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

December 7, 2020

Anti-Money Laundering Law in Thailand Due to be Updated

Subscribe to Updates
Informed Counsel

Thailand’s legal framework for preventing transactions that are deliberately designed to conceal the unlawful origin of funds is primarily contained within the Anti-Money Laundering Act B.E. 2542 (1999) (AMLA), as amended. As international money laundering practices evolve and emerge over time, prevention measures must evolve with them. Therefore the Financial Action Task Force (FATF) recently recommended amendments to the AMLA, along with the Counter Terrorism and Proliferation of Weapons of Mass Destruction Financing Act B.E. 2559 (2016) (CFTA), in order to be consistent with the latest international standards. The amendments passed through the public hearing stage on June 15, 2020, and the laws will now continue through the cabinet and parliament.

Key Draft Amendments to the AMLA

The definition of “financial institution” is expanded to include operators of many financial technology services, including:

  • asset management and digital asset businesses;
  • trustees in capital market trusts;
  • derivatives businesses;
  • authorized juristic persons under foreign exchange controls;
  • personal loan businesses;
  • nano- and pico-finance businesses;
  • peer-to-peer lending businesses;
  • crowdfunding platforms;
  • regulated e-payment systems and services;
  • non-bank credit card service providers; and
  • additional businesses related to financial services or financial technology services at risk for money laundering (by further announcement in ministerial regulations).

The definition of “professions” (formerly known as “section-16 professions”) is expanded to include additional occupations and businesses, such as accounting, auditing, auto trading and leasing, legal consulting, and additional professions at risk for money laundering (by further announcement in ministerial regulations).

For cash transactions exceeding the prescribed threshold, parties in the listed professions are assigned recordkeeping duties in addition to their current reporting duties.

The authority and power of the Anti-Money Laundering Office are expanded to include acting as a central financial intelligence agency to regulate, check, and rate the operations of companies and branches both within and outside of Thailand.

Key Draft Amendments to the CFTA

  • A channel is established for section-6 designated persons (i.e. people who have been listed as a terrorist by the U.N. Security Council) to submit a petition for reconsideration and delisting to the U.N. Security Council via Thailand’s Ministry of Foreign Affairs.
  • If a designated person’s funds and assets are frozen, qualifying financial institutions and professions are given an exemption that enables them to deposit funds (e.g., due payments, interest, etc.) earned prior to the freeze into the frozen account.

Additional Updates to CDD Regulations

In addition to the above draft amendments, the new Ministerial Regulation on Customer Due Diligence B.E. 2563 (2020) came into force on August 12, 2020. This repealed and replaced the former version from 2013 (as amended), and contains the following key updates:

  • The definition of a “Politically Exposed Person” (PEP) has been amended for clarity and ease of compliance, according to the FATF recommendations. Also, certain new definitions have been added, such as “senior management,” “family member,” “intimate person,” “business relationship,” “risk,” and “reliable source of information.”
  • The measures to assess, manage, and relieve risks have been streamlined for consistency with international standards. For example, reduction of a customer’s risk level now requires approval from senior management. Foreign PEPs and customers from any country in the FATF list of high-risk jurisdictions are to be treated as high-risk customers, whereas domestic PEPs are subject to CDD for risk assessment.
  • customer due diligence (CDD) and know-your-customer measures have been enhanced for certain types of customers, such as juristic persons, trusts, and so on.
  • Reporting entities are excused from identifying the beneficial owners of certain types of customers, such as governmental authorities, special financial institutions, listed companies, mutual funds, and so on.
  • For international electronic transfer of funds below THB 50,000 (approximately USD 1,600), the transferring financial institution must also transmit information about the transferor and transferee to the receiving financial institution.

The new amendments and additional updates to the anti-money laundering regulations give more certainty to many issues that were ambiguous before. This will be beneficial for both regulators and the public since less interpretation is needed in order to apply the regulations, and there is therefore less room for ambiguity or error. In addition, the amendments to the AMLA make Thailand’s anti-money laundering regulations more relevant and better suited to fighting modern money laundering schemes that utilize new technological innovations and financial technologies. As a result, entities that are now included in the definition of “financial institution” and “profession” will need to be more aware of the obligations that they will need to comply with. Finally, the amendments to the CFTA include the establishment of the petition submission channel, which has been a persistent obstruction to legal proceedings and will be a great relief for regulators and institutions alike.

We expect that these revisions will lead to positive changes for many financial institutions in Thailand, as well as for those foreign banks that operate (or wish to establish a presence) in Thailand. However, they make it more important than ever for such institutions to ensure strict compliance with the law.

Download Full Article
Related Professionals

Practices

Banking and Finance

Compliance and Investigations

Location

RELATED INSIGHTS​ 

September 16, 2024
On July 23, 2024, the State Bank of Vietnam (SBV) published a draft circular regulating the implementation of open (publicly available) application programming interfaces, or Open APIs, in the banking industry (Draft Circular) to collect public comments. Open APIs in the banking sector are APIs of banks that allow third parties to process data for their own use or to provide products and services to customers. Urgent need Currently, the development of Open APIs in Vietnam is fragmented, with each bank using different API standards and security standards. There is no common standard for information technology systems, information storage, security, connectivity, or legal frameworks. Therefore, the promulgation of a regulation on Open APIs is urgently needed to create a clear legal basis and guidance for electronic banking transactions, especially in connecting to bank information systems and processing customer data safely, and creating new, innovative products and services to meet the increasing needs of customers. Cooperation of banks required The Draft Circular requires banks to provide Open API services to third parties for connection to the bank system and data processing. Banks have the right to refuse or suspend Open API services if third parties do not meet specified conditions. However, banks will be responsible for ensuring the quality and security of data, providing tools for customer data queries and revocation of third-party data processing rights, and coordinating with third parties and authorities to resolve issues. The Draft Circular standardizes Open API functions for all banks according to the Open API function list and the technical standards list specified in the Draft Circular. Open API service contract The template Open API service contract between banks and third parties using Open API services must have certain required contents such as provisions regarding confidentiality, data use purpose, and that the security level
Read More
August 20, 2024
On June 28, 2024, the State Bank of Vietnam (SBV) issued Circular No. 19/2024/TT-NHNN to amend certain regulations of Circular No. 08/2023/TT-NHNN dated June 30, 2023 (‘Circular 08”), on conditions for foreign loans not guaranteed by the government (“Circular 19”). Circular 19 took effect on July 1, 2024, and provides changes in relation to, among other things, foreign loans to pay for goods import contracts and letters of credit. Foreign Loans to Pay for Goods Import Contracts Circular 08 exempts foreign loans in the form of deferred payment for imported goods (a buyer-seller relationship) from applicable foreign loan conditions. Circular 19 adds provisions regarding foreign loans taken out by non-bank borrowers (a buyer-seller-lender relationship) to make the deferred payments for goods import contracts for the implementation of an investment project, production or business plan, or other project. In this case, the foreign loan’s purpose is determined to be for implementing an investment project, production or business plan, or other project; and the borrower can exclude medium- and long-term foreign loan balances arising from the deferred payment in the import contracts when calculating the foreign loan limit. In addition, the borrower is allowed to borrow from foreign lenders to pay for the goods import contract via letters of credit. However, it is worth noting that other requirements relating to the loans are still applied to the borrower, such as foreign loan agreement, currency, and records/reporting obligations Letters of Credit Following the reclassification of letter of credit (L/C) activities from a “payment service” to “extension of credit” under the Law on Credit Institutions 2024, Circular 19 supplements L/C activities into the current foreign loan regulatory framework, including adding foreign loans between credit institutions and branches of foreign banks (as issuing banks) and non-resident banks (as reimbursing banks) where issuing banks are
Read More
July 5, 2024
In April 2024, Vietnam’s Ministry of Finance published a draft circular concerning securities transactions, clearing and settlement of securities transactions, activities of securities companies, and information disclosure on the securities market (the “Draft Circular”) for public feedback. The Draft Circular, if adopted, will amend several regulations impacting public companies and the securities market. Some of the more notable amendments are discussed below. Relaxing Pre-Funding Requirement for Foreign Institutional Investors To place orders to purchase securities, investors are currently required to have sufficient cash in their securities trading accounts to pay 100% of the cost of the transaction, except in cases of: Margin trading (applicable to Vietnamese investors only); and Transactions in which there is a settlement guarantee or confirmation from the custodian bank on accepting the settlement request. The Draft Circular allows foreign institutional investors (“FIIs”) to purchase securities without 100% pre-funding their securities trading accounts, based on a signed agreement with a securities company. However, the State Securities Commission of Vietnam (“SSC”) has the right to temporarily reinstate the 100% pre-funding requirement if measures for securities market stabilization are required. The Draft Circular also specifies that securities companies must (i) assess the capacity of FIIs to determine the pre-funding requirement under relevant agreements signed between them, and (ii) be responsible to settle the shortfall of a securities purchase order through their proprietary trading account(s) if the FIIs are unable to fully pay for such securities purchase order, except in certain circumstances. Further, a securities company cannot directly exempt or authorize other entities to exempt an FII from the 100% pre-funding requirement if the FII purchases securities of (i) such securities company, (ii) a company in which such securities company is a majority shareholder, or (iii) the parent company of such securities company. The 100% pre-funding requirement for FIIs
Read More
June 27, 2024
On May 17, 2024, Thailand’s Anti-Money Laundering Office (AMLO) issued an amended Notification Concerning the Rules for Designating or Reviewing the List of High-Risk Customers Who Require Close Monitoring under the Ministerial Regulation on Customer Due Diligence B.E. 2563 (2020). This notification, which took effect the following day, updates the previous version of the notification from 2022 to cover cybercrimes listed under the Emergency Decree on Measures for the Prevention and Suppression of Technological Crimes B.E. 2566 (2023). The amended notification sets out the steps that all financial institutions in Thailand must take to manage money laundering risks and to comply with the AMLO’s mandatory Guidelines on Customer Due Diligence. Under the new notification, account holders suspected of engaging in or facilitating technological crimes, as recorded by the Anti Online Scam Operation Center (AOC), are to be classified as “high-risk persons.” The notification includes provisions for listing high-risk customers under two specific codes: HR-03-1: This code applies to individuals who are the subject of either a petition or a complaint related to a predicate offense accepted by the relevant inquiry officer and recorded as a criminal case. It also covers individuals whose bank accounts are suspected of being used to conduct transactions related to crimes under the Emergency Decree on Measures for the Prevention and Suppression of Technological Crimes B.E. 2566 (2023), with victims seeking prosecution. The names of individuals in this category are received from responsible agencies according to the Criminal Procedure Code or the AOC and are documented in a publicly accessible online notification system. HR-03-2: This code is for individuals involved in the commission of a predicate offense or those whose bank accounts are suspected of being used in such offenses, but whose cases have not been accepted or numbered by the relevant inquiry officer. Names
Read More