Blacklist may push up local bank costs

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Blacklist may push up local bank costs

SUCHEERA PINIJPARAKARN,
PIYANUCH THAMNUKASETCHAI
THE NATION



BANGKOK: -- The Bank of Thailand said yesterday the international blacklisting of Thailand has not yet caused any problems with financial transactions, but local banks fear costs will rise for them and their customers.

"We will closely monitor the situation and will also have discussions with commercial banks to see if they have had difficulties from this move," said Pongpen Ruengvirayudh, an assistant governor of the central bank.

Thailand would likely win a rating review after it issues the required laws to demonstrate its readiness and ability to join global anti-money laundering efforts, he said.

Banthoon Lamsam, CEO of Kasikornbank, said the setback highlights Thailand's failure to comply with international standards. Though the damage is unclear, Thailand's image is already blemished.

The House should look at the issue urgently and also at other pending bills, or this could pose hurdles to the nation's social and economic development.

"We need a clear legal framework to facilitate fair business activities and efficiency. Now, the House is a barrier, as it is tasked to pass all laws," the veteran banker said.

Somkiat Sirichatchai, a senior executive vice president of KBank, said banks would be required to launch deeper inspections of customer transactions. This could push up operating costs for the bank as well as for customers.

Subhak Siwaraksa, president and CEO of CIMB Thai Bank, said financial transactions could take longer to complete with detailed examination of documents needed. Still, it is too early to say how the blacklist would increase banks' operating costs, he said.

The Anti-Money Laundering Office called for new legal weapons to combat money laundering and terrorism financing so that Thailand can be removed from the list of "uncooperative" countries.

New laws could be passed by Parliament this year "if there is a serious effort to push them through", Sihanart Prayoonrat, the acting secretary-general of AMLO, told a press conference yesterday.

However, he could not tell when the Paris-based Financial Action Task Force (FATF), an intergovernmental body, would drop Thailand from its list of uncooperative countries.

"According to the FATF, Thailand still has flaws in 400 areas," he said without elaborating.

Meanwhile, AMLO would rely on expedient measures to help ease the situation, including a ministerial regulation to make it more difficult for terrorists or money launderers to use nominees to open bank accounts.

There are three reasons why Thailand was included among the uncooperative countries, he said.

Its law against money laundering does not comply with international standards. It lacks measures to prevent terrorists or money launderers from using financial institutions in their money laundering or terrorism financing. And it lacks the means to punish terrorism financiers.

The FATF move would cause havoc for Thailand's international business transactions in the near future, he said. Lengthy examinations of documents would slow down the transaction process, and fees would be higher.

"In general, Thailand's competitiveness will be diminished, and Thais will have problems conducting financial transactions with foreign countries," he said.

The ripples could reach the monetary, capital and stock markets. However, it remained unclear how serious the impacts would be, he said.

The Senate yesterday voted 82-50 to endorse Sihanart as the AMLO secretary-general after meeting more than three hours behind closed doors.

 The Nation 2012-02-21