Thailand Country Financial Crime Dashboard 2024 by FCN

Today Financial Crime News is publishing a Financial Crime Country Dashboard for Thailand after the Editor spent a few days last week in Bangkok. Many thanks to all the Thai financial crime fighters in the public and private sector who met with the Editor and in a number of ways influenced this post.

Whilst there is no official estimate of the value of proceeds generated annually by predicate crimes committed in Thailand, or foreign proceeds entering Thailand, the amount is likely to be high. The size, nature and location of the Thai economy and its position with a border of 5,656 KM with Malaysia, Myanmar, Laos and Cambodia and a long coastline of 3,151 KM facilitates the movement of people, goods, cross-border trade, and funds into and out of the country as well as being a leading tourist destination.

Crimes: The top five high risk predicate offences for ML, according to Thailands most recent National AML/CTF/CPF Risk Assessment 2022 are malfeasance in office, narcotics (includes corruption), gambling, natural resources exploitation (includes wildlife crime), and public fraud. Corruption and illicit drugs are the most serious. Other crimes to note include, loan sharking, migrant smuggling, workers, child pornography trade and illegal surrogacy. Third parties also highlight human trafficking and goods piracy.

Based on recent updates to the Organised Crime Index 2023:

Organised Crime: Foreign criminal groups have been operating in Thailand for over a century, and they currently engage in activities such as human and drug trafficking, and fraud through call centres. Thailand has long been known as a haven for foreign criminals, with the Golden Triangle serving as a centre for drug production and Vietnamese actors involved in smuggling elephant ivory, rhino horn and other endangered species. Currently, Chinese, Korean and Taiwanese criminals are significantly involved in online gambling and call centre scams based in Pattaya, with these targeting Chinese nationals with false investment opportunities. There is no evidence about native Thai mafia-style groups. Rather, such groups operating in the country are linked to foreign criminal diasporas. Criminal networks remain active in human trafficking, money laundering and drug trafficking across Thailand, with network members often involved in multiple areas of transnational crime. The recent reintroduction of local elections, after more than seven years, has sparked concerns about the return of criminal gangs, following a surge in violence linked to political actors using criminals to further their interests”.

Corruption: “State-embedded corruption facilitates trafficking and undermines anti-trafficking efforts. High levels of perceived corruption have made NGOs hesitant to work with the government, and some police officers are suspected of compromising investigations and failing to provide sufficient evidence to prosecute trafficking cases. Law enforcement officials have been wary of investigating influential offenders, including those with connections to high-ranking government officials. Although some officials have been investigated for complicity in trafficking, the government has often relied on administrative punishments instead of criminal prosecution”.

Drug Trafficking: “Thailand is a transit and destination country for the heroin trade in South East Asia, with the Golden Triangle area, in particular, being heavily used for drug trafficking during the COVID-19 pandemic. Although Thailand has eliminated opium farming and heroin production, the latter continues in neighbouring Myanmar, with heroin and other drugs often being smuggled through Laos to Thailand and onwards. Corruption among officials in Thailand contributes to the heroin trade, and local heroin use has contributed to significant public health concerns, particularly in relation to the transmission of HIV and other blood-borne viruses. Thailand’s cocaine-trafficking market is moderate and is dominated by international players and networks rather than domestic groups. West and East African criminal networks heavily influence the cocaine market, with authorities conducting operations to disband cocaine-trafficking activities involving loosely organized crime groups with individuals from Guinea and Nigeria, as well as Thailand. Thailand recently decriminalized cannabis, making cultivation, distribution, possession, sale and consumption legal, within certain regulations. The move is the latest step in Thailand’s plan to promote cannabis as a cash crop, given that about a third of its labour force works in agriculture. Synthetic drug trafficking was significant during the COVID-19 pandemic, with the Golden Triangle area being a major route. The country is one of the main routes for methamphetamines from Myanmar reaching the Asia-Pacific region, with several shipments bound for Australia and Japan being seized recently”.

Human Trafficking: “Thailand serves as a source, transit and a destination country for human trafficking. Labour and sex traffickers exploit women, men, LGBTQ+ individuals, and children from various countries. Trafficking networks are supported by corrupt officials, and employers exploit workers in various industries using debt-based coercion and deceptive recruitment practices, as well as other means. Vessel owners, brokers and senior crew subject men and boys to forced labour on fishing boats, without adequate food, water or medical supplies. Thailand also serves as a transit hub for people trafficked into cyber-scam operations in neighbouring countries”.

Human Smuggling: “People smuggling remains a serious and ongoing problem in Thailand. The country serves as a transit hub for smuggled individuals seeking either exit or entry from Thailand. Most individuals are smuggled to Thailand from neighbouring countries, such as Myanmar, Laos, Cambodia and Vietnam”.

Arms Trafficking: “Thailand is a major transit point for arms trafficking, as weapons often pass through the country to reach Myanmar – where they are used by ethnic armed groups and criminals. Thailand is also a destination country for arms from Cambodia. The country is also becoming a source of firearms due to the proliferation of online black markets, making it easy to access illicit handguns. Despite strict gun laws, licenses can be purchased from corrupt officials and discounted firearms are sold on the black market. The lack of commitment to countering arms trafficking is due in part to the involvement of many members of the security establishment”.

Goods Piracy: “Counterfeit goods are also a serious issue in Thailand, with both domestic and foreign actors involved in the production and trade of fake products. Physical counterfeit goods are readily available, and e-commerce platforms and social media are increasingly being used as channels for this illegal trade”.

Goods Smuggling: “Thailand is also a major hub for the illicit trade of excise goods, including liquor, tobacco and playing cards. Both domestic and foreign criminals, as well as state-embedded actors, such as the police, are involved in this trade, with over a quarter of cigarettes sold in the country being illegal contraband”.

Wildlife Crime: Timber: “Flora crimes are significant in the country, with profits accruing to both nationals and foreign criminals. The trafficking of rosewood is a major problem in eastern Thailand. Despite law enforcement efforts, illegal logging and trafficking of Siamese rosewood have been on the rise, allegedly transiting through Cambodia, Laos and Vietnam on its way to the Chinese market. There are also concerns that government officials in charge of protected areas have contributed to deforestation by allowing illegal logging and timber trading”.Wildlife Crime: Timber:

Wildlife Crime: Animals: “Thailand also has one of the largest illegal wildlife trade markets in the world, involving a range of animals and products, such as African and Asian rhino horn, tiger skin, elephant ivory, pangolin, captive-bred tigers, reptiles, birds and mammals, including tiger cubs, bear cubs and primate babies. The country is a source, transit and destination area for these illegal wildlife trades, with Thailand’s seaports and postal services facilitating deliveries to other countries, particularly China and Vietnam, where tourists are known to purchase illegal wildlife products”.

Illicit Extracted Products: “Thailand is an attractive transit and destination country for oil and fuel markets, as well as precious stones, due to its strategic location and multiple entry points. The country is a major market for gemstones, particularly rubies and sapphires, which may have been trafficked from their countries of origin by transnational organized crime networks. One smuggling route is from Myanmar to Thailand, where ‘mules’ carry a few gems at a time and deliver them to a dealer in a Thai border town after crossing an official border. Corruption of authorities may also be enabling the smuggling of non-renewable resources as, in some cases, smugglers pay bribes to officials, allowing them to cross the border. The illegal trade in precious stones poses serious environmental and human rights concerns, as it can lead to the exploitation of workers, and environmental degradation in source countries”.

Cyber Crimes: “Cybercrime in Thailand has been on the rise lately, especially since the more widespread adoption and reliance on technology during the COVID-19 pandemic. Various industries have been affected, including legal services, construction, wholesale and retail, and healthcare. The main cyber threats expected to emerge are ransomware attacks, attacks related to the metaverse, the exploitation of flaws in application programming interfaces and critical infrastructure attacks. Among these, ransomware attacks are projected to become the most serious cyber threat. The country is vulnerable in this regard due to the absence of appropriate monitoring and reporting, which further exacerbates the problem. Critical digital infrastructure attacks are also considered key cyber threats facing the country, especially in the financial, utility and healthcare sectors, where confidential and lucrative data can be targeted by attackers”.

Financial Crimes: “Thailand is grappling with an escalating issue of financial crimes, including fraud, tax evasion and embezzlement. These crimes involve a range of individuals, from those embedded within the state to those in the private sector. Scammers have been able to utilize advanced technologies to perpetrate their activities, such as romance scams, Ponzi schemes and voice phishing scams. Criminal actors, both domestic and foreign, are involved in cyber-enabled financial crimes. Financial fraud and online shopping scams are the most frequently reported types of fraud. Criminals often use untraceable mule accounts to collect the proceeds of their crimes, and victims are often lured into investment schemes that promise unrealistic returns. Since the COVID-19 pandemic, call centre scams have increased significantly, with the country’s elderly population being a target of such criminal activities. There is also evidence of a strong link between transnational human trafficking and industrial-scale financial fraud, with organized crime groups luring hundreds of people from across South East Asia, and around world, to engage in fraudulent activities”.

Terrorism / Terrorism Finance: The risk of terrorism in Thailand has thankfully decreased significantly, and is now at its lowest levels since the start of violence (2001) attributed to ethno nationalist insurgents in the country’s deep south was reignited, though foreign Islamist groups tried to influence what was a local struggle into one that was more international, and so the bigger risk appeared to be from international terrorist groups infiltrating domestic insurgent groups. During its height, from 2004 – 2021, there were 9,444 incidents, 5,780 people died, 12,131 were injured, and 867 became disabled. However, the number of incidents has declined steadily since 2017, with the lowest at 51 cases until 2021. In 2006, 22 commercial banks were simultaneously bombed. Despite a reduction in terrorist activity the risk of terrorism is still assessed as “high risk”, however according to the NRA 2022, “as the situation is improving due to a steady decrease of incidents, and so far the Southern border conflict has never expanded to be an armed conflict or civil war, as well as no apparent movement of international terrorist groups in Thailand”. Terrorism finance is overall considered at “medium risk”, with higher risk areas, i) raising funds (self-funding through faith donations, financial support from criminal activities, from oversea business and fund raising through NPOs); ii) Moving funds i.e., cash couriers moving funds through MSBs changer or transfer services and assets holding by nominees and iii) TF channels and methods principally concerned with cash couriers, banks, unregulated digital asset platforms and NPOs. Information from arrested insurgents revealed that the estimated amount of funds in each terror attack was approximately 5,000 – 15,000 THB as the offenders often produced self-modified equipment or used stolen vehicles for operations. Taking an average of 200 – 300 incidents per year, the operation finance requirements were estimated at 1,000,000 – 4,500,000 THB per year. Between 2018-2020 assets of 5.3 Million Thai Baht was frozen, by the authorities.

Proliferation Finance: Rated at “medium risk” overall, with the highest risks likely around economic sanction evasion, dual-use items trading and financial sanction evasion of designated persons. The highest risk channels for PF or methods are trade-based and businesses related to dual-use items.

Sectors: Sectors assessed as highest risk are banks and specialised depository FI’s (Government Housing Bank, Government Savings Bank, Bank for Agriculture and Agricultural Cooperatives, and Islamic Bank of Thailand): Digital asset providers or platforms which are not regulated; business nominees, that still lack adequate measures to investigate the actual profile of the business and true beneficiaries as well as money laundering in foreign companies in tax haven countries; cross-border cash couriers and TBML

Country Risk: For a high level overview of the risks posed by third countries to Thailand related to financial crimes, both incoming  and outgoing, See the chart below (from the NRA 2022).

AMLO: The Anti-Money Laundering Office (AMLO) is Thailand’s central authority for AML/CFT and plays a pivotal role in coordinating ML/TF risk assessments, including the NRA, and the development of the national AML/CFT strategies. AMLO is also the sole AML/CFT supervisor and a specialist asset recovery Law Enforcement Agency (LEA). AMLO, in its FIU role, collects a very wide range of data, and provides a financial analysis and intelligence capability that is highly regarded, according to the FATF.

AML/CFT Strategy: The AML Board leads Thailands approach to combatting ML/TF/PF, and owns the AML Strategy (2022 – 2027). This strategy was endorsed by the Cabinet on 2 August 2022. Thailands AML/CFT strategy consists of 6 strategic objectives:

1: Driving Thailand’s proactive AML/CFT/CPF measures to be more effective and in line with international standards.

2: Integrating domestic and international AML/CFT/CPF work in line with international standard

3: Promoting supervisory measures and systems for private and public sectors responsible for AML/CFT/CPF and compliance among reporting entities

4: Developing body of knowledge for innovation, new products, and new business approaches that promote AML/CFT/CPF work in digital form

5: Developing cooperation with and disseminating of AML/CFT/ CPF information to the civil society

6 Transforming organizations into high performance organizations for effective AML/CFT/CPF work

Priorities 1,3 & 4 have been prioritised as the most significant.

Responses: Thailand’s 4th Round MER 2017 reported just 4/11 positive effectiveness ratings at Substantially Effective for IO1 Risk Understanding, IO2 International Co operation, IO6 Financial Intelligence & IO8 ML Confiscations. Technical Compliance scores have improved as follow up reports have reflected rating upgrades, such that there remains 1 Non compliant & 6 partially compliant ratings. The NC is for R22 DNFBP CDD & the PC’s for R8 NPOs, R23 DNFBP Other Measures, R24/R25 Transparency of BO’s, R28 Regulation of DNFBPs & R35 Sanctions.

 Thailand avoided being placed on the FATF grey list.

Outcomes: Performance Data for Thailand:

FIU Staffing: 552 (506 filled) for AMLO which includes the FIU, and other agencies.

STRs Reported: 164,512 STRs in (86,703 reviewed by FIU) up from 129,875 in 2021

SAR Conversion Rate: 86,703 STRs reviewed in 2022 (7,184 in 2021) by FIU & 487 Cases Disseminated

PPP: N/A

NRA: Yes latest ML/TF/PF 2022

ML Convictions: 36 in 2016

Human Trafficking Convictions: 82 in 2021 down from 233 in 2020

Foreign Bribery Convictions: N/A (2018-2021)

Assets Seized: US$104 Million (0.6%) of estimated financial crime proceeds @ 3.6% of GDP) 2022

Assets Confiscated: US$27 Million (0.14%of estimated financial crime proceeds @ 3.6% of GDP) 2022

FCN Country Risk Scores & Ratings:

Thailand is rated 79/100 and having a “Moderate to High” Threat level, with a “Moderate” Response at 51/100, resulting in an overall Risk of “Moderate – High” at 65/100, using the FCN Methodology. This is worse than regional neighbours Indonesia (63/100), Vietnam (62/100) & Malaysia 55/100, far behind Singapore 21/100 and Japan 36/100, South Korea 36/100, Australia 26/100, Singapore 21/100, and New Zealand 17/100, but better  North Korea at 75/100 & China at 77/100.

For the Thailand Financial Crime Dashboard see below and HERE: FCN Thai Dash Mar24

These materials are owned and copyrighted by FCN/Metriqa Ltd.  They should not be used for commercial purposes without the prior consent of the author.

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