The rapidly growing middle class in Southeast Asia is bringing with it increased household wealth, increased consumption, and increased investment. As a result, the commercial banking sector has seen a boom in the more economically developed countries of the region—especially in Thailand. A select few foreign banks have also been very successful in Cambodia, Laos, Myanmar, and Vietnam for many years, but as other banks seek to replicate their Thai success in these new markets, the field looks likely to become much more crowded in coming years. Six major Thai banks are active in at least one other jurisdiction in mainland Southeast Asia, with some already operating across them all, and many larger international banks also beginning to take note. Amid that background, this guide examines the legal frameworks for foreign banks seeking to operate in these jurisdictions, and addresses some current and upcoming developments that investors should note. The full guide is available as a PDF through the button below.

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

On October 21, 2022, the Financial Action Task Force (FATF) added Myanmar to the list of high-risk jurisdictions having significant deficiencies to counter money laundering, terrorist financing, and financing of proliferation. The FATF is an international financial watchdog that aims to impede global money laundering and terrorist financing. It is a policymaking body that monitors implementation of FATF Recommendations and FATF Standards and is not binding as a supervisory authority for financial institutions. Myanmar will remain on the list of countries subject to a call for action until the country has implemented an action plan that: demonstrates an improved understanding of money laundering risks in key areas; demonstrates that onsite and offsite inspections are risk-based, and hundi (a type of informal remittance instrument for transferring money) operators are registered and supervised; demonstrates enhanced use of financial intelligence in law enforcement authorities’ investigations, and increasing operational analysis and dissemination by Myanmar’s Financial Intelligence Unit; ensures that money laundering is investigated and prosecuted in line with risks; demonstrates investigation of transnational money laundering cases with international cooperation; demonstrates an increase in the freezing, seizure, and confiscation of criminal proceeds, instrumentalities, and property of equivalent value; manages seized assets to preserve the value of seized goods until confiscation; and demonstrates implementation of targeted financial sanctions related to proliferation financing. Enhanced Customer Due Diligence Unlike other blacklisted countries, Myanmar is not applicable to countermeasures. Instead, the financial institutions of members and nonmember states of the FATF are urged to conduct “enhanced customer due diligence (CDD) measures” to mitigate the risk of money laundering, terrorist financing, and proliferation financing from Myanmar. Examples of these enhanced CDD measures to be applied to certain higher-risk activities include: Obtaining additional identifying information about the customer (available through public databases or internet sources) and regularly updating the identifying

The Bank of Thailand (BOT) and the Fiscal Policy Office have drafted a royal decree that will regulate the hire purchase and leasing of cars and motorcycles under the Financial Institution Business Act B.E. 2551 (2008). This draft royal decree, which comes at a time when the level of household debt is surging in Thailand, aims to address the rise in outstanding debts related to hire purchase and leasing of cars and motorcycles. In recent years, there has been growing concern about such financing for cars and motorcycles, as these arrangements conducted by non-banks are currently unregulated and have sparked many public complaints relating to fees and practices. Scope of Regulated Businesses By virtue of the draft royal decree, businesses carrying out hire purchase and leasing of cars and motorcycles will become regulated businesses under the Financial Institution Business Act B.E. 2551 (2008). The draft royal decree defines “hire purchase” and “leasing” as follows: “Hire purchase” refers to hire purchase of cars and motorcycles according to the Civil and Commercial Code—that is, a contract whereby an owner of a car or motorcycle hires out the vehicle to a customer, and either promises to sell it to the customer or promises that it will become the property of the customer, on the condition that the customer makes a certain number of payments. “Leasing” refers to renting of a car or motorcycle under a financial lease contract in which the lessor procures a car or motorcycle according to the lessee’s request from a manufacturer, distributor, or other party, or a car or motorcycle repossessed from another lessee, in order to allow the lessee to utilize the vehicle. The lessee is obligated to maintain and repair the leased car or motorcycle during the leasing term. However, the lessee cannot terminate the contract unilaterally before maturity. Upon