Thailand's council of ministers has approved a draft regulation to change the country's anti-money-laundering law in the wake of the Asia Pacific Group's mutual evaluation report of 2017.

The report came out under the auspices of the Financial Action Task Force, the world's AML standard-setter for which the APG acts as a regional chapter. The legislative proposal came originally from the Anti-Money-Laundering Office, the country's AML regulator.

The AMLO, unlike its counterparts elsewhere, is not a quango full of civil servants but an arm of the police. The body that governs it, the AML Board, is composed solely of uniformed police and its acting head is Police Major General Preecha Jaroensahayanon. In the past, Thai politicians have used it as a political football by asking it to investigate prominent people from rival parties. Perhaps this is why the prime minister persuaded the cabinet to place the agency directly under him in 2016.

The RBA

The 'risk-based approach' to money laundering is still nascent in Thailand. Section 16 Anti-Money-Laundering Act says that anyone who is engaged in a business of operating, or advising to engage in investment transactions, or the movement of capital, has a duty to tell the AMLO when there is probable cause to believe that such a transaction may be suspicious or relate to assets involved in the commission of an offence. In accordance with this section, the draft regulation proposes to instruct them to try to reduce the risks that relate to money laundering and terrorist finance. The Act as it stands does not mention risk.

Crypto-reform

Jaroensahayanon has also told the press that he wants the Government to change the Anti-Money-Laundering Act to require digital currency exchanges to report their activities to his agency.

DNFBPs

Thailand, according to the report, does not yet require 'gatekeepers' (professionals such as lawyers and accountants who give their clients access to the financial system) to perform background checks or 'customer due diligence' (CDD) in contravention of FATF Recommendation 22. Such people and organisations (DNFBPs or designated non-financial businesses and professions) include auditors, external accountants, tax advisors, casinos and other gambling service providers, company service providers, dealers in precious metals/stones, lawyers, notaries, real-estate agents and trusts. The new regulation goes some way towards correcting this loophole.

The nuclear option

In 2017 Thailand was not in compliance with Recommendation 7, which covers targeted financial sanctions relating to the proliferation of nuclear weapons. The APG noted in 2017 that there were "minor shortcomings relating to notify attempted transactions, mechanisms to resolve  false positives and detailed provisions for access to funds" but that these were being rectified in an as-yet-unimplemented Act. According to TMB Bank, the Counter Terrorism and Proliferation of Weapon of Mass Destruction Financing Act 2016 has come into force and has remedied this problem.

PEPs

The APG pronounced Thailand 'largely compliant' with Recommendation 12, which covers politically exposed persons or PEPs. The full panoply of AML rules in the Act does not cover all financial institutions. Obligations in relation to PEPs, moreover, only cover the sources of their funds and incomes but not the sources of all their wealth. The new legislation aims to rectify this.

Cross-border wire transfers

Recommendation 16, which deals with wire transfers, is another subject of the new regulation. The APG report rated Thailand 'partially compliant' with it.

According to the slightly erratic wording of the report, "requirements to maintain originator and beneficiary information only apply to originators and beneficiaries who are customers of ordering or beneficiary FI respectively. There is a lack of requirements for FIs not to execute the transactions if there is suspicion of ML/TF risks. The intermediary FI [financial institution] and beneficiary FI are required to have policies and procedures for handling those wire transfer lack information but such procedures do not cover the determination as to when to execute the wire transfer."

For cross-border wire transfers, there is no specific provision to require any intermediary institution to include all information from an originator and beneficiary in the wire transfer.

The new regulation is designed to remedy all these problems. The law, according to the APG report, already requires all reporting entities to apply CDD before conducting any wire transfers/electronic payments each exceeding 50,000 baht (approximately US$1,650).

The Act defines money launderers as individuals who commit or attempt to commit a money laundering offence or who serve as accomplices. They can be imprisoned for up to 10 years and have to pay fines of up to 200,000 baht (about US$6,594).