‘Dirty money’ from corrupt Cambodian regime flowing into Australia

Millions of dollars of ‘dirty money’ appears to be flowing from the corrupt Cambodian regime into Australia because of lax anti-money laundering measures.

Cambodia's former prime minister Hun Sen. Picture: AFP

Millions of dollars in “dirty money” could be flowing from the corrupt Cambodian regime into Australia, an investigation by Transparency International Australia and advisory and investment firm KordaMentha has found, as the Albanese government announces a $166m boost to toughen anti-money laundering measures.

Regulatory gaps are making Australia an attractive destination for money laundering, particularly in Australia’s lucrative real estate sector, according to the KordaMentha report, with 118 properties bought by Cambodian nationals over a five year period from 2018/19 at a combined value of $110m.

More than half a billion dollars was transferred from Cambodia to Australia in 2020, KordaMentha reported, noting the Anti-Money Laundering and Counter-Terrorism Financing regime is not compliant with global standards or consistent with international peers.

The report says almost $6m of the total $516m detected was physically transported from Cambodia in hard cash.

The funds coming into Australia through regulated channels represented almost 1 per cent of Cambodia’s total GDP every year, with illicit transfers likely to account for much more.

Corruption in Cambodia continued to be a systemic issue, with members of the political elite and their families using their power and connections to generate personal wealth.

Former prime minister Hun Sen and his family have amassed a fortune estimated at up to $US1bn ($1.51bn) in a country that continues to struggle with poverty and where the average wage is $US190 per month.

The report points out that although Hun Sen has rejected claims he is involved in corruption, he reportedly owns a collection of watches worth $US13m.

The investigation comes as the Australian government pushes for amendments to extend obligations under the anti-money laundering legislation to real estate agents, lawyers, accountants, trust and company service providers, and dealers in precious metals and stones.

Those businesses would be required to report suspicious transactions to Australia’s anti-money laundering watchdog, Austrac, and might require them to determine the source of any funds held by wealthy and politically influential foreigners.

Attorney-General Mark Dreyfus has warned for some time that Australia is one of only five jurisdictions out of more than 200 that does not regulate these so-called “tranche two entities”, placing the nation at risk of being “grey-listed” by the Financial Action Task Force, the global money laundering and terrorist financing watchdog.

A grey listing by the FATF would be a damaging blow to Australia’s financial reputation and “could result in significant harm to our economy”, Mr Dreyfus said on Monday.

“As a result of the former government’s failure to act, Australia is falling short of meeting the standards required to combat criminal abuse of our financial system, and at increased risk of becoming a haven for money laundering,” he said.

The $166m budget allocation would enable Austrac to implement the new regime and support industries to meet their obligations.

The KordaMentha report agreed Australia’s failure to implement “tranche two” reforms made it “an attractive destination” for such funds moving illegally out of the Southeast Asian region. “The current Australian legislative regime does not sufficiently deter criminals from laundering money through Australia’s real estate and the broader economy,” it said.

Cambodia’s cash-based economy, growing on the back of industries such as casinos and logging, and with “a deeply politicised judicial system and reports of heightened corruption”, made money laundering hard to detect, the report said.

“Our research shows that ‘dirty money’ flowing across transnational borders, including from Cambodia, tends to move out of poorer countries and into the economies of wealthier nations, including Australia and the United States.”