growth policies to alleviate the debilitating poverty that engenders corruption; and building human and institutional capacity in law enforcement sectors to enable the government to deal more effectively with narcotics traffickers.
Bilateral Cooperation. U.S.-Cambodia bilateral counternarcotics cooperation is hampered by restrictions on official U.S. assistance to the central government of Cambodia that have remained in place since the political disturbances of 1997. Cambodia regularly hosts visits from DEA personnel based in Bangkok, and Cambodian authorities cooperate actively with DEA. U.S. officials raise narcotics-related issues regularly with Cambodian counterparts at all levels, up to and including the Prime Minister.
The Road Ahead. Cambodia is making progress toward more effective institutional law enforcement against illegal narcotics trafficking; however, its capacity to implement an effective, systematic approach to counternarcotics operations remains low. Efforts to develop effective counternarcotics strategies are further limited by the lack of comprehensive data on the extent and nature of illicit drug use in Cambodia. The UNODC has proposed a survey to collect such data.
Instruction for mid-level Cambodia law enforcement officers at the International Law Enforcement Academy in Bangkok (ILEA) has partially addressed Cambodia's dire training needs. The ILEA training has produced a small, but growing cadre of Cambodian officials who are becoming familiar with modern police techniques including drug identification, coordination of operations and intelligence gathering. However, after training they return to an environment of scarce resources and pervasive corruption. This situation will require a long period of sustained investment to change the culture.
Cambodia is vulnerable to money laundering. It is a transit country for heroin trafficking from the Golden Triangle. It has a cash-based economy (heavily dollarized), little control over its borders and suffers from widespread corruption, including among officials at the highest levels of government. The National Bank of Cambodia (NBC) has made strides in recent years in beginning to regulate the small banking sector but other nonbank financial institutions, such as casinos, remain outside its jurisdiction. Draft legislation being developed in cooperation with the IMF would go a long way towards setting up the sort of comprehensive financial oversight that does not now exist in Cambodia. But once the legislation is in place, the government would have to meet the challenge of enforcing that framework.
Cambodia is not an important regional financial center. Its banking sector is small, with thirteen general commercial banks and four specialized commercial banks. The National Bank of Cambodia (NBC) has oversight responsibility for the banking sector and, with relatively small numbers of transactions and deposits in the system, believes it exercises comprehensive oversight. There is no indication that the banking financial institutions themselves are engaged in money laundering. With relative political stability and the gradual return of normalcy in Cambodia after decades of war and instability, deposits continue to rise and the economy shows some signs of financial deepening.
The NBC does acknowledge that money laundering occurs in Cambodia. The NBC says that some of this activity is linked to proceeds from narcotics and smuggling. There is a significant black market in Cambodia for smuggled goods, but little to no evidence that smuggling is funded primarily narcotics proceeds. More likely, the majority of smuggling involves more mundane items transported to circumvent official duties and taxes. There is, for example, anecdotal evidence of significant smuggling of fuel, alcohol and cigarettes.
Government officials and their private sector business associates control the smuggling and thus its proceeds. Given the cash-based nature of the economy in Cambodia, there is little need to funnel cash proceeds through the banking system or other financial institutions. Cash can readily be converted into land, housing, luxury goods or other forms of property. It is also relatively easy to hand-carry cash into and out of Cambodia.
The NBC does not have the authority to apply anti-money laundering controls to nonbanking financial institutions such as casinos or other intermediaries, such as lawyers or accountants. The NBC believes that if significant money laundering activity were occurring through casinos in Cambodia, it would be conducted via cash, carried in and out of the country by hand. The NBC is confident it would learn of any large amounts wired through the banking system for such purposes.
In 1996, Cambodia criminalized money laundering related to narcotics trafficking through the Law on Drug Control. In 1999, the government also passed the Law on Banking and Financial Institutions. These two laws provide the legal basis for the NBC to regulate the financial sector. The NBC also uses the authority of these laws to issue and enforce new regulations. The most recent regulation, dated October 21, 2002, is specifically aimed at money laundering. The decree established standardized procedures for the identification of money laundering at banking and financial institutions. In addition to the NBC, the ministries of Economy and Finance, Interior and Justice also are involved in anti-money laundering matters. An NBC circular dated October 2003 was issued to assist in identifying suspicious transactions and contains helpful examples.
The 1996 and 1999 laws include provisions for customer identification, suspicious transaction reporting, and the creation of the Anti-Money Laundering Commission (AMLC) under the Prime Ministers Office. The composition and functions of the AMLC have not been fully promulgated through additional decrees, and the NBC performs many of the AMLCs intended functions.
The 1999 Law on Banking and Financial Institutions imposed new capital requirements on financial institutions, increasing them from $5 million to $13.5 million. Commercial banks must also maintain 20 percent of their capital on deposit with the NBC as reserves.
Cambodia has assisted neighboring countries with money laundering investigations. Cambodia is not a party to the 1988 UN Drug Convention. On November 11, 2001, Cambodia signed the UN Convention against Transnational Organized Crime.
A Working Group of the National Anti-Drug Committee was formed on November 26, 2003 to prepare draft anti-money laundering legislation and an action plan to fight money laundering and the financing of terrorism. The NBC is the main contributor in this process with the other relevant agencies comprising the Ministries of Interior, Justice, Economy and Finance, and Foreign Affairs. The draft legislation envisions including preventive obligations related to customer due diligence, record keeping, internal controls, reporting of suspicious transactions and establishing an independent Financial Intelligence Unit (FIU) to receive, analyze and disseminate information and to supervise compliance with all relevant laws and regulations.
Among other priority actions, the Cambodian governments draft legislation and action plan to fight money laundering and the financing of terrorism envision the following: criminalizing the financing of terrorism, ratification of relevant UN conventions, regulating and controlling NGOs, reducing the use of cash and encouraging the use of the formal banking system for financial transactions, enhancing the effectiveness of bank supervision, ensuring the use of national ID cards as official documents for customer identification, and regulating casinos and the gambling industry. Although the NBC regularly audits individual banks to ensure compliance with laws and regulations, there were no arrests for money laundering in 2003.
While Cambodia is drafting legislation that would specifically address terrorism financing, it currently does not have any laws that do so. It does cooperate with the U.S. by circulating to financial institutions the list of individuals and entities included on the UN 1267 sanctions committee consolidated list. The NBC reviews the banks for compliance in maintaining this list and reporting any related activity. To date, there have been no reports of terrorist financing using the Cambodian banking sector.
Should sanctioned individuals or entities be discovered using a financial institution in Cambodia, the NBC has the legal authority to freeze the assets but not to seize them.
Prior to the enactment of new anti-money laundering legislation, the Royal Government of Cambodia should implement extant anti-money laundering legislation. New legislation should cover all serious crimes including the financing of terrorism and provide for the creation of a comprehensive anti-money laundering regime. Cambodia should become a party to the UN International Convention for the Suppression of the Financing of Terrorism