US State Department warns against making investments in Cambodian casinos

The US Department of Commerce, US Department of State, and US Department of the Treasury have jointly issued an advisory warning American businesses operating in Cambodia, or considering doing so, against any interactions with certain entities and sectors of concern.

Illicit financing activities and interactions in Cambodia with entities involved in the trafficking and abuse of wildlife, people, and narcotics are highlighted by the advisory. US companies are particularly vulnerable to these two areas. Sihanoukville casinos are also closely linked to them. Other areas of concern include the infrastructure, real estate, and financial sectors.

The advisory describes a 263% jump in Cambodian casino licenses from 2014 to 2019. It also points out that regulators have "outpaced their capacity to police these establishments," attracting organized crime elements which invest in and use casinos to launder money.

The warning adds, "Recognizing these vulnerabilities related to new casinos and other commercial enterprises in Preah Sihanouk province, which hosts most of the casinos, the government established an inter-ministerial task force to investigate alleged money laundering and human trafficking. The task force has not issued a report on its findings, as of October 2021."

The Financial Action Task Force (FATF) graylisted Cambodia in 2019 because of deficiencies in its programs. However, the advisory states that the Financial Action Task Force is an intergovernmental organization responsible for leading global anti-money laundering and counterterrorism financing efforts (AML/CFT).

It advises US businesses to take into account the risks of human trafficking as well as child exploitation, especially when investing in the Cambodian tourism sector.

It stated, "Rampant development in Sihanoukville, the site of dozens of new casinos built in the last five years, raises concerns of child exploitation and trafficking. "Cambodia's 2020 ban on online gambling and the subsequent shuttering of many casinos and other entertainment establishments have reduced such trafficking, though the problem persists and will likely grow as the Cambodian economy recovers from COVID-19."

The government is unable to deal effectively with child labor, and is overwhelmed in Preah Sihanouk, according to the advisory. This leads to an increase in child laborers at construction sites as well entertainment venues, including hotels, casinos, and karaoke clubs.

Although the advisory does not name specific businesses or businesses, it does identify two individuals that warrant special attention. They are 14K identity Wan Kuok Koi and North Korean official Kim Chol Sok, who are both described as criminal elements in Cambodia's casino sector.

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