FATF AML Deficiency List
US Dept of State Money Laundering assessment
Non - Compliance with FATF MER Recommendations
Corruption Index (Transparency International & W.G.I.)
World Governance Indicators (Average Score)
Thailand is no longer on the FATF List of Countries that have been identified as having strategic AML deficiencies
Latest FATF Statement - 21 June 2013
The FATF welcomes Thailand’s significant progress in improving its AML/CFT regime and notes that Thailand has established the legal and regulatory framework to meet its commitments in its Action Plan regarding the strategic deficiencies that the FATF had identified in February 2010. Thailand is therefore no longer subject to FATF’s monitoring process under its on-going global AML/CFT compliance process. Thailand will work with the APG as it continues to address the full range of AML/CFT issues identified in its Mutual Evaluation Report.
Compliance with FATF Recommendations
The last follow-up Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Thailand was undertaken in 2018. According to that Evaluation, Thailand was deemed Compliant for 3 and Largely Compliant for 24 of the FATF 40 Recommendations. It was also deemed Highly Effective for 0 and Substantially Effective for 4 with regard to the 11 areas of Effectiveness of its AML/CFT Regime.
APG Yearly Typologies Report - 2015
Emerging Trends; Declining Trends; Continuing Trends (INCSR)
Emerging trend: use of a nominee to hold assets or accounts, especially by corrupt politicians.
Declining trend: smurfing has declined because money launderers now know that authorities are monitoring this type of transaction.
Continuing trend: buying precious metals or gems and real estate.
In general, the same methods are still being used. However, there is a tendency for criminals to make their techniques more complex such as combining methods e.g. using of non-related nominee to open an account to receive the proceed and use the fund to buy precious metal or stones and carried overseas, and thus make it more difficult for authorities to detect.
US Department of State Money Laundering assessment (INCSR)
Thailand is categorised by the US State Department as a Country/Jurisdiction of Primary Concern in respect of Money Laundering and Financial Crimes.
Thailand is emerging as a logistics and financial hub within Southeast Asia. The country’s porous borders and uneven law enforcement make it vulnerable to money laundering, drug trafficking, and other categories of transnational crime. Thailand is a source, transit, and destination country for illicit smuggling, trafficking in persons, a production and distribution center for counterfeit consumer goods, and a center for the production and sale of fraudulent travel documents. The proceeds of illegal gaming, official corruption, underground lotteries, and prostitution are laundered through the country’s informal financial channels.
There are no international sanctions currently in force against this country.
BRIBERY & CORRUPTION
Rating (100-Good / 0-Bad)
Transparency International Corruption Index 36
World Governance Indicator – Control of Corruption 39
There are high risks of corruption in most sectors in Thailand. Even though Thailand has the legal framework and a range of institutions to counter corruption, companies may regularly encounter bribery or other corrupt practices. Ousted Prime Minister Yingluck Shinawatra has been put on trial for losses to the state allegedly amounting to at least USD 8 billion stemming from a rice subsidy scheme. The military junta that overthrew the government in 2014 has further entrenched its power and corruption is said to have worsened under the military regime. The Organic Law on Counter Corruption criminalizes corrupt practices of public officials and corporations, including active and passive bribery of public officials. The Penal Code also criminalizes embezzlement and trading in influence. Anti-corruption legislation is inadequately enforced, and facilitation payments and gifts are common in practice. For further information - GAN Integrity Business Anti-Corruption Portal
With a well-developed infrastructure, a free-enterprise economy, and generally pro-investment policies, Thailand historically has had a strong economy, but it experienced slow growth in 2013-15 as a result of domestic political turmoil and sluggish global demand, which curbed Thailand’s traditionally strong exports - mostly electronics, agricultural commodities, automobiles and parts, and processed foods. Following the May 2014 coup d'etat, tourism decreased 6-7% but is beginning to recover. The Thai baht depreciated more than 8% during 2015.
Thailand faces labour shortages, and has attracted an estimated 2-4 million migrant workers from neighbouring countries. The Thai Government in 2013 implemented a nationwide 300 baht (roughly $10) per day minimum wage policy and deployed new tax reforms designed to lower rates on middle-income earners. The household debt to GDP ratio is over 80%.
Agriculture - products:
rice, cassava (manioc, tapioca), rubber, corn, sugarcane, coconuts, palm oil, pineapple, livestock, fish products
tourism, textiles and garments, agricultural processing, beverages, tobacco, cement, light manufacturing such as jewellery and electric appliances, computers and parts, integrated circuits, furniture, plastics, automobiles and automotive parts, agricultural
Exports - commodities:
automobiles and parts, computer and parts, jewellery and precious stones, polymers of ethylene in primary forms, refine fuels, electronic integrated circuits, chemical products, rice, fish products, rubber products, sugar, cassava, poultry, machinery and parts
Exports - partners:
US 11.2%, China 11.1%, Japan 9.4%, Hong Kong 5.5%, Malaysia 4.8%, Australia 4.6%, Vietnam 4.2%, Singapore 4.1% (2015)
Imports - commodities:
machinery and parts, crude oil, electrical machinery and parts, chemicals, iron & steel and product, electronic integrated circuit, automobile’s parts, jewellery including silver bars and gold, computers and parts, electrical household appliances, soybean
Imports - partners:
China 20.3%, Japan 15.4%, US 6.9%, Malaysia 5.9%, UAE 4% (2015)
Investment Climate - US State Department
Thailand, the second largest economy in ASEAN after Indonesia, is an upper middle-income country with pro-investment policies and a well-developed and growing infrastructure platform. In May 2014, Thailand's democratically elected government was overthrown in a bloodless military coup, and the military continues to rule over an interim government, interim legislature, and other entities tasked with developing and implementing reforms. Despite the upheaval, Thailand continues to maintain an open, market-oriented economy and encourages foreign direct investment as a means of promoting economic development, employment, and technology transfer. In recent decades, Thailand has been a major destination for foreign direct investment, and hundreds of U.S. companies have invested in Thailand successfully. Thailand continues to welcome investment from all countries and seeks to avoid dependence on any one country as a source of investment. Economic recovery and growth will be important to maintaining investor confidence. Delays in infrastructure spending and increased concerns about Thailand's regional competitiveness continue to weigh on growth forecasts, but investors remain cautiously optimistic that the Thai economy will retain its well-known resiliency and resume more robust growth.
Reforms implemented after the 1997-98 Asian Financial Crisis were designed to foster a more competitive and transparent climate for foreign investors. The Foreign Business Act (FBA) of 1999 continues to govern most investment activity by non-Thai nationals. Many U.S. businesses also enjoy investment benefits through the U.S.-Thailand Treaty of Amity and Economic Relations (AER), originally signed in 1833. The Treaty allows U.S. citizens and businesses incorporated in the United States or in Thailand that are majority-owned by U.S. citizens to engage in business on the same basis as Thai companies (national treatment) and exempts them from most restrictions on foreign investment imposed by the Foreign Business Act, although some types of business remain excluded under the Treaty. Notwithstanding their Treaty rights, many U.S. investors also choose to form joint ventures with Thai partners who hold a majority stake in the company, leveraging their partner’s knowledge of the Thai economy and local regulations.
Consistent and predictable enforcement of government regulations remains problematic for investors in Thailand. Gratuity payments to civil servants responsible for regulatory oversight and enforcement remain a common and inefficient practice.
The Thai government maintains a regulatory framework that broadly encourages investment and largely avoids market-distorting support for specific sectors. Government policies generally do not restrict the free flow of financial resources to support product and factor markets, and credit is generally allocated on market terms rather than by "directed lending." Legal, regulatory, and accounting systems are largely transparent, with the Thai government investing considerable effort to bring these systems in line with international norms and achieving significant progress.
The Board of Investment (BOI) is Thailand's central investment promotion authority and offers investment incentives uniformly to both qualified domestic and foreign investors through clearly articulated application procedures. BOI in 2014 announced a new strategy to promote foreign direct investment over a seven-year period from 2015-2022. The strategy is intended to improve Thailand’s competitiveness, reduce its reliance on low cost labor, and focus on high technology to support the government's efforts to build a digital economy. The new strategy awards privileges based on types of projects, emphasizing those that support the digital economy, such as high technology, research and development, design, and other specific industries in the same designated sectors. As part of its strategic development plan, the government is developing ten Special Economic Zones, which will offer additional tax and non-tax benefits to investors, and building industrial clusters around the country to attract investment, decentralize development, and create opportunities for Small- and Medium-sized Enterprises (SMEs). The industrial clusters will also offer incentives and privileges for investors in the following sectors:
Automotive and Parts;
Electrical Appliances, Electronics and Telecommunication Equipment;
Petrochemical and Eco-Friendly Chemical Product;
Textile and Garment.
Detailed information on these incentives can be found on the website of the Board of Investment: www.boi.go.th
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