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AML/CTF compliance in Thailand

WHAT ARE THE

Money laundering and terrorism financing laws in Thailand?

In Thailand, money laundering and terrorism financing are serious offences and are primarily regulated under the Anti-Money Laundering Act B.E. 2542 (1999) and the Counter-Terrorism and Proliferation of Weapons of Mass Destruction Financing Act B.E. 2559 (2016), along with their associated regulations.

WHAT ARE THE

Key obligations reporting entities have under Thai laws?

The key obligations under the AML/CFT Act include:

  • Establishing and maintaining procedures for customer due diligence, record keeping, and reporting suspicious transactions: Identifying and verifying the identity of customers, understanding the nature of their business, and monitoring their transactions for any unusual activity.

  • Conducting ongoing monitoring of customer transactions and accounts: Keeping track of all transactions and accounts, and looking for any patterns or trends that may be indicative of money laundering or terrorism financing.

  • Reporting to the authorities when certain transactions are suspected to be related to money laundering or terrorism financing: This is known as "suspicious transaction reporting" (STR).

  • Implementing policies, procedures, and controls to prevent the financing of proliferation: This includes ensuring that customers are not using the reporting entity's services to finance the development or use of weapons of mass destruction.

  • Undertaking a risk assessment to determine any risks for money laundering, terrorism financing or proliferation financing: This involves identifying the risks that the reporting entity faces, and developing measures to mitigate those risks.

  • Taking measures (such as training programs) to educate employees on their obligations under the law: This ensures that all employees are aware of the reporting entity's anti-money laundering and counter-terrorism financing (AML/CTF) obligations, and how to comply with them.

These are just some of the key obligations that reporting entities have under these laws. It is important to note that these obligations can vary depending on the specific type of reporting entity. For example, banks have different obligations than casinos or real estate agents.

WHO ARE THE

ML/TF regulators in Thailand and what functions do they perform?

In Thailand, there is a multi-agency approach with regulatory oversight for different sectors:

  • Anti-Money Laundering Office (AMLO) - has the responsibility for implementing, monitoring and enforcing anti-money laundering laws. This includes receiving reports of suspicious transactions, conducting investigations, and cooperating with national and international agencies in Thailand.
  • Office of the National Economic and Social Development Board - works in conjunction with AMLO and AMLC to implement the provisions of the Money Laundering Control Act, B.E. 2542 (1999) and related laws. Their role is to prevent, detect, suppress, and penalize money laundering and terrorism financing activities in Thailand.

In addition to these regulatory agencies, there may also be other local and national authorities involved in the enforcement and compliance with anti-money laundering and counter-terrorism financing laws in Thailand.

WHAT ARE THE

Industry sectors subject to ML/TF regulations?

The industry sectors in Thailand that are regulated under the Money Laundering Control Act, B.E. 2542 (1999) and the Counter-Terrorism and Proliferation of Weapons of Mass Destruction Financing Act B.E. 2559 (2016) include, but are not limited to:

Banks

This refers to all commercial banks, rural banks, and sharia banks. They are required to conduct customer due diligence, report suspicious transactions, and maintain comprehensive records.

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Insurance Companies

All types of insurance providers, including life, general, reinsurance, and sharia insurance companies, fall under the purview of AML/CFT laws. They need to adhere to the same standards of due diligence and reporting as banks and non-bank financial institutions.

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Securities Companies and Capital Markets

Securities underwriters, brokers, dealers, and investment managers, as well as mutual funds. They are obliged to follow AML/CFT regulations in their operations.

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Non-Bank Financial Institutions

Including money remitters, finance companies, credit unions, pawnshops, and leasing companies. Similar to banks, they are also obligated to comply with AML/CFT regulations.

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Larger Financial Institutions

Are more closely regulated due to the higher risks associated with their size and the volume of transactions they handle. This includes larger banks, insurance companies, and other financial services providers.

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WHAT ARE THE

Penalties for non-compliance with AML/CTF laws?

The penalties for non-compliance with Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) laws in Thailand are quite varied and depend on the severity of the offense and the status of the offender. Penalties can include:

  1. A person who enters into a conspiracy to commit money laundering may face half the penalty provided for the offense under Section 9 of the Money Laundering Control Act, B.E. 2542 (1999).

  2. Certain officials, such as members of the House of Representatives, senators, local administrators, government officials, and others, who commit an offense may be liable to twice the penalty provided for the offense under Section 10 of the same Act.
  3. A person who fails to keep records or report a suspicious transaction may be subject to up to two years imprisonment or a fine up to 200,000 baht, or both, under Section 24 of the CTFP Act_1.
  4. A person who commits an offense of terrorism financing or financing the proliferation of weapons of mass destruction may face imprisonment of two to ten years or a fine up to 200,000 baht, or both.
  5. Legal entities that violate the regulations may be subject to a fine ranging from 500,000 baht to 2,000,000 baht.

It's also noted that a court has the power to inflict a punishment of no punishment or lesser punishment than that provided by law if the offender reveals the truth about the conspiracy to the competent official before committing the offense under certain circumstances.

WHAT ARE THE

Largest fines for non-compliance with AML/CTF laws?

The largest fine for non-compliance with AML/CTF laws in Thailand as of the writing is:

Central Criminal Court for Corruption and Misconduct Cases, Thailand

  • The Central Criminal Court sentenced former top executive of the Krisda Mahanakorn real estate company, along with five other individuals, to 20 years in prison in 2022, after finding them guilty of money laundering connected to the 9.9-billion-baht loan from the state-owned Krungthai Bank.
  • The case dates back to 2003, when the Krungthai Bank granted a loan to subsidiaries of Krisda Mahanakorn for refinancing and land acquisition for real estate development. However, the funds were used for share trading on the stock market and were laundered to conceal their source.
  • Other penalties included: The court initially sentenced each of the six defendants to prison terms, ranging from 118 years to 860 years. Nevertheless, since the law states that a combined prison term cannot exceed 20 years, their terms were commuted to the legal maximum. The court also ordered all of them to compensate Krungthai Bank to the tune of about 8.8 billion baht within 30 days.
  • In 2015, related to the same scandal, former executive board chairman of the bank, the former bank president, and over a dozen defendants were sentenced to prison terms by the Supreme Court’s Criminal Division for Political Office Holders. A former prime minister was also charged but was found not guilty by the same court in 2019.