Long a major crossroads for drug trafficking and the laundering of the resulting huge sums of tainted cash, Thailand is now actively enforcing a comprehensive anti-money laundering act passed by the Thai Parliament in March 1999. The new law is aimed at combating not only the illicit drug trade, but also corruption, prostitution and other crimes. There was initial delay in enforcement until a new enforcement agency could be established and staffed, and implementing ministerial regulations developed and put in place.
Enforcement of the anti-money laundering law began at the end of October 2000, and 3 suspects had their bank accounts frozen soon thereafter in the first cases under the new law. In the first five months, assets worth approximately 150 million baht (about US$3.5 million)in assets were seized.
The Anti-Money Laundering Prevention and Suppression Office ("AMLO") reported that local banks had been cooperative in reporting transactions subject to the new law, with the office receiving 10,000 reports a week from commercial banks. AMLO has noticed that the number of transactions exceeding the minimum amount requiring reporting decreased sharply after enforcement of the new law began. Only a small portion of reported transactions result in further investigation for possible violation of the new law.
What Are The Targeted Crimes?
Thai law enforcement officials initially proposed the enactment of a money laundering act some years ago to target the transfer of money and property derived from the rampant trade in illegal narcotics, as well as to comply with requirements for membership under the 1988 Convention Against Illegal Traffic in Narcotic Drugs and Psycho-toxic Substances. Additional criminal offenses were added during the legislative process, and the law as enacted covers the transfer or conversion of funds or property obtained from:
- Narcotics trafficking;
- Prostitution and other sexual offenses;
- Fraud against the public;
- Fraud involving financial institutions;
- Abuse of position by a government official;
- Trade in contraband.
What Does The New Law Prohibit?
Under the new law, it is a crime to transfer, convert, or receive the transfer of funds or property arising from the above-specified criminal offences for the purpose of hiding or concealing the source of the funds. Violators are punishable by imprisonment of up to 10 years plus a fine of up to 200,000 Thai Baht (about US$4,600). Violators are defined as persons who commit or attempt to commit a money laundering offence, or aid another person in committing a money laundering offence.
Banking transactions are a primary activity subject to scrutiny under the anti-money laundering law, but other financial transactions are also covered. For example, an individual who secretly uses the money from a drug sale to purchase shares of publicly traded stocks on the Stock Exchange of Thailand could be prosecuted under the new law. Or, a corrupt official who used money obtained from a bribe to purchase land runs the risk of being exposed and having the land confiscated.
Perhaps the most effective tool in combating crime is the ability of enforcement officials to seize, without a warrant, money or property connected with the commission of one of the seven specified crimes, or a money laundering offence. The owner of seized property must convincingly demonstrate the property is not related to the commission of one of the enumerated crimes, or a money laundering offence, in order to recover the property.
Bank Reporting Requirement
A key provision of the new law requires banks and financial institutions to report all cash transactions over two million Thai Baht (about US$46,000). Property transactions involving cash in excess of five million Baht (about US$115,000) must also be reported. Also required to be reported are suspicious transactions that may relate to one of the specified targeted crimes, are more complex than normal, lack economic plausability, or appear to have been undertaken to avoid compliance with the anti-money laundering law. The reporting institutions must require their customers to provide a detailed record of the transaction.
Local banks, other financial institutions, and government land offices have been busy training their staff on the new law's reporting requirements, in order to avoid penalties for noncompliance. Failure to comply with the reporting requirements is punishable by a fine of up to 300,000 Thai Baht (about US$7,000). Filing a false report is punishable by a fine of up to 500,000 Thai Baht (about US$11,500) and imprisonment for up to two years.
Other New Developments
The Anti-Money Laundering Office expects to issue a new regulation soon which will require all persons crossing the border into or out of Thailand to declare the amount of all currencies in their possession.
In another development in the global fight against money laundering, the European Union is seeking permission from the Thai Government to set up a regional office in Bangkok to cooperate with law enforcement agencies in various Asian countries in the suppression of money laundering activities. The Thai Government is expected to act soon on this request. .
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