Formichella & Sritawat
By Dr. Paul Crosio
April 2025
Thailand’s Ministry of Justice has unveiled draft amendments to the Anti Money Laundering Act B.E. 2542 (1999). This signalled a significant escalation in efforts to combat financial crime, corruption, and illicit foreign ownership structures. The proposed changes, open for public consultation until April 25, 2025, aim to align Thailand with global anti-money laundering (AML) standards while addressing systemic vulnerabilities in corporate transparency.
1. Expansion of Predicate Offenses
A “predicate offense ” is the underlying act for a more complex crime, often associated with money laundering or other financial crimes. It generates the proceeds that are subsequently laundered.
The draft introduces a robust definition of predicate offenses to include previously overlooked crimes, ensuring stricter enforcement under AML laws:
- Bribery of Domestic and Foreign Officials:
Offering or promising assets or benefits to Thai or foreign public officials, including those in international organizations, is now classified as a predicate offense. This aligns Thailand with Article 23 of the UN Convention Against Corruption (UNCAC) (UNODC, 2003), which mandates criminalizing corruption-linked money laundering.
- Nominee Structures:
Criminalizing arrangements where Thai nationals act as proxies for foreign entities to circumvent the Foreign Business Act (FBA). This includes holding shares, jointly operating businesses under false pretences, or structuring entities to disguise foreign control (see https://fosrlaw.com/thailand-nominee-shareholding-opinions-of-the-thai-supreme-court/). The Financial Action Task Force (FATF) has long advocated for such measures under Recommendation 24 (2022), emphasizing transparency in beneficial ownership.
- Enforcement Window:
A 15-year prescription period for predicate offenses allows authorities to address older violations, reflecting Thailand’s commitment to long-term accountability (Bangkok Biz News, 2024).
2. Joint Liability for Foreign Investors
The draft eliminates legal loopholes shielding foreign beneficiaries of nominee schemes. Under the joint accountability framework:
Foreign nationals knowingly using Thai nominees to conduct restricted businesses face equal liability.
This reform responds to Thailand’s Department of Business Development (DBD) 2024 policy, which prioritizes holding all parties accountable regardless of nationality.
Implications: Foreign investors must rigorously audit ownership structures to avoid asset seizure or prosecution.
3. Mandatory Beneficial Ownership Disclosure
The draft mandates unprecedented transparency for Ultimate Beneficial Owners (UBOs):
Definition: UBOs include individuals who directly/indirectly own, control, or dominate entities, including through trusts or asset management arrangements.
Reporting Requirements: Financial institutions and designated professions must disclose UBO details to Thailand’s Anti-Money Laundering Office (AMLO). Noncompliance risks a fine of up to THB 500,000 (USD 13,600) plus daily penalties.
Global Alignment: FATF’s 2023/2024 review commended Thailand’s progress on Recommendation 24, which targets opaque corporate structures.
4. Targeting High-Risk Sectors
The amendments specifically address sectors prone to foreign ownership abuse:
- Real Estate, Hospitality, and Shell Companies:
- Enhanced asset holdings and partnerships scrutiny.
Cross-Border Corruption: Prosecutors gain tools to trace bribes paid to foreign officials, which is critical for multinational investigations.
Rationale and Regional Context
Thailand’s reforms respond to mounting pressure from global bodies and domestic economic risks:
- FATF Compliance: Avoidance of the grey list by closing gaps in AML/CFT frameworks.
- Foreign Business Act Enforcement: Dismantling nominee networks that undermine Thailand’s restrictions on foreign-controlled sectors (e.g., agriculture, tourism, media).
- Regional Precedent: It follows Singapore’s and Malaysia’s stricter AML laws, prioritizing UBO transparency and cross-border corruption prosecutions.
Implications for Businesses and Investors
- Due Diligence Overhaul: Foreign entities must audit shareholding patterns, contractual arrangements, and UBO disclosures.
- Sectoral Risks: Industries historically reliant on nominee structures (e.g., property development) face heightened enforcement.
- Compliance Costs: SMEs and nonprofits may struggle with reporting burdens, necessitating government support.
Next Steps and Stakeholder Engagement
The public consultation period allows businesses, legal experts, and foreign investors to propose revisions. Key debates may focus on:
- The breadth of arrangements subject to UBO reporting.
- Proportionality of penalties for noncompliance.
- Final legislation is expected by late 2025, pending parliamentary approval.
Conclusion
Thailand’s draft AML amendments represent a paradigm shift in combating financial crime and unauthorized foreign investment. The reforms align with global standards while safeguarding domestic economic interests by criminalizing nominee structures, enforcing joint liability, and mandating UBO transparency. Stakeholders must proactively engage in the consultation process to shape a balanced regulatory framework.
References
1. UN Convention Against Corruption (UNCAC), Article 23 (UNODC, 2003).
2. FATF Recommendation 24 on Beneficial Ownership (2023).
3. Department of Business Development (DBD), Policy Statement on Joint Accountability (2024).
4. Bangkok Biz News, Thailand Targets Nominee Networks (2024).
5. Draft Anti-Money Laundering Act Amendments, Ministry of Justice (2025).
The comments herein are for discussion and information purposes only and are not guaranteed to be up to date. Nothing herein should be or can be relied on as legal advice. If you are legally engaged in a criminal defamation matter, seek counsel from a qualified legal professional.
For any questions, you may contact Formichella & Sritawat at [email protected]
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