Cambodia Overhauls Customs System to Counter Trade-Based Money Laundering Ahead of 2030 Transition

Cambodia’s General Department of Customs and Excise is in the midst of an extensive institutional transformation aimed at shutting down trade-based money laundering risks that pose a serious threat to the country’s fiscal stability. With technical support from the International Monetary Fund, the government is rolling out six separate revenue-mobilisation measures designed to strengthen its ability to fund public services without relying on external assistance. Central to this effort is the replacement of the current Customs Law, which dates back to 2007, with a modern legislative framework capable of identifying and responding to increasingly sophisticated financial crimes embedded within global supply chains. These reforms come at a critical moment as Cambodia prepares to graduate from Least Developed Country status by 2030 and anticipates a corresponding decline in foreign aid, making the protection of domestic revenue streams a top national priority.

A key focus of the overhaul is the integration of advanced investigative methods to address the growing complexity of trade-based money laundering, a form of financial crime that uses international commerce to conceal the origins and movement of illicit funds. These schemes often rely on falsified invoices, misdeclared goods, and manipulated pricing structures. The International Monetary Fund has warned that practices such as over-invoicing and under-invoicing undermine the integrity of customs revenue collection while distorting national trade statistics. In response, the General Department of Customs and Excise is developing practical audit tools and risk-based methodologies that allow officials to target high-risk transactions more effectively, closing long-standing loopholes that have enabled criminal networks to move value across borders with minimal detection. Beyond domestic enforcement, these efforts are intended to align Cambodia’s customs regime with international norms, offering predictability and confidence to legitimate trading partners.

Modern supply chains now span multiple jurisdictions and rely on complex documentation, requiring customs officers to go beyond traditional paper-based reviews. Specialized training programs are being introduced to help personnel identify inconsistencies that point to non-cash value transfers, including multiple invoicing, circular trade patterns, and shipments of non-existent goods. Because trade-based money laundering often overlaps with other forms of commercial fraud, the new enforcement strategy emphasizes integrated compliance and comprehensive risk profiling. By tightening oversight and securing customs revenues, Cambodia aims to strengthen its revenue-to-GDP ratio, estimated at 14.9 percent for the current year. Officials stress that sustaining this progress will depend on maintaining reform momentum and ensuring that every trade transaction entering or leaving the country is transparent, verifiable, and accurately reported.

Inter-agency cooperation forms another pillar of the reform agenda. The General Department of Customs and Excise is hosting multi-agency workshops designed to enhance intelligence sharing with the Financial Intelligence Unit, the National Bank of Cambodia, and national law enforcement bodies. This coordinated approach is essential because trade-based money laundering often circumvents conventional banking surveillance mechanisms. When illicit funds are moved through trade transactions, the evidence is frequently buried within otherwise legitimate shipping and customs documentation, making it difficult for any single agency to detect the full pattern of abuse. By cross-referencing customs declarations with financial transaction data, authorities are working toward a system capable of identifying suspicious activity in near real time.

This collaborative framework also extends to special economic zones and Cambodia’s rapidly expanding e-commerce sector. As digital trade accelerates, the surge in small parcels and cross-border shipments introduces new challenges for risk assessment and cargo review. The International Monetary Fund is providing technical assistance to ensure that digital clearance systems can process high volumes efficiently without weakening security controls. By aligning these systems with World Customs Organisation standards, Cambodian authorities are building an environment that facilitates legitimate trade while making it far more difficult for criminal actors to exploit digital marketplaces for money laundering. The objective is a regulatory structure that is clear, functional, and adaptable to evolving criminal tactics.

Legal modernization is expected to anchor these reforms over the long term. The planned enactment of a new Customs Law in 2026 is intended to replace the aging 2007 legislation, which officials increasingly view as inadequate for confronting modern trade-based financial crimes. Draft versions of the law have already undergone internal technical review and are now subject to external assessments to ensure compliance with international best practices. Alongside legislative reform, the post-clearance audit process is being strengthened as a critical secondary safeguard. Enhancements to the Automated System for Customs Data will allow authorities to deploy more advanced analytical tools to flag high-risk shipments before and after clearance.

Post-clearance audits play a vital role in uncovering long-term and systemic abuses that may not be visible during routine inspections. This includes detecting persistent under-invoicing schemes, where goods are consistently undervalued to reduce tax obligations while excess value is transferred through informal channels. IMF technical assistance is helping ensure that these audits are both thorough and balanced, deterring fraud without placing unnecessary burdens on compliant businesses. As Cambodia works toward its 2030 development objectives, the capacity to collect accurate and fair revenue from international trade is expected to underpin fiscal resilience and the financing of public infrastructure and social services.

The drive to eliminate trade-based money laundering is closely tied to Cambodia’s broader macroeconomic stability and its standing within the global financial system. Demonstrating the ability to combat illicit financial flows enhances investor confidence and strengthens the country’s appeal for foreign direct investment. The involvement of international experts, including economists such as Cindy Negus, highlights the global significance of these reforms. By laying out a clear implementation timeline, Cambodian authorities are signaling their commitment to transparency and accountability at a time when preferential trade arrangements are diminishing and regulatory credibility is becoming a competitive asset.

Ultimately, these comprehensive reforms are intended to secure national revenues and ensure that the government can meet its development goals on a self-reliant basis. By targeting trade-based money laundering, Cambodia is safeguarding its financial system against distortion and promoting a fair distribution of trade benefits across the economy. The transition toward a more automated, data-driven, and legally robust customs framework represents a major step in the country’s economic maturation. As new laws and systems take effect throughout 2026, the combined efforts of Cambodian authorities and their international partners are expected to establish a more transparent and resilient gateway for global trade, reinforcing the nation’s path toward long-term prosperity and fiscal independence.

By fLEXI tEAM