Tailoring Compliance Programs to Country-Specific Risks: Challenges in Thailand

April 7, 2016

Tailoring Compliance Programs to Country-Specific Risks: Challenges in Thailand

TRACE Trends – A Compliance Conversation

The content below was first published on TRACE Trends – A Compliance Conversation, a blog published by TRACE International. Tilleke & Gibbins is the TRACE Partner Law Firm for Thailand.

Companies doing business in Thailand should be wary of corruption risks. While Thailand has made substantial recent progress in its efforts to combat corruption, the practice nonetheless persists in many aspects of business. As in other jurisdictions, companies that commonly utilize government contracts or regularly interact with officials are at special risk. Companies may be at risk for not only running afoul of Thailand’s recently updated anti-corruption laws, but also under foreign anti-corruption laws, such as the FCPA and UK Bribery Act.

Thailand has extensive anti-bribery legislation in place. In 2015, the government issued the latest amendment to the Thai Organic Act on Counter Corruption (OACC). The Amendments to the OACC provide that a company can be criminally liable for the bribery offenses of its employees, agents, and others acting on behalf of the company, even if the bribe-giver acted without the company’s authorization. Importantly, the OACC Amendments also state that if the company implements “proper internal measures” (i.e. a compliance program) to prevent the bribe, this would be a mitigating factor to limit or exclude liability.

Thailand’s current government has made anti-corruption a core policy focus. Numerous investigations have been brought against public officials. For example, the former president and chairman of a state-owned bank was recently sentenced to 18 years in prison for various corruption-related offenses. While there have not yet been major anti-corruption investigations initiated against foreign companies in Thailand, this is likely to change, particularly given the current government’s stated commitment to more aggressive anti-corruption enforcement.

To minimize risks, companies should tailor internal compliance programs for the local Thai environment. One aspect of a tailored program is having controls in place to vet third-party agents and consultants, and to identify improper or potentially illegal behavior. Foreign-invested companies often rely on third-parties to liaise with officials for everything from securing contracts to dealing with law enforcement officials. A good local compliance program would ensure that those third-parties are properly vetted. The program would also red flag situations warranting further review, such as higher-than-expected official fees, entertainment expenses, questionable charitable contributions, and other similar payments.

Related Professionals

John Frangos

Partner and Director, Dispute Resolution

Thailand

+66 2056 5790

Email

RELATED INSIGHTS

December 15, 2023

Lex Mundi Guide to Doing Business in Thailand 2023

As part of its membership in Lex Mundi, Tilleke & Gibbins has published an updated edition of its Guide to Doing Business in Thailand for 2023. This guide outlines the key factors for starting and operating a business in the Thai market. Issues covered include: Investment incentives Financial facilities Exchange controls Import and export regulations Structures for doing business Requirements for the Establishment of a Business Operation of the Business Cessation or Termination of the Business Labor legislation, relations, and supply Tax Immigration requirements This publication is part of Lex Mundi’s Country Guides series prepared by member firms in more than 100 jurisdictions worldwide. The guides serve as a useful resource for planning international business strategy and researching new markets. The full Guide to Doing Business in Thailand is available through the button below.

March 20, 2023

Thailand’s New Cybercrime Measures Enlist Aid of Banks and Service Providers

Thailand has enacted new legislation to counter cybercrime and scams. The Royal Decree on Measures for Protection and Suppression of Technology Crimes B.E. 2566 (2023) (“Cybercrime Decree”) was published in the Government Gazette on March 16, 2023, and took effect the following day. The Cybercrime Decree provides a new legal tool to interrupt the money-laundering process and aims to crack down on cybercrime perpetrators and scammers by providing stronger legal measures applying to certain types of offenders that had not been sufficiently covered by existing laws. This new legislation grants victims the right to have commercial banks and online payment platforms freeze suspicious transactions and obligates these banks and platforms to comply with such requests. It further requires these banks and platforms—as well as other service providers—to share data for the prompt prevention and suppression of cybercrime. The key rights, duties, and offenses established by the Cybercrime Decree are detailed below. Freezing Transactions The Cybercrime Decree requires commercial banks and online payment platforms to temporarily freeze (for 72 hours) any related transactions of their account holders upon receipt of an alert from the account holder that he or she is the victim of cybercrime. Victims can report these illicit transactions by phone or electronic means. If by phone, the relevant bank or platform must document the call. The victim must file a police complaint about the illicit transaction within 72 hours of the freeze being made. A police inquiry officer will then notify the bank or platform about the complaint, and the transaction freeze must be maintained for seven days from the filing of the complaint with the police. The police will then determine whether it is necessary to keep the transaction frozen for longer than seven days. If the seven days lapse without a further order to freeze the

February 13, 2023

Thailand Reissues Regulation on Gifts to State Officials

Thailand’s Office of the Prime Minister has issued a new regulation titled Giving or Receiving Gifts of State Officials B.E. 2565 (2022). This regulation, which took effect on January 13, 2023, repeals the previous 2001 version and updates certain provisions to be in sync with Thailand’s primary anticorruption law, the Organic Act on Anti-Corruption B.E. 2561 (2018). The regulation prohibits state officials’ family members from receiving gifts from people who are dealing with the officials’ respective agencies. It also prohibits state officials from giving gifts to their supervisors and their supervisors’ family members. An exception, carried over from the previous version of the regulation, is provided for gifts on limited “customary occasions” valued at THB 3,000 or less. There are some notable revisions in the definitions of the new regulation. The term “gift” is now clearly defined to include “training” or “seminars.” In addition, the term “family members” now includes spouses living together “as husband and wife,” even if not legally married. For example, the common-law spouse of an officer considering a license application is not allowed to receive a gift from or attend an overseas seminar organized by the applicant. The regulation also provides: Guidelines for state officials to self-report in case of violation by a family member; Instructions on how to deal with the gifts received in violation; and Disciplinary actions for violation. Importantly, the regulation continues to prohibit the receipt of gifts by state officials’ family members but does not expressly criminalize the giving of gifts by private parties. However, all who deal with government officials should take note of the updated regulation to avoid creating a situation that might violate the rules.

November 3, 2022

Myanmar Requires Border-Trade Importers to Pay via Bank Transaction

On October 31, 2022, the Department of Trade in Myanmar’s Ministry of Commerce announced that payments for importation at the border are to be made via bank transaction. This announcement comes into force with Import/Export Newsletter No. 10/2022, dated October 31, 2022, issued by the Department of Trade, with the purpose of implementing a systematic payment system for import and export at the border, in accordance with a suggestion made by the Financial Action Task Force (FATF), an international financial watchdog. (This follows the recent news that the FATF has blacklisted Myanmar.) This requirement means that only bank transactions will be accepted for import payments in the border trade. Initially, this system will be applied to trade at the Myanmar-Thailand border only. The new requirement to pay for imports only via bank transaction states that export earnings and other types of foreign currency earnings (including salary and income remitted by Myanmar workers overseas) will be allowed to be used for imports. Importers are required to make the payments for import goods—using these earnings—via their banks. That is, Importers operating in the border trade must have foreign currency earnings received through official banking channels and must make import payments abroad through official banking channels using those earnings. In contrast to previous practices, they are unable to use other sources of income and are not able to make other payment arrangements that do not involve bank transactions. The procedures for importation at the Myanmar-Thailand border are as follows: Companies applying to the Department of Trade for an import license must produce credit advice and original bank statements that prove the receipt of export earnings or other earnings into their bank account. The Department of Trade will scrutinize the reported export earnings or other earnings, and approve the import license for an

You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

Industries

Practices

April 7, 2016