Asia Times: Thai anti-laundering law watched closely



	October 29, 1999	atimes.com

Southeast Asia

Thai anti-laundering law watched closely
By Satya Sivaraman

BANGKOK - After years of delay, the Thai government has passed a sweeping anti-money laundering law that aims to clean up billions of dollars worth of illegally acquired money coursing through the country's economy.

Though the law, effective since August this year, has been welcomed by many as a positive step forward, there are some critics who remain skeptical of the Thai administrative machinery's ability to implement the law properly.

The new legislation covers offences in seven categories - narcotics, prostitution, fraud or fraudulent loans, corruption, executive fraud or embezzlement in finance firms, malfeasance, extortion, organized crime rackets syndicates and customs duty evasion. ''The anti-money laundering law is a measure to stem syndicated, organized and transnational crimes'' said Thailand's Deputy Permanent Secretary for Justice Bandit Rachataran.

The two agencies most affected by the law are banks - which until now have been major conduits for money laundering - and the state-run land department which oversees all real estate dealings in the country.

Estimates of the amount of money changing hands through illegal businesses ranges from a conservative US$5 billion to nearly $40 billion, half Thailand's GDP.

The sex industry alone is estimated to generate nearly $2.5 billion while the drug trade, based in the notorious Golden Triangle area on the Thai-Laos-Burma border, is said to generate more than $10 billion annually. Such profits are sunk into the real estate sector in Thailand. Some industry sources estimate that 40 percent of real estate dealings are due to ''dirty money'', blaming money laundering for the glut in real estate which contributed to the economic crisis in mid-1997.

Many illegal profits have been laundered through multiple bank transactions, since the country's laws have not required banks to question customers about their sources of income. ''Proceeds from narcotic trafficking are deposited into an account, withdrawn, deposited into another account with a new bank. The accounts may be owned by the trafficker himself, his wife, their children, his relatives and friends, or sometimes held under an assumed name,'' said a senior official with the Thai ministry of justice. ''The process is repeated several times so that the origins of the drug money become blurred and turn legal.''

Under the new law banks are now required to report to Thai authorities any cash transactions exceeding $5,000, property transactions exceeding a certain limit and any transaction for which there are reasons to suspect involvement in money-laundering activities. Banks that fail to do so face a fine of up to $7,600.

Suspect transactions will be reported to the anti-money laundering office, a new agency under the prime minister's office, which may recommend that the assets be frozen and that the attorney general file a suit with the civil court to impound them. Successful prosecutions are punishable by a maximum of 10 years' imprisonment, or maximum fines of $5,063 for individuals and $25,316 for corporations, or both fine and imprisonment.

The main concern expressed by critics of the new law has been whether it will be implemented properly by the authorities. Parliament has not yet agreed to set up three legal bodies to enforce the new law: the Money Laundering Prevention and Suppression Committee, the Administrative Committee and the Office of the Prevention and Suppression of Money Laundering attached to the Office of the Prime Minister.

Critics also point out that, although the measures were first introduced as a bill in 1994, it took five years to overcome parliamentary opposition to certain clauses. ''The lawmakers include a number of lawbreakers. Several MPs are suspected of involvement in drug-running, smuggling, gambling ventures, arms trading, and human trafficking. Others are dependent on the money and support of those involved in such activities,'' said an editorial in The Nation newspaper.

Supporters say that despite problems of implementation the new law is an achievement in itself because it marks the first time that Thailand has tackled the issue of money laundering. In the past, Thailand had no laws enabling the police to make arrests and to confiscate illicit money. ''Although there are some loopholes that money launderers can still use to cover their tracks, the new law will certainly help in reducing the problem,'' says Dr Suvarn Valaisathien, a leading Thai legal and tax expert.

Advocates of the law blame ''dirty money'' as a major factor in enabling criminal lobbies to gain a foothold in Thailand's electoral politics. ''Allowed to build up huge legitimate empires, criminals become an entrenched part of the political and social system. Dirty money attracts more bad money, and the risks to the country transcend the political system and threaten the stability of the economy and financial systems,'' said The Nation.

(Inter Press Service)

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