117TH INTERNATIONAL SEMINARPARTICIPANTS’ PAPERS

CURRENT SITUATION AND COUNTERMEASURES AGAINSTMONEY LAUNDERING IN THAILAND
Pisan Mookjang *Thailand is a democratic country with astrong economy in Southeast Asia. Like
most developing countries, Thailand ismainly concerned with the economic andsocial development of the country for thewell-being of her people. So she must face
up to various kinds of problems such as
unemployment, poverty, education, traffic,
political corruption, the environment andcrime, etc.

economic crises and the negative effects
emerging from the effort to convert thec o u n t r y ’s e c o n o m i c s y s t e m f r o magricultural oriented to industrial oriented.

It is generally accepted that “crime”
means an offence for which there is severe
punishment by law and such offences arecollectively treated as serious lawbreaking. Not only “Street Crimes” suchas homicide, rape, larceny, extortion,robbery, gang-robbery and drug offences
etc. are serious problems to the Thai
Government but also “Transnational
Crimes” and “Economic Crimes” are themost serious ones in this decade.

B. Smuggling of Illegal Migrants
Since Thailand’s economic condition ismuch better than her neighboring countries’
such as Myanmar, Loas, Cambodia andChina, there has been an influx of illegal
foreign workers through the means of fakepassports and visas made by organized
smuggling rings. These organized criminalgroups not only smuggle illegal workers
from neighboring countries into Thailand
but are involved in smuggling illegal
migrants to other countries by using
Thailand as the gateway and a temporary
resort. This is also rewarding business for
it turns out that this business makes a lotof money especially smuggling illegal
migrants to other countries like the USA,the UK, the Netherlands and Japan, and it
costs each person about 75,000 baht —140,000 baht for one illegal trip.

I. MAJOR TRANSNATIONALORGANIZED CRIMINAL GROUPSAND THEIR ACTIVITIESA. Drug Trafficking
Drug crime in Thailand starts at the
beginning of the cycle in that many typesof drugs like heroin, amphetamine, opium,
marijuana are produced here in Thailand
and immediately transported to “domestic
markets” which will be trafficked directly
to the “consumers”. This brade is stimulate
by the tension people get from the country’s* Superintendent, Economic Crime Prevention andSuppression Police Cadet Academy, Royal Police
Headquater, Thailand

Moreover, the proximity of the golden
triangle where the borders of Thailand,
Myanma and Loas, meet has allowed drug
business to be prosperous, especially opium
plantation.

C. Arms Trafficking
Thailand is located among neighboring
countries which have problems concerninginternal peace and order such as Myanmar,
and Cambodia. Consequently, for the past
10 years, there has been an in-flow and outflow of lethal weapons. Unfortunately,some Thai government officials cooperatewith the organized criminal groups secretly

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to sell illegal weapons to ethnic or minorgroups along the borders of Thailand.
These weapons are used to fight against
their governments.
D. Trafficking in Women
There are a large number of prostitutesin Thailand partly due to poverty andpartly because many women have been
misled and forced into it, some of whom
have been trafficked to other countries such
as Japan and Germany. However, it is
widely known that some foreign prostitutes
come and do their business in Thailand
under the control of transnationalorganized crime syndicates.
II. PROBLEMS AND OBSTACLES TOSOLVING TRANSNATIONALORGANIZED CRIME(1) The authority and power of law
enfocement officers is limited and thisdoes not allow the officers to act quickly
and fast, and to keep up with thedevelopment and different forms ofcrime, for example, wire trapping is stillprohibited.
(2) Most law enforcement officers lackknowledge about transnationalorganized crime and about the new
types of crime such as computer crime.
(3) The shortage of criminal justicepersonnel and the limited budget as aresult of economic crises of the country.
III. ECONOMIC CRIME IN
THAILAND
There are various types of economic
crime in Thailand but this paper will focus
on the enforcement of two kinds of offence
which are increasing on a large scale both
domestically and internationally : they arecredit card fraud and counterfeiting andthe laundering of money by organizedcrime groups.

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A. Credit Card Fraud andCounterfeiting
At present, economic crime, especiallycredit card fraud and counterfeiting U.S.
currency, are mostly committed by wellorganized crime syndicates, who operate
not only within each country but expand
to international level, by fleeing between
countries believing that they will not beapprehended, with a significant number of
trade transactions taken along neighboring
countries such as Cambodia, Laos,
Malaysia and Myanmar.
The occurrence of both credit card fraudand counterfeiting U.S. currency tend toincrease at an alarming rate along withgreater complexity in investigations andthe inability of law enforcement officials toapprehend the suspects. In addition, thenumber of credit card holders is increasing
because of competition between the credit
card companies and more borders havebeen opened to allow trade withneighboring countries. Because of this,certain problems need to be emphasized.
1. Loop-Holes/Weak Points
Criminals who commit fraud always
take advantage of existing loop holes or
weakpoints to forge and counterfeit. We
should try to minimize every advantage
used by the criminals by communicatingthese loopholes and weakpoints throughout
the law enforcement community.
2. Modus Operandi
It is the duty of law enforcement officials
to know the modus operandi of thecriminals and every type of modus operandi
should be informed to all competent law
enforcement officers.
3. Information
The criminal uses advanced
communications (telephones, especiallycellular hand or mobile phone, and faxes)
to pass his information and travels to and117TH INTERNATIONAL SEMINARPARTICIPANTS’ PAPERS
from countries in a matter of hours. Law
enforcement officers should, therefore, use
these same means with each other to bringthe criminals to justice regardless ofgeographical boundaries by establishing
information exchange centers between law
enforcement authorities to keep ahead of
the criminals.
4. Co-operation
Both counterfeit and credit cardfraudsters are organized and often commit
their crimes in different countries at thesame time. We need to be at least asorganized as the criminals and also havethe ability to pass information to othercountries, for effective co-operation, before
they can commit any crime anywhere in
the world.
The above-mentioned problems have to
be closely considered and administered by
all competent law enforcement authorities
continually, and effectively. Only then willa law enforcement strategy be developed
to benefit the economy and societies ofevery country.
B. Money Laundering
Historically, “crime” has been considered
only in terms of acts of violence, threats ofviolence and overt thefts. The Thai system
of jurisprudence has evolved by defining
as illegal, certain activities directed against
property and persons, and over a numberof years, law enforcement agencies havedeveloped generally accepted methods forinvestigating these traditional crimes. As
firstly mentioned, “economic crime” causes
a lot of problems to law enforcement andone of the illegal activities of this type ofcrime, which becomes an alarming issue
nowadays, is money laundering.
Since most money collected by organizedcrime activities is from illegal sources suchas loansharking, prostitution, gambling or
narcotics, the individual racketeer isunderstandably reluctant to report theincome and its source on his tax return.
Before spending or using these funds, it isnecessary that this money must be given
an image of legality so that it can bereported on the tax return without
revealing the true nature of its origins.
This process of conversion is known as“laundering”.
If law enforcement officials are to combat
organized crime successfully, they musthave an understanding of how money
acquired from illicit sources is transformed
into respectable funds that can be spentand invested without the fear ofprosecution.
The Bank of Thailand has classified
money laundering into several
characteristics;
1. Carrying cash when travelingabroadCriminals tend to carry dirty money,
especially cash, with them every time they
travel abroad to finance themselves abroad
because dirty money obtained from drugtrafficking or other economic crime
activities could be traced by law
enforcement officials if the transfer is done
through financial institutions.
2. Deposits with domestic financial
institutions
The role of the modern banking system
has helped criminals to deposit their dirty
money in financial institutions. Part of theordinary business of financial institutions
is discretion, which is the bankers duty
when serving their clients, and last but notleast, his obligation to keep all information
secret.
3. International wire transfer
Satellite communication hold thepromise of a new era in which people
throughout the world while be linked,

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RESOURCE MATERIAL SERIES No. 58
including the Thai citizen, by a single
telecommunications system. This will
provide a great number of avenues tot r e m e n d o u s l y e x p a n d T h a i l a n d ’s
telecommunication’s capacity and enhance
its chances of becoming the region’s
telecommunication’s hub. Whereas
electronic records favor law enfocement
authorities, modern international banking
favors the criminal. It is difficult,sometimes impossible, and often not worth
the trouble, to follow the paper trial acrossinternational borders. Therefore, money
launderers use typical internationaltransfers to hide the true source of themoney. With the advent of satellite
communication, hi-tech information
systems and the introduction of facsimile
machines, both economic criminals anddrug traffickers have been invited tolaunder their dirty money during this last
decade and it will continue to flourish as
we approach the conclusion of this century.
4. Front Companies
Drug traffickers and white-collar
criminals certainly conceal their illegal
income and the ownership of such illicit
money to avoid being detected by law
enforcement officials. They establish a“front company” in a free-port state andproceed with lending money or selling highprice merchandise to their own companies
with high interest rates or high costs withthe real intention to launder the dirty
money into legal income.
5. Others
While laundering money can beaccomplished by a wide variety oflegitimate businesses, it should berecognized that certain domestic
businesses have characteristics which lendthemselves to successful laundering
operations. Businesses that normallyexperience a high rate of spoilage or otherloss of goods also have a high potential tolaunder money. Groceries, hotels,

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restaurants, money changers are good
examples, since some spoilage of goods is
expected during the normal course ofbusiness. When such a business is taken
over, a large bulk of illicit money isintroduced into the business and recordedin the general income accounts of thegrocery stores, hotels, restaurants etc. as
if this money has been received from
customers. Fraudulent invoices, forms of
produce or other perishable items ar thenissured to these business by other mobowned or mob-controlld companies acting
as suppliers.
Domestic laundries : domestic
businesses also have characteristics which
lend themselves to successful laundering
operations. For example, the businessselected as a “laundry” must be capable ofabsorbing a large volume of cash income,since most illicit income is received in theform of cash. The purpose of laundering
funds is to co-mingle licit and illicit money
so that they cannot be separated, while
simultaneously preventing the discovery of
the introduction of illegal money into thebusiness. Since almost all checks andcredit card receipts are traceable by law
enforcement officials, businesses such as
restaurants, bars, and massage parlors,
which normally take in high proportionsof cash, tend to be more desirable as apotential “laundry” than a businessnormally receiving most of its income in
the form of checks or other traceable
financial instruments.
The above technique has been used tolaunder funds successfully for a number ofyears, and a large numbr of domestic
businesses controlled by organized crimegroups are still being used for this function.
A few years ago, however, law enforcement
officials from the Office of Narcotics Control
Board (ONCB) adapted new methods, suchas sampling, ratio analysis, andflowcharting to discover laundering

117TH INTERNATIONAL SEMINARPARTICIPANTS’ PAPERS
operations and to successfully prosecutethe people involved in the conversion
process.

been taken in providing investigators withnew jurisdictional tools to combat thisproblem.

Another method used to uncoverdomestic laundering operations involves
researching the corporate and ownership
structures of both the suspected businessand all the companies’ deals. Since theultimate success of laundering operations
are dependent upon keeping the money “inhouse” there will be a commonality among
the various businesses. The relationshipbetween the various companies may b
illustrated visually by the process offlowcharting, which allows investigators,
prosecutors, and judges to grasp moreeasily the sometimes complex relationships
which exist in laundering operations.

Worldwide rules and different legal
cultures : since laundering is typically doneby moving money across international
borders, it is highly desirable to developinternationally uniform rules on money
laundering definitions an forfeituredefinitions.

Implications for law enforcement : since
the laundering of dirty money depends
upon keeping the cash flow “in house”, it
creates such complexity that investigations
into the operation appear to be toocomplicated to undertake. Experience has
shown, however, that these laundering
operations are not complicatd and can be
successfully investigated by law
enforcement officers willingly to use
techniques such as sampling, ratio
analysis, and flowcharting, combined withtraditional methods of investigation.
The success of organized crime inlaundering funds through secret numberedbank accounts and foreign corporations andthrough securities and financial
instruments issured by off-shore bankshas, in larger part, been a result of the factthat these “foreign laundries” havetraditionally been beyond the jurisdiction
and resources of law enforcement agencies
operating in the Kingdom of Thailand.
While investigating this type of laundering
operation remain expensive, difficult, andtime consuming, significant steps have

IV. RECENT LEGISLATIVEDEVELOPMENTS
It has been taken for granted that
Thailand provides a fertile ground where
illegal businesses can operate lucratively
much to their advantage. This is possible
partly because of its socio-economic
conditions and partly because of its geopolitical situation. Against this backdrop,
however hard the government and theinstitutions concerned try to combat
organized crimes in general and money
laundering in particular, it seems that a
total victory over such crimes is still an
illusive object, if not a distant dream, ifconcerted efforts are lacking on both aregional and international scale.
There are a variety of illegal sources that
contribute to the flourishing business ofmoney laundering. In order to spotlightthe gravity of the situation and its
d e v a s t a t i n g i m p a c t o n s o c i e t y,
Chulalongkorn’s Political Economy Center,
Faculty of Economics, has undertaken a
research into illegal trades in Thailand
along the following main categories : (1)drug trafficking (2) trading in contrabandarms; (3) diesel oil smuggling; (4)prostitution; (5) human trafficking, and (6)illegal gambling. The study provides
estimates of these illegal trades concludingthat these six activities generated 289-457
thousand million Baht of value added perannum during the period 1993-1995. The

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figure is equivalent to 8-13 percent of GNP.
The largest contributor was gambling,followed by prostitution, drug trafficking,diesel oil smuggling, trafficking labour, andtrading in contraband arms, as can be seenin the table below:
Estimates of the Size of the Illegal Economy(1993-1995, billion baht per annum)
Category

Value added

1. Drug trafficking

29-33

2. Trading in contraband arms

6-31

3. Diesel oil smuggling

9

4. Prostitution in Thailand100

5. Human trafficking

5-7

6. Illegal Gambling140-277

6.1 Underground lottery(80-98)

6.2 Football gambling(12-16)

6.3 Casinos(45-163)
Total

289-457

Remark : Thailand’s GDP between 1993-1995
averaged 3.6 billion Baht a year.

The above table testifies to the fact thatthe average volume of turnover of theillegal economy in Thailand is staggeringly
huge and it is enough to stimulate thebusiness of money laundering and otherrelated activities. It can therefore be safely
deduced that these illegal business
operators and their agents will resort toall available facilities whether they belegal, financial, or banking to launder theirillicit proceeds of crime. Their widespreaduse of money to achieve their ultimate aimsof turning illegal proceeds to legal money
undoubtedly paves the way for a generald e g r a d a t i o n o f m o r a l i t y, w h i c hunfortunately has become a negative social
phenomenon tearing apart the fabric ofsociety.
The overall situation being as such, it
has become imperative that the442

Government and the business community
take timely action to gurard against theonslaught of organized crime, particularlymoney laundering. To this end, as we haveobserved, the State reacted, and willcontinue to react, with some commendable
determination by means of administrativeand legislative initiatives.
Legislative & Aministrative Initiatives
Beginning in 1991, the government ofThailand had taken the following
legislative and administrative measures inpursuance of the 1988 Vienna Convention(The United Nations Convention against
Illicit Trafficking in Narcotics Drugs &Psychotropic Substances) :a) t h e A c t o n M e a s u r e s f o r t h e
Suppression of Offenders in an
Offence Relating to Narcotics, B.E.
2534; (1991)b) Ministerial Rgulations (to implement
the above Act); andc) the Money Laundering Control Act,1999
It may, however, be noted that the legal
and administrative instruments shown in(a) and (b) above do not directly deal withmoney laundering properly; whereas item(c) is the precise answer to the problem ofmoney laundering in Thailand.

117TH INTERNATIONAL SEMINARPARTICIPANTS’ PAPERS
MONEY LAUNDERING CONTROLACT OF THAILAND 1999
The Money Laundering Control Act
1999 consists of 7 chapters and
66 sections :Chapter 1 : General Provision
Chapter 2 : Reporting and Identification
Chapter 3 : Money Laundering ControlBoard
C h a p t e r 4 : B u s i n e s s Tr a n s a c t i o n
Committee
Chapter 5 : Office of Money Laundering
Control
Chapter 6 : Actions on Properties
Chapter 7 : Penalties“Predicate offences” mean
1. Narcotic offences : offenses pertaining
to narcotics, under the Narcotics
Control Act or the Act on Measures
for the Suppression of Offenders in
an Offense Relating to Narcotics.
2. Trafficking of children and women :offenses relating to sexuality under
the Penal Code, in particular sexual
offenses pertaining to procuring,
seducing, and taking away, forindecent acts, women and children inorder to gratify the sexual desire ofanother person, sexual offenses
against children and minors, offenses
under the Measures to Prevent andSuppress Trading of Women andChildren Act, offenses under thePrevention and Suppression of
Prostitution Act, especially offenses
pertaining to procuring, seducing andtaking away persons for the purposeof forced prostitution, offenses
pertaining to conducting a
prostituion businesses as owner,
operator, or manager of places of
prostituion, or supervising persons
who commit prostituion in places ofknown prostitution.
3. Cheating and fraud of the public :offenses of cheating and fraud of the

public under the Penal Code oroffenses pertaining to acquiring loans
fraudulently pursuant to the
Fraudulent Loans and Swindles Act.
4. Misappropriation or cheating andfraud by financial institutions :offenses of misappropriation andcheating and fraud under the law
governing commercial banks, law
governing the conduct of business infinance, money market funds,
securities and credit fencier, law
governing securities and securities
market, which are committed bymanaging directors or any person
who is responsible for or has someinterests in conducting the affairs ofa financial institution.
5. Malfeasance in office or in judicial
office : offenses pertaining tomalfeasance in office or malfeasancein judicial office under the Penal
Code, offenses pertaining to law
governing officers of governmentorganizations or sector or offenses
pertaining to malfeasance on
dishonesty in carrying out official
duty under other laws.
6. Extortion or blackmail by financial
institutions : offenses of extortion or
blackmail which are committed by amember of a secret society or criminalorganization, under the Penal Code.
7. Customs evasion : offenses of customs
evasion under the Customs Law.
“transaction” means any activity
relating to a juristic act, contract, or any
operation with other persons dealing withfinance, business or involving properties;“suspicious transaction” means atransaction that is more complicated than
the norm by which that transaction isusually conducted, a transaction that lacks
economic possibility, a transaction believed
to be conducted for the purpose of avoiding
the application of this Act or a transaction

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RESOURCE MATERIAL SERIES No. 58
related or possibly related to a predicate
offense, whether the transaction was
conducted once or more than once;“properties related to an offense” means :(1) money or properties derived from a
predicate offfense, or from supportingor assisting in the commission of apredicate offense;(2) money or properties derived from thesale, distribution, or transfer in any
manners the money or properties in(1); or(3) fruits of the money and properties in(1) and (2)Notwithstanding how many times theproperties in (1), (2), or (3) have been sold,distributed, transferred, or changed from,or have been found in whosever ownership,or have been transferred to whomever, or
have been shown registered or recorded
under whosever ownership.
“Financial institutions” means :1. Banks
2. Trust and investment companies,
credit and finance companies andsecurities enterprises
3. Industrial Fund Enterprise ofThailand
4. Saving Cooperative
5. Other institutions as designated in
the Ministerial Regulations.
Definition of “money laundering
offence” under section 5 of the
Money Laundering Control Act
1999
Whoever(1) transfers, receives the transfer, orchanges the form of properties related
to an offense, for the purpose ofconcealing or covering up the sourcesof those properties, or for the purposeof assisting other persons before,
while, or after the commission of theoffense so that the offenders can avoid444

the penalty or receive lesser penalty
for the predicate offense; or(2) takes any actions in order to cover
up or disguise the true nature of themanner of obtaining, location, sale,transfer, and rights of ownership, of
properties related to an offense
Shall be deemed as having committed
the offense of money laundering.
The following persons are required toreport without delay to the Anti-Money
Laundering Office, all transactions that are
unusual, suspicious or in excess of a given
amount fixed in the Ministerial
Regulations :1. Financial Institutions
2. Land registration offices
3. Other persons in exercise of theirprofession carrying out, supervising oradvising on transactions involving
movement of capital.
The Money Laundering Control
Board mainly consists of :• Prime Minister as Chairman• Minister of Finance as Vice-Chairman• Permanent Secretary of Ministry ofJustice• Attorney-General• Commissioner General of the Royal
Thai Police• Secretary General of Narcotic Control
Board• Governor of the Bank of Thailand• Other nine members with expertise ineconomics, monetary matters, financeor law appointed by the cabinet etc.
The Anti-Money Laundering Office issubordinate to the Office of thePrime Minister and has thefollowing powers and duties;
1. To carry out resolutions of the Money
Laundering Control Board andBusiness Transaction Committee
2. To receive, collect and examine
information on financial transactions

117TH INTERNATIONAL SEMINARPARTICIPANTS’ PAPERS
3. To share information with the Court
and other competent authorities forthe purpose of investigating andprosecuting offenders
4. To develop training programs forconcerned government and private
sectors.
Special methods of investigation
The competent officials may apply to the
Civil Court for an order authorizing;• Placing bank accounts undersurveillance• Tapping telephone lines• Accessing computer systems.
There shall be a Business Transaction
Committee consisting of :• Secretary General of the Money
Laundering Control Board as
Chairman• Other 4 members appointed by the
Money Laundering Control Board.
Action on Properties (section 48-59)
The acknowledgement of the report may
accompany an order by the BusinessTr a n s a c t i o n C o m m i t t e e s e i z i n g o r
attaching suspicious properties for a period
not exceeding 90 days.
All properties related to predicate
offences must be forfeited irrespective ofwhether there is a convicted person and theproperties will devolve to the Kingdom ofThailand.
Penalties (sections 60-66)
Whoever commits a money laundering
offence shall be punished withimprisonment of one to ten years and a finefrom between twenty thousand Baht to two
hundred thousand Baht or both.
It the offender is a juristic person, heshall be punished with a fine from two
hundred thousand Baht to a million Baht.

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