US issues business warning against Cambodian casinos

By Ethan Anderson Updated
US issues business warning against Cambodian casinos

American companies and investors have been told to steer clear of Cambodian casinos by the US government, for fears of corruption and risky business.

A joint business advisory warning from the US State Department, US Treasury Department and the US Department of Commerce highlighted “growing systemic corruption” in the country.

It warned that US companies place themselves at risk of exposure to “entities and sectors potentially involved in human rights abuses, criminal activities and corrupt business practices” by investing in Cambodian casinos.

“The deteriorating human rights situation in Cambodia, combined with increased and widespread corruption in the financial, real estate, casinos and infrastructure development sectors, pose significant challenges in Cambodia for investors,” the warning read.

Sihanoukville becomes casino hotbed thanks to Chinese investment

Cambodia’s casino sector has exploded in recent years, largely thanks to Chinese investment in the country.

Many of the new casinos are in Sihanoukville, on the country’s west coast.

Formerly a sleepy seaside town, Sihanoukville has been transformed into an adult playground for Chinese tourists.

More than 100 casinos and hotel resorts have sprung up in the surrounding province and more than 70 in the city in just a matter of years.

The sector has become a hotbed for money laundering and human trafficking, according to the US government.

“The increase in casinos over the past decade outpaced regulators’ capacity to monitor and police these establishments, attracting organised crime elements that invest in casinos and use them to launder money,” the warning read.

“In addition to Cambodia’s weak anti-money laundering and counter-terrorist financing regime, vulnerabilities include a largely cash-based, dollarised economy and porous borders.

Both legal and illicit transactions, regardless of size, are frequently conducted outside of regulated financial institutions.”

The joint warnings highlighted, in particular, the involvement of Wan Kuok Koi, aka “Broken Tooth”, in Cambodian casino industry.

Wan is widely reputed to be the leader of the Hong Kong-based 14K, the second-largest triad in the world.

The 14K engage in drug trafficking, illegal gambling, racketeering, human trafficking and a range of other criminal activities, according to the US government.

Wan was sanctioned by the US Treasury in December 2020 over concerns he was expanding his criminal empire throughout Southeast Asia.

The BAW comes 24 hours after the US Treasury imposed sanctions on two senior figures in the Cambodian military.

The Treasury said it would freeze any US assets and criminalise transactions for senior defence ministry official Chau Phirun and naval commander Tea Vinh over alleged corruption linked to the Ream Naval Base in the Gulf of Thailand.

In October, the Centre for Strategic and International Studies claimed new facilities were being built at the base.

That was allegedly in readiness for a Chinese military presence in the country.

Cambodia dismissed the sanctions as “politically motivated”.

Chinese authorities are coming down hard on online gambling and there are rumblings that similar things are happening in Cambodia.

Online gaming booms in Cambodia

It has become common knowledge that online gambling in Cambodia, whose websites feature a myriad of live casino games as well as slot machines, roulette, sports betting, lottery and poker, persisted in the shadows despite a government ban on operations that came into force on January 1, 2020.

Recent news reports of crackdowns on the activity of nondescript premises in Phnom Penh including one in Daun Penh district and a massive raid by the Military Police at a condominium tower in Boeung Keng Kang I commune – with the arrests of more than 100 foreign nationals and grim details of alleged human trafficking and abuses, only confirmed suspicions of its veiled continuity all these years.

In March 2021, the Macau-based Asian Gaming Brief wrote an editorial quoting industry expert Ben Lee, managing director of iGamix Management and Consulting, who expressed shock over the sector’s activity in Sihanoukville.

“We just completed a site survey in Cambodia for a client…the act that online gambling is coming back is a surprise,” Lee said.

In a text message, he alleged that the area around the Golden Lion Circle, an iconic roundabout in the centre of coastal city Sihanoukville, was rife with such activities.

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