US sanctions threaten Kingdom’s confidence despite anti-scam efforts

US sanctions threaten Kingdom’s confidence despite anti-scam efforts

While the sanctions do not directly target Cambodian exports, international buyers may adopt stricter supplier checks in sectors such as garments, footwear and agriculture.

The US Treasury Department Monday imposed sanctions on networks of scam centres operating across Southeast Asia, a decision that could affect Cambodia’s investment, trade, banking credibility, tourism recovery and digital economy, despite the Royal Government’s ongoing efforts to combat illicit activities.

On September 8, the US Office of Foreign Assets Control (OFAC) announced sanctions targeting individuals and entities linked to cyber scams and forced labour in the region, particularly in Burma.

Later, US Secretary of State Marco Rubio highlighted that some operations associated with forced labour and scams are tied to Cambodia, raising questions about the Kingdom’s economic reputation abroad.

The Royal Government has repeatedly stressed its active crackdown on such operations nationwide. Authorities have dismantled illicit networks, monitored cyber activity and cooperated with regional and international partners to prevent scams, capturing and deporting thousands of scammers in just the past few months.

Despite these efforts, the US measures signalled that international perceptions of Cambodia’s involvement in regional scam operations remain a concern, potentially influencing economic confidence.

The sanctions could have immediate consequences for forging direct investment (FDI). Foreign businesses, particularly in finance, technology and real estate, may exercise caution due to reputational risk.

In the banking and financial sector, stricter scrutiny from international correspondent banks may raise compliance costs for local institutions.

Cambodian banks and microfinance operators could face more rigorous monitoring of cross-border transactions, which might increase operational expenses in the short term but ultimately strengthen transparency and align practices with global standards.

Trade and tourism are also sensitive to reputational effects. While the sanctions do not directly target Cambodian exports, international buyers may adopt stricter supplier checks, particularly in sectors such as garments, footwear and agriculture.

Similarly, tourism, a key driver of post-pandemic recovery, could see setbacks if headlines linking the Kingdom to scam networks affect travellers’ perceptions.

Cambodia’s digital economy ambitions face a credibility test. The government has emphasised the role of digital transformation in future growth. However, persistent narratives associating the country with cyber scams could hinder legitimate technology partnerships.

For businesses, the immediate concern is reputational fallout, but effective government action could ultimately transform challenges into advantages, positioning Cambodia as a credible destination for investment, trade and digital innovation.

Speaking to Khmer Times, Seun Sam, a policy analyst at the Royal Academy of Cambodia (RAC), said that relations between Cambodia and the US had been improving, partly due to President Donald Trump’s role in the ceasefire agreement with Thailand.

“However, the statements from the US Treasury Department and the US Secretary on Monday night indicate a contrasting dynamic, potentially affecting Cambodia’s reputation and disrupting economic growth.”

Sam noted that bilateral trade is unlikely to be significantly impacted, given the existing tariff arrangements, but tourism could face more serious challenges.

He suggested that visible enforcement actions, regulatory improvements and stronger international cooperation are essential to maintain economic momentum.

Despite these hurdles, Sam emphasised that Cambodia still has opportunities to bolster economic resilience.

Strengthening anti-money laundering frameworks, enhancing labour protections and maintaining proactive monitoring of digital platforms could improve credibility and demonstrate the government’s commitment to reform, he added.

Although the Royal Government has not issued an official statement regarding the US sanctions, Sor Soputra, Governor of Stung Treng province, yesterday convened a meeting with the provincial administration unity command, representatives from armed forces, commune and district chiefs and other relevant officials.

According to the Ministry of Interior announcement, the meeting focused on enforcing regulations to combat online scams, as well as preparing management procedures and evidence for the suppression of such activities.

These measures aimed to enhance the government’s capacity to investigate and deport offenders operating within Cambodia, underscoring the Kingdom’s ongoing commitment to combating cybercrime and preserving its economic credibility.

Anthony Galliano, Group CEO of Cambodian Investment Management Holdings (CIM), told Khmer Times that OFAC sanctions against a large network of scam centres across Southeast Asia signify the determination of the administration to confront a pressing and destructive challenge impacting US citizens.

He said, “There is a possibility this could escalate if US citizens continue to be severely damaged and victimised. The Royal government should be commended for its campaign and substantial effort to crack down on scam centres, specifically in July.”

However, with the recent OFAC release, the situation remains unrectified and not resolved to the satisfaction of the administration, while Rubio appears to be persistently firm in the government’s tenacity to address the problem.

Galliano, also Vice-President of the American Chamber of Commerce in Cambodia (AmCham), explained that the scam centre issue casts a pall over the accomplishments, social and economic progress, and achievements of Cambodia, especially in terms of brand, reputation, and attractiveness as a tourist and investment destination.

“I am confident that the Royal Government will continue to take enforcement measures to suppress the issue, which can only lead to a stronger US relationship, improved global image, and Cambodia as a compelling investment destination,” he added.

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