Thailand tightens regulations on large cash withdrawals in a new crackdown on grey funds

The Bank of Thailand (BoT) is implementing stringent new measures to combat “grey money” flows, mule accounts, and other illicit financial activities.

These initiatives, announced by Governor Vitai Ratanakorn, aim to increase transparency across various transaction types, particularly large cash withdrawals and gold trading, to better intercept suspicious financial movements.

Regarding cash withdrawals, the BoT is introducing the following requirements for commercial banks:

• Banks will be mandated to flag and report large cash withdrawals, with the threshold expected to be in the range of 3 to 5 million baht.
• They must also record the customer’s stated purpose for these substantial cash withdrawals.
• The BoT considers unusually large cash withdrawals potentially suspicious, especially given the availability of electronic transfers and cheques for significant payments.
• Commercial banks are further encouraged to strengthen customer due diligence (CDD) and scrutinize inconsistencies between a customer’s financial profile and unusual account activity (e.g., daily movement of millions for an incompatible occupation).

For gold transactions, the BoT is significantly tightening oversight with new and upcoming regulations:

• A foreign-exchange notification has already been published, requiring gold buyers or sellers who have imported or exported gold with a total value exceeding 10 billion baht over the past five years to report to the BoT.
• Two additional notifications are expected to be published:
  • Gold shops will be required to keep records of all gold transactions exceeding 20 million baht.
  • A cap of 50 million baht will be imposed on gold trading conducted via applications settled in Thai baht. This cap will not apply to USD-settled apps, and app providers will receive a one-month grace period to implement the change. It will only apply to new trades, allowing previously purchased gold to be traded normally if platforms clearly separate new and existing holdings.

These gold-related measures are intended to enhance transparency and close loopholes for illegal activities, as gold trading on apps has sometimes surpassed the trading volumes seen in equities markets, which are already subject to strict regulatory oversight.