2.2 Money Laundering

2.2

Money Laundering

International definition of money laundering:

(i) The conversion or transfer of property, knowing that such property is the proceeds of crime, for the purpose of concealing or disguising the illicit origin of the property or of helping any person who is involved in the commission of the predicate offence to evade the legal consequences of his or her action; (ii) The concealment or disguise of the true nature, source, location, disposition, movement or ownership of or rights with respect to property, knowing that such property is the proceeds of crime” (United Nations Convention against Corruption of 2003, Article 23, Paragraph 1.A)134

Applicable domestic laws in Thailand:

Anti-Money Laundering Act of 1999; Anti-Terrorist Financing Act of 2013.

There was no significant disagreement among interviewees concerning the criminal activity of money laundering. Money laundering in Thailand primarily involves the proceeds of drug trafficking and trafficking in persons. A few emerging trends were noted, along with unanimous agreement that Thailand is primarily a destination country for money laundering rather than a source or transit country. However, there was ambiguity about whether the amount of money laundering has increased over the last two years, or more cases have been reported due to increasingly advanced detection capacity. Finally, interviewees agreed that both Thai and foreign nationals are involved in this criminal activity.

According to the Anti-Money Laundering Office of Thailand, in 2018, the Office has investigated 644 cases of possible money laundering.135 The DSI, in turn, had reported that they had received 42 cases of economic crime, which includes money laundering.136

134 Schmid, T. (2010). The Darker Side of Tropical Bliss: Foreign Mafia in Thailand. Thailand Law Forum, 1. Retrieved from http://www. thailawforum.com/foreign-mafia-thailand.html 135 Anti-Money Laundering Office of Thailand. (2015). Official data provided in response to TIJ request, Bangkok. 136 Ibid.

Methods of Money Laundering

Illicit assets are often laundered in Thailand through legitimate channels such as real estate and stocks,137 due to the loose oversight of foreign funds being transferred into Thailand in order to attract foreign investment.138 Noted trends identified by the Thai Anti-Money Laundering Office consist of ten different forms of money laundering taking place in Thailand:139

1. Having a bank account in Thailand in which money is transferred from abroad, and occasionally into accounts of Thai nationals.

2. Using a bank account of a person who is the victim of fraud and has no connection with the offender.

3. Transferring money into an account in a neighbouring country and using that neighbouring country account as a transit point.

4. Utilizing an illegal banking system in which money is transferred from abroad into Thailand without the appropriate approval.

5. Having victims deposit small amounts of money into one account; an example of this would be the result of an illegal call centre operation.

6. Allowing transactions in order to avoid fraud inspection by transferring amounts lower than the designated inspection rate.

7. Investing in either real estate or a car and register it under the name of a Thai national; a common practice in this respect is to register the asset in the name of a Thai wife.

8. Creating a front organization, for example, a shop or restaurant, in order to hide any illegal activity; common locations for this are Pattaya, Phuket, Chiang Mai, and Samui Island.

9. Transferring money through Western Union.

10. Fraudulently creating and transferring money through casino accounts; this is done by influential figures such as politicians, as well as people that do not hold such a status in society.140

137 DSI. DSI and MJIB dismantled transnational criminal organization Call Center Gang. Retrieved from https://dsi.go.th/en/Detail/DSI-andMJIB-dismantled-transnational-criminal-organization-Call-Center-Gang 138 ‘Narcotic drug’ means any of the substances, natural or synthetic, in Schedules I and II of the Single Convention on Narcotic Drugs, 1961, and that Convention as amended by the 1972 Protocol Amending the Single Convention on Narcotic Drugs, 1961. Source: United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances 1988, Article 1, Paragraph N. 139 ‘Psychotropic substance’ means any substance, natural or synthetic, or any natural material in Schedules I, II, III and IV of the Convention on Psychotropic Substances, 1971. Source: United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances 1988, Article 1, Paragraph R. 140 ‘1961 Convention’ means the Single Convention on Narcotic Drugs of 1961.

Offenders

Most interviewees agreed that money laundering in Thailand is linked to TOC and it is conducted by both Thai and foreign offenders, stating that many foreign criminal groups need the support of local Thai people to conduct their illicit operations in Thailand. For example, in 2017, DSI had dismantled the ‘Call Centre Gang’, which is a transnational criminal organization that has its base outside Thailand but was targeting Thai people with the help of their Thai accomplice.141 Moreover, in practice, when offenders are married to a Thai national, they tend to use their partner and a lawyer as local facilitators. Nevertheless, a handful of interviewed stakeholders said that money laundering in Thailand primarily involves foreign groups operating alone. None of the interviewees said that purely Thai criminal groups were involved in money laundering: there was apparently always a foreign affiliation.

A few groups could be identified as conducting money laundering in Thailand, including Thai, Chinese, Myanmar, Nigerian, Russian, Macanese, Korean and European criminal groups, specifically Dutch groups and the Italian Mafia. It was noted that criminal groups engaging in money laundering are usually also involved in other types of crime, in particular drug trafficking and trafficking in persons.

Money Laundering Routes

All of the interviewees agreed that Thailand is a destination country for money laundering. The proceeds of crime to be laundered come from both domestic and foreign sources. The proceeds of TOC are usually laundered by investing these assets in real estate, gold, and securities; buying cars and lands; setting up legitimate and non-legitimate businesses, such as companies operating in various fields, bars, night clubs and massage parlours; or depositing the money in the bank accounts of third parties. Proceeds of crime coming from abroad are laundered primarily through investments in real estate and licit companies. Common laundering locations include Phuket, Pattaya, Chonburi and Chiang Mai. Casinos along the Thai-Cambodian border are also well-known locations for money laundering. Thailand is seen as a desirable location to launder money, since the monitoring of financial flows is not seen to be too stringent due to the Kingdom’s policy of seeking to attract foreign investment.

Emerging Trends: Money Laundering

Interviewees indicated that the perpetrators tend to invest in legal businesses as their front operations, which makes it difficult to separate laundered money from legal money.

Stakeholders also said that there has been an increase in Thailand in the laundering of money through gold and foreign currencies, such as bank notes from Japan and the United States.

141 ‘1961 Convention as amended’ means the Single Convention on Narcotic Drugs of 1961, as amended by the 1972 Protocol Amending the Single Convention on Narcotic Drugs, 1961.