Thailand’s Fintech Landscape: Navigating the AML Regulations for Businesses
Thailand’s position as an alluring fintech destination in the ASEAN region remains undeterred by its economic slowdown. This trend is reflected in the growing market value of the fintech sector, which was approximately 37.6 billion Thai baht ($1bn USD) in 2021. In this article, we explore the Anti-Money Laundering (AML) regulations that businesses must adhere to in Thailand’s fintech industry.
Impact of Digital Penetration and Demographic on Thailand’s Fintech Hub
According to a 2019 report by EY, Thailand’s substantial digital penetration and younger demographic make it a key fintech hub in the ASEAN region. This trend is evident in the significant increase in the fintech sector’s market value from 14.3 billion baht ($401m USD) in 2019 to 37.6 billion baht ($1bn USD) in 2021.
Government’s Support for Startups and Key Industries Subject to AML Regulations
The Thai government’s proactive approach to supporting startups parallels the successful Singapore model. Venture capital companies are offered tax-exempt capital gains from the sale of startup shares. However, potential investors and businesses must navigate the intricacies of Thailand’s AML and Know Your Customer (KYC) regulations.
Which Industries are Subject to AML Regulations?
According to the Anti-Money Laundering Act B.E. 2542 (1999), the following industries are subjected to AML regulations:
- Banks
- Electronic payment service businesses
- Credit institutions including personal loan businesses
- Advisors in transactions relating to investments
- Traders of precious stones, diamonds, gems, gold, or ornaments decorated with precious stones, diamonds, gems, or gold
- Car traders or car hiring services
- Real estate brokers or agents
- Traders of antiques
- Digital asset business operators
Notably, casinos, betting, and gaming activities are banned in Thailand.
Cryptocurrency’s Status in Thailand’s Regulatory Framework
Thailand recognizes cryptocurrencies as “digital assets” under the Royal Decree on Digital Asset Businesses, but they are not legal tender for payment services. Digital asset businesses are classified into the following categories:
- Digital Asset Exchange
- Digital Asset Broker
- Digital Asset Dealer
These businesses can issue, trade, and exchange digital assets. Thailand-based digital asset business operators must secure approval by the Minister of Finance and SEC to comply with the country’s AML requirements.
Who Enforces the AML Regulations in Thailand?
The Bank of Thailand supervises the country’s financial system, while the Securities and Exchange Commission (SEC) oversees securities businesses. The Anti-Money Laundering Office (AMLO), founded in 1999, is responsible for upholding AML and preventing financing for terrorism regulations.
Key Regulations Relevant to Fintechs
The following AML-related legislations are crucial for fintech businesses:
- Anti-Money Laundering Act B.E. 2542 (1999)
- Counter-Terrorism Financing Act B.E. 2559 (2016)
- Financial Institutions Business Act B.E. 2551 (2008)
- Ministerial Regulation B.E. 2563 (2020)
- Prime Minister Office Notification
- Notification of the Bank of Thailand No. FPG. 6/2565
Ensuring Compliance
Financial institutions and professionals subjected to AML regulations in Thailand must:
- Implement a customer acceptance and risk management policy regarding money laundering
- Conduct periodic Customer Due Diligence
- Report suspicious transactions to the regulator
Furthermore, companies must follow record-keeping guidelines, including keeping client identification information for 5 years (post-account closure), financial transaction information for 5 years, and customer acceptance policy records for 10 years.