Thailand plans gold-trade oversight to trace grey money

Thailand’s Finance Ministry is preparing an oversight framework covering the entire gold market, with financial records and gold transactions to be connected so authorities can follow money from its source to the eventual movement or delivery of bullion.

The ministry is seeking views from state agencies and the industry before settling the rules, Fiscal Policy Office (FPO) director-general Vinit Visessuvanapoom said. The aim is to make gold trading more transparent without placing an excessive burden on legitimate businesses.

Officials want to prevent scammers and grey-capital networks from using gold businesses to circulate or launder money whose origin cannot be verified.

“The gold market has two problems that need urgent attention. First, no agency directly regulates the gold business. Second, the state lacks the tools to obtain complete transaction data,” Vinit said.

Those gaps prevent authorities from fully tracing funds from their origin to their destination or establishing whether money entering the financial system eventually moves into gold, he added.

Following money from source to delivery

The ministry intends to “connect the dots” by bringing together information held across several systems.

The Bank of Thailand (BOT) has already issued some rules in line with the government’s approach, while the FPO is working on further details to broaden the scope of supervision.

Officials are looking beyond records of gold purchases and sales. The proposed framework would cover the source and movement of funds, physical delivery, bullion transactions and gold imports.

The data should allow authorities to determine whether both the money and gold recorded in a transaction exist and where the funds used for the purchase originated.

The ministry’s approach would supplement the work of the Anti-Money Laundering Office (AMLO), which already has legal powers to monitor cash transactions and other dealings that meet statutory conditions.

The Finance Ministry wants more detailed information showing the links between financial flows and gold.

Online and shopfront trades treated as one market

Vinit said online trading and transactions conducted at physical gold shops could not easily be regulated separately because money and gold may move through both channels as part of the same transaction chain.

The ministry will consult gold businesses and relevant agencies before deciding how the market should be supervised.

Regulators need access to essential information, he said, but the rules must not unnecessarily disrupt an industry that remains important and popular in Thailand.

The FPO is drafting the framework with other agencies and wants more complete information before establishing firm requirements.

Officials will examine which measures can close genuine loopholes without imposing disproportionate costs on gold businesses.

Tax remains one option, not the objective

No final decision has been made on whether to impose a specific business tax on gold transactions.

Taxation is only one of several possible tools for obtaining transaction records and tracing financial flows, Vinit said.

“I do not want the public to worry about tax, because that may create the impression that the government is trying to raise revenue when this is a separate issue,” he said.

“Tax is only one tool, but it gives us transaction data. There are several other tools, so oversight is more important in the bigger picture.”

The FPO plans to complete its work as quickly as possible, although Vinit said the ministry must first consider the available options carefully and establish which form of supervision would close the regulatory gaps without causing unnecessary harm to the gold industry.