FinCEN Restricts Dealings with Cambodia-Based Financial Group

The Financial Crimes Enforcement Network ("FinCEN") finalized a rule designating a Cambodia-based financial group as a "foreign financial institution of primary money laundering concern."

Under the rule, FinCEN imposed special measures under Section 311 of the USA PATRIOT Act, prohibiting U.S. financial institutions from maintaining correspondent accounts for the designated entity. FinCEN noted the rule bars covered institutions—including banks, broker-dealers, mutual funds, and futures commission merchants—from opening or maintaining such accounts and requires enhanced due diligence to prevent indirect access through foreign correspondent relationships. FinCEN directed covered institutions to notify foreign correspondents of the prohibition, implement risk-based monitoring, take appropriate action if indirect access is detected, and maintain records demonstrating compliance.

FinCEN explained that its designation is based on extensive evidence showing the institution’s involvement in large-scale money laundering and cybercrime. FinCEN determined that the group (i) laundered funds tied to North Korea’s Lazarus Group, (ii) processed hundreds of millions in illicit proceeds from transnational cyber scams, (iii) operated an online marketplace offering illegal financial services and trafficking-related tools, (iv) failed to implement meaningful AML controls, and (v) issued and promoted an "unfreezable" stablecoin marketed as beyond regulatory reach.

The rule becomes effective 30 days after publication in the Federal Register.