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
three 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) 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
resulted 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:
1)
Narcotics trafficking;
2) Prostitution and other sexual offenses;
3) Fraud
against the public;
4) Fraud involving financial institutions;
5) Abuse
of position by a government official;
6) Extortion;
7) 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 offenses
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 offense, or aid another
person in committing a money laundering offense.
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 uses 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
offense. 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 offense, 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 plausibility,
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.
©2001
Tilleke & Gibbins, Bangkok, Thailand
