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Money laundering delays eroding faith

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Delays in strengthening the country's laws against money laundering and terrorist financing activities have had a direct impact on international business and could undermine plans to link the Asean capital markets later this year, business leaders say.

Twatchai Yongkittikul, the secretary-general of the Thai Bankers' Association, said European financial institutions have already begun rejecting financial transactions with Thai parties due to perceived risks.

In February, the international Financial Action Task Force (FATF) named Thailand as one of 15 countries designated ''high risk'' due to the failure of parliament to enact tougher laws against money laundering and terrorist financing.

The list, which puts Thailand on a similar footing as Cuba, Ethiopia, Indonesia, Pakistan and Syria, is a warning for global financial institutions to exercise special care when conducting transactions with parties in the designated countries.

Mr Twatchai warned that Thai consumers could ultimately see their credit cards rejected when travelling abroad and businesses unable to trade as a result of the FATF action.

''Some European financial institutions have already received orders to stop transactions with Thailand. And local bank customers have already had to cope with additional reporting requirements when dealing with overseas counterparties,'' he said.

Mr Twatchai said progress on addressing the legal loopholes outlined by the FATF should be taken by the end of the year otherwise Thai consumers and companies will face even greater difficulties in conducting business abroad.

The FATF in February downgraded Thailand's status due to the lack of ''sufficient progress in implementing its action plan'' to strengthen laws against money laundering and terrorist financing.

The organisation urged Thailand to adequately criminalise terrorist financing, establish procedures to identify and freeze terrorist assets and strengthen the overall legal framework.

Mr Twatchai said the Thai Bankers' Association and other industry groups had earlier submitted a letter to Prime Minister Yingluck Shinawatra about the FATF downgrade, but would seek a new meeting this month to stress the need for progress.

Jaruporn Viyanant, a director of the Anti-Money Laundering Office board and director of the Stock Exchange of Thailand, said a draft amendment strengthening the country's anti-money laundering law should be submitted to the cabinet for review next month.

She said if Thailand hoped to be removed from the FATF blacklist, the new law would have to take effect by January, ahead of the annual FATF meetings the following month.

Ms Jaruporn said a worry was that the Asean Linkage programme, to be launched in August by the Thai, Malaysian and Singaporean stock markets, could be affected by the FATF warning.

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Guest Thursday, 17 April 2014

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