Businesses are warned to be prepared for severe repercussions on business transactions, as the Thai government once again failed to pass an anti-money laundering bill before the next review of the Financial Action Task Force (FATF), say business leaders.
"It is clear the law will not be ready by the next FATF meeting in February," said Thanit Sorat, a vice-chairman of the Federation of Thai Industries (FTI).
A bill needs 120 days to take effect once the draft passes the Senate, meaning it needs to be announced by the end of this month, he said. But the draft is awaiting consideration by the Senate, which has a long list of bills to be considered.
The FATF already downgraded Thailand to its "grey list" this past February "for failing to implement laws to curb financial misconduct". An industry source said no agencies are willing to submit the names of those likely to be involved in money laundering since most of them are politicians.
In July, Thailand proposed an anti-money laundering bill to the Asia-Pacific Group on Money Laundering (APG), a regional body of the FATF. The APG rejected the draft of the bill, noting several points need to be amended.
The impact of staying on the list is that investors will find it more difficult to make financial transactions with foreign countries and will pay higher fees for financial activities.
Mr Thanit said the International Monetary Fund (IMF) will take action by moving forward with one of three methods.
First, countries trading with Thailand would have to ask for information about who the receiver of the money is before sending it including the names of major shareholders if the receiver is a company.
Second, the IMF might ask Thailand to establish an automatic database.
"The worst-case scenario is countries would not be able to do business with Thailand for a period of six months before the FATF's next meeting in June," he said, adding that companies would need to set aside more liquidity to survive during such a period.
FTI vice-secretary-general Korrakod Padungjitt said if Thailand really is put on the blacklist, then business operators can do nothing except try to lower their costs, as the issue would be beyond their control.
About the author
- Writer: Nanchanok Wongsamuth
Position: News Reporter