Introduction: Examining Thai and U.S. Legal Systems in a Modern Context
Thailand’s legal history is fascinating. In Thailand, the pendulum swings hard between authoritarianism and more democratic governance. Here in the U.S. in 2024, we are at a turning point in our democracy. Though President Elect Trump is again ascending to the presidency, he is coming into power through mostly peaceful, democratic processes, winning the electoral vote, and not by military coup, as has happened repeatedly in Thailand over the years. Nonetheless, President Elect Trump is defined by autocratic methodologies, his willingness to disrupt and dismantle democratic institutions, and a utilitarian philosophy, which does not value fundamental structural principles such as the separation and balance of powers, judicial and legislative checks on executive power, and transparency in government.
Thus, at this turning point in our history, it is instructive to compare, contrast and learn from Thailand’s political history and periodic turmoil, political and legal institutions and institutional frameworks with those in the United States. In a series of articles, we will examine the similarities and differences between the Thai and U.S. laws and systems. Before we get to the particular topic of this article, Anti-Money Laundering regulations, let’s take a step back and contrast the legal systems of the two countries.
Common Law vs. Civil Law: Key Differences in Legal Traditions
Generally, in the U.S, we operate under a common law system, with cases and controversies coming before our state and federal judiciaries where they are decided, opinions are issued and those court decisions become the law by precedent. Thailand operates under a civil law system, with codified statutes forming the basis of law, with no recognition of stare decisis. In Thailand, judicial decisions do not generally carry the same precedential authority as in common law systems like that of the United States. However, decisions, particularly from higher courts like the Supreme Court of Thailand (Dika Court), are highly influential and often treated as precedent in practice, even though they do not have binding legal force in a strict sense.
Thailand’s legal system is based on codified statutes and regulations. The primary sources of law are the Civil and Commercial Code, Criminal Code, and other statutes, with judicial decisions serving an interpretive role. Unlike the U.S., where prior judicial decisions are binding (stare decisis), Thai judges are not formally bound to follow previous decisions. The Supreme Court of Thailand (Dika Court) serves as the highest appellate court in Thailand. While its rulings are not formally binding, they are persuasive and often followed by lower courts to ensure consistency and predictability in the application of law. Scholars and practitioners frequently cite Dika Court judgments in legal arguments and academic writings to support interpretations of statutory provisions. Moreover, in practice, lower Thai courts tend to adhere to the reasoning in Dika Court rulings, which tends to avert conflicting interpretations of laws, giving higher court decisions a quasi-precedential effect.
Significantly, there is no codified principle in Thai law that grants precedential authority to judicial opinions. Thai Courts must base their decisions on the statutes as enacted by the Thai legislature. Dika Court decisions are published in the “Supreme Court Judgment Reports” and are widely used as references but do not hold the strength of law.
Anti-Money Laundering: A Comparative Analysis of Thailand and the United States
For this first topic in the series, let’s look at the Anti Money Laundering laws in the United States versus Thailand’s statutory scheme. Anti-Money Laundering (“AML”) laws in Thailand and the United States share common objectives of combating illicit financial activities, yet the statutory schemes diverge in structure, scope, and implementation. Here are some of the key similarities and differences between the two statutory schemes.
AML Framework in Thailand: Key Regulations and Oversight
Thailand’s Anti-Money Laundering Act B.E. 2542 (1999) (AMLA) is a comprehensive statute regulating financial and non-financial institutions to prevent money laundering. The Thai AMLA applies to financial institutions and non-financial entities defined as Professional Operators (“POs”) under the law. Key Regulations include the following:
- MR No. 4 (2000): Requires POs to implement internal controls for compliance with AML obligations.
- MR on Cash Transaction (2011): Mandates the reporting of certain cash transactions exceeding prescribed thresholds to the Anti-Money Laundering Office (AMLO).
- MR on Customer Due Diligence (CDD) (2019): Introduces robust customer identification and verification requirements for POs.
- MR on Know Your Customer (KYC) (2019): Outlines measures for financial institutions and POs to verify customer identities for specified transactions.
AML in the United States: The Role of the Bank Secrecy Act and Modernization
Here in the United States, we have the Bank Secrecy Act (“BSA”), Title 31 U.S.C. § 5311, enacted in 1970, is the foundational AML law in the U.S., aimed at detecting and preventing money laundering and other financial crimes. The BSA covers financial institutions and entities engaged in financial services, more recently expanded to certain non-financial entities. The Anti-Money Laundering Act of 2020 modernized the BSA by mandating risk-based AML programs and expanding reporting requirements to cover beneficial ownership.
Similarities in AML Approaches Between Thailand and the U.S.
Despite our overarching differences in legal systems, there are key similarities between the U.S. and Thai AML statutes. Both countries maintain mandatory reporting requirements. In Thailand, under Section 16 of the AMLA and the MR on Cash Transaction, POs must report large cash transactions (exceeding prescribed thresholds) and suspicious transactions to the AMLO. In the United States, financial institutions are required under the BSA to file Currency Transaction Reports (“CTR”) for transactions exceeding $10,000 and Suspicious Activity Reports (SAR) for potentially illicit activities.
Regarding customer due diligence (“CDD”), in Thailand, the MR on CDD (2019) mandates customer identification and verification processes to prevent money laundering. In the United States, the Customer Due Diligence Rule (31 CFR § 1010.230) requires identifying the beneficial owners of legal entities and verifying their identities as part of a risk-based AML program. Both countries maintain “know Your Customer (“KYC”) standards. Thailand and the United States require KYC processes to verify customer identities for high-risk transactions or when certain thresholds are met.
Not surprisingly, both the United States and Thailand impose significant penalties for non-compliance with the statutory requirements, including monetary fines and potential criminal liability for institutions and individuals.
Key Differences in AML Implementation
Despite the many similarities, there are key differences between Thai and U.S. law regarding AML. For instance, with respect to covered entities, Thailand’s AML explicitly applies to Professional Operators (POs), such as real estate agents, dealers in precious metals, and other designated non-financial entities, in addition to financial institutions. In the United States, the BSA traditionally focused on financial institutions. However, the United States’ AML Act of 2020 expanded its scope to include non-financial entities like virtual currency service providers and high-value art dealers.
Regarding regulatory oversight, in Thailand, the Anti-Money Laundering Office (“AMLO”) is the dedicated agency overseeing AML compliance and enforcement. In the United States, multiple agencies, including the Financial Crimes Enforcement Network (“FinCEN”), oversee AML enforcement, with support from law enforcement and financial regulators.
There are also key differences in the monetary thresholds for AML reporting. In the United States, the BSA sets a uniform reporting threshold of $10,000 for CTRs.
Regulatory Oversight: AMLO in Thailand vs. FinCEN in the United States
In Thailand, the MR on cash transaction specifies thresholds unique to different types of POs, which may vary depending on the transaction type. Instead, the thresholds vary depending on the type of transaction and the entity involved. The key regulations outlining these requirements include:
- Ministerial Regulation No. 4 B.E. 2543 (2000): This regulation mandates that financial institutions and certain non-financial businesses, referred to as Professional Operators (POs), report specific transactions to the Anti-Money Laundering Office (AMLO). The reporting thresholds differ based on the nature of the transaction and the entity conducting it.
- Ministerial Regulation on the Amounts of Cash Transactions that Professional Operators as Prescribed in Section 16 Must Report to the Anti-Money Laundering Office B.E. 2554 (2011): This regulation specifies the monetary thresholds for cash transactions that POs are required to report. The thresholds are tailored to different types of POs and the transactions they handle.
- Ministerial Regulation on Customer Due Diligence B.E. 2563 (2019): While primarily focused on customer identification and verification procedures, this regulation also outlines scenarios where transactions must be reported, which may involve specific monetary thresholds.
- Ministerial Regulation B.E. 2562 (2019) on Transactions that Financial Institutions and Professionals under Section 16 Must Require Customers to Identify: This regulation details the types of transactions that necessitate customer identification, which can be linked to reporting obligations, including certain monetary thresholds.
In sum, Thailand’s AML reporting requirements are not governed by a single monetary threshold but are instead determined by the specific type of transaction and the entity involved, as outlined in the relevant ministerial regulations.
Tailoring Compliance Across Borders
As to beneficial ownership (“BO”), in Thailand : BO requirements are integrated into broader CDD and KYC processes but are less emphasized compared to the U.S. In the United States, the Corporate Transparency Act (part of the AML Act of 2020) requires corporations and LLCs to disclose beneficial ownership information to FinCEN.
In Thailand, AML laws have been shaped by specific financial and regulatory needs, with targeted amendments over time. In the United States, the BSA and AML framework have evolved significantly, with the 2020 AML Act introducing modernization efforts focused on emerging technologies and international cooperation.
Conclusion: Distinct Traditions, Shared Goals in Combating Money Laundering
Both Thailand and the United States have robust AML frameworks, but they reflect their distinct legal traditions and enforcement priorities. Thailand’s AMLA emphasizes a broad application to non-financial entities and transaction-based thresholds, while here in the U.S., BSA focuses on risk-based compliance and beneficial ownership transparency. Of course, these differences underscore the need for businesses operating in both jurisdictions to tailor their compliance programs to meet local requirements in both jurisdictions.
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