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Thailand joins anti money laundering blacklist

The international money-laundering watchdog’s decision on blacklisting Thailand will inevitably affect foreign investors’ confidence.

Daniel Lorenzzo

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corruption Thailand

The international money-laundering watchdog Financial Action Task Force on Money Laundering (FATF)  decision on blacklisting Thailand will inevitably affect foreign investors’ confidence.

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Worawan Tharapoom, president of the Association of Investment Management Companies, sees that the Financial Action Task Force on Money Laundering (FATF) decision to include Thailand on the blacklist of countries failing to meet international standards would definitely impact foreign investor confidence and will affect Thailand as a whole.

The move will increase the cost for capital investment and financial transactions, she said. It will eventually impede international trading including opening accounts with international financial institutions and remittances as additional documents and clarification may be needed to identify the origin of the money and objective of transferring money abroad, and the time taken for money transactions will be longer.

The Financial Action Task Force (FATF) is the global standard setting body for anti-money laundering and combating the financing of terrorism (AML/CFT) . In order to protect the international financial system from money laundering and financing of terrorism (ML/FT) risks and to encourage greater compliance with the AML/CFT standards, the FATF identified jurisdictions that have strategic deficiencies and works with them to address those deficiencies that pose a risk to the international financial system.

The Financial Action Task Force, the global standard-setter in the fight against money laundering and  terrorist financing, has revised the Recommendations after more than two years of efforts by member countries. The Recommendations are used by more than 180 governments to combat these crimes. The revisions, made with inputs from governments, the private sector, and civil society, provide authorities with a stronger framework to act against criminals and address new threats to the international financial system.

The cost of money laundering and underlying serious crime is very large, estimated between 2 and 5% of global GDP.  The revision will enable national authorities to take more effective action against money laundering and terrorist financing at all levels – from the identification of bank customers opening an account through to investigation, prosecution and forfeiture of assets. At the global level, the FATF will also monitor and take action to promote implementation of the standards.

Recent Reforms in Thailand have not convinced

Despite Thailand’s high-level political commitment to work with the FATF and APG to address its strategic AML/CFT deficiencies, Thailand has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain, although Thailand has faced external   difficulties from 2009 to 2011 which significantly impacted the legislative process for the necessary laws and regulations.

Thailand has taken steps towards improving its AML/CFT regime, including by substantially completing an AML/CFT risk assessment for its financial sector.

Thailand should work on implementing its action plan to address the remaining deficiencies, including by: (1) adequately criminalising terrorist financing (Special Recommendation II); (2) establishing and implementing adequate procedures to identify and freeze terrorist assets (Special Recommendation III); and (3) further strengthening AML/CFT supervision (Recommendation 23). The FATF encourages Thailand to address its remaining deficiencies and continue the process of implementing its action plan.

Thailand named to money-laundering blacklist will affect investor confidence

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