Thailand Law Journal 2011 Fall Issue 2 Volume 14

D. Thai Anti-Money Laundering Act

1. Legislative Development

Between 1992 and 1993, the Thai government used the financial liberalization policy to make Thailand the hub of finance in East Asia.⁶⁴ Several measures were introduced to attract foreign investment, including the Bangkok International Banking Facilities ("BIBF").⁶⁵

BIBF allowed the commercial banks in Thailand to accept deposits and to borrow in foreign currency and then loan the money domestically and abroad.⁶⁶ Also, Thailand relaxed capital control so funds could freely flow in and out of Thailand.⁶⁷ Consequently, a massive amount of currency, including dirty money from transnational organized crime, entered Thailand.⁶⁸ Yet, Thailand did not criminalize money laundering.⁶⁹ The combination of these factors has made Thailand one of Asia's havens for money laundering.⁷⁰ It is estimated that approximately 100,000 million Baht (approximately three trillion U.S. dollars) a year have been laundered in Thailand in the last decade.⁷¹

In addition, Thailand has realized that money laundering can undermine national security because it can strengthen drug trafficking networks, which are a national problem.⁷² Thailand was, further, willing to become a party to the U.N. Drug Convention.⁷³ These factors sparked Thailand's desire to criminalize money laundering.⁷⁴

In May 1994, the Office of the Narcotics Control Board ("ONCB"), the government body that handles drug matters, set up an ad hoc committee comprised of representatives from relevant government agencies.⁷⁵ It resolved that Thailand should accede to the U.N. Drug Convention and should implement certain legal measures to comply with that treaty's obligations.⁷⁶ Two years later, a working group of the committee concluded that without a domestic money laundering law, Thailand may not be prepared to become a party to the U.N. Drug Convention.⁷⁷

Consequently, the ONCB and relevant government agencies drafted the Anti-Money Laundering Act and forwarded it to the Cabinet and the Parliament for consideration.⁷⁸ Parliament passed the Act on March 19, 1999, and then the Act came into effect on August 19, 1999.⁷⁹ The Act creates the Anti-Money Laundering Office ("AMLO") as a regulatory agency with unprecedented investigatory powers.⁸⁰

2. Summary of the Thai Anti-Money Laundering Act

a. Money Laundering Offences

The Act criminalizes laundering money by two means: It defines as criminal anyone who (i) "transfers, receive[s] a transfer or converts an asset involved in the commission of an offences for the purpose of concealing or disguise[ing] the origin or source of an asset or for the purpose of assisting another person(s) to avoid or receive a lesser penalty for the predicate offences"⁸¹ or (ii) "acts in any manner whatsoever for the purpose of concealing or disguising the true nature of the acquisition, source, sale, transfer or ownership of an asset involved in the commission of an offences."⁸²

b. Extraterritorial Jurisdiction

The Act also applies extraterritorially for the purpose of suppressing transnational money laundering.⁸³ Although the money laundering offences may nonetheless be committed outside Thailand, it can be prosecuted in Thailand (i) if "a Thai national or resident is an offender,"⁸⁴or (ii) if "an alien commits the offences with the intention of having consequence in the country, or the Government is the inured party,"⁸⁵ or (iii) "when an alien committed an offences under the other state's law and he appears on Thai territory and is not yet extradited under the Extradition Act".⁸⁶

c. Conspiracy

The Act applies the conspiracy principle to the money laundering offences.⁸⁷ With this principle, although two or more persons only conspire to launder money and have not yet committed money laundering, they each will be penalized with half penalty of the money laundering offence.⁸⁸

d. Financial Intelligence Unit and Know Your Customer Requirement

The Act designates the AMLO as the Financial Intelligence Unit.⁸⁹ Under the Act, commercial banks, financial institutions, land registration office and investment consultant must report to the AMLO about: (i) cash transactions of 2,000,000 Baht (approximately 56,000 U.S. dollars) or more, or 5,000,000 Baht (approximately 144,900 U.S. dollars) or more in property transactions⁹⁰ (ii) any suspicious transaction regardless of the amount. For example of the suspicious transaction, It is an unusually complicated transaction or one with features that are unusual or seem uneconomic on their face or designed to avoid reporting under the Act or where there is any hint it is possibly connected to a predicate offences.⁹¹ However, some transactions, for example, transactions made by members of the royal family, or government agencies, fall under the exemption of the reporting requirement.⁹²

With regard to Know Your Customer ("KYC"), it is "due diligence that the banks and financial institutions must perform to identify their customers and ascertain the relevant information pertinent to doing financial business with them".⁹³ KYC under the Act requires the banks and financial institutions to have their customers identify themselves⁹⁴ and maintain records for fives years.⁹⁵