Onus on agencies to follow up on Panama revelations
Authorities must investigate how Thai entities took money out of the country, or evaded taxes; Thai law weak compared to other nations: expert.
THE AUTHORITIES are now under the spotlight over their ability to crack potential money-laundering and tax evasion cases involving prominent Thai individuals and companies recently exposed by the Panama Papers leak.
Dr Veerapong Boonyopas, director of the economic crimes and money launder-ing data centre at Chulalongkorn University, said Thailand’s anti-money laundering law currently covers only 25 offences.
This compares with more than 100 offences in other countries such as Singapore, the US, or European nations where the law is more strict against money laundering and related crimes.
As a result, individuals and businesses are afraid because their assets could be confiscated by authorities if proven to come from corrupt practices or if the sources of the income could not be verified.
“It’s well known that the private sector use the services of offshore shell companies to hide their assets because these offshore entities are not within the jurisdiction of any country.
They don’t have to report and disclose information to the government or the anti-money laundering authority.
“Normally, investment advisory and asset management firms have to comply with their country’s regulations in terms of disclosure on their clients and capital flows, which have to be verified for transparency,” he said.
According to Anti-Money Laundering Organisation (AMLO) acting chief Pol Colonel Sihanart Prayoonrat, a total of 719 names from Thailand – 411 Thais, 262 expatriates, and 46 Thai companies – were on the list of those using the services of Panama-based law firm Mossack Fonseca to hide their assets abroad.
Of these, 16 were former politicians, businessmen and celebrities, based on data exposed by the International Consortium of Investigative Journalists, or ICIJ.
Mossack Fonseca, which has a branch office in Thailand, is a global network of legal and related services for setting up offshore shell companies used to hide assets from authorities as clients do not have to verify the sources of their income.
The country’s anti-graft civil society network has urged the government to follow up on the data leaked in the Panama Papers, especially with regard to Thai individuals and companies that use the Panama-based law firm’s services, since money laundering and tax evasion could be suspected.
Methods of secretly sending money
According to Veerapong, there are two major methods to secretly send money out of the country. For example, they could order goods from a cooperative foreign firm at a highly inflated price and have the excess funds deposited into bank accounts in a foreign country.
The money is later transferred to an offshore shell company where it could not be traced back easily.
Another method is to take the money out of the country in the form of gold, expensive jewellery or foreign currencies.
“In fact, authorities can trace these funds using the anti-money laundering law by investigating how Thai persons and companies named in the Panama Papers took the money out of the country. They will also have to show proof of their sources of their income.
“If they’re unable to do so, they could be involved in money laundering. If they are not involved in money laundering, then the Revenue Department will have to investigate how they avoided or evaded taxes. Maybe, the revenue code has to be amended to close the loopholes. It’s time to overhaul the system,” he said.
In September 2015, AMLO reported |that it had confiscated assets worth a combined Bt12 billion over the past 16 years with regard to money-laundering activities in connection with a total of 25 wrongdoings such as human trafficking, narcotics, forgeries, stock manipulation, corruption, and briberies.
However, AMLO’s cross-border money laundering and tax evasion cases involving the use of offshore shell companies are still very few hence Thai authorities will have to step up their effort to tackle sophisticated lawyers and bankers who are behind these activities.
