BoT Tightens Rules on Cash Transactions Over 5 MB to Combat "Gray Capital"

The Bank of Thailand (BoT) is preparing to release new regulations within two weeks to control cash deposits and withdrawals. Transactions exceeding 5 million Baht will require an inquiry and a clear explanation of the purpose of the funds.

The goal is to combat gray capital, illegal transactions, and money laundering, while improving the transparency of Thailand’s economic system.

Vitai Ratanakorn, Governor of the Bank of Thailand, believes that in addressing Thailand’s economic challenges, the BoT must shift its role from relying solely on monetary policy tools to using more targeted measures to make economic solutions more effective.

One of the BoT’s proactive roles in tackling structural issues in the country is addressing gray capital and abnormal financial transactions.

In terms of preventing financial crime, the BoT has tightened its supervision of money transfer systems and digital channels. The BoT is also preparing to introduce new rules for stricter regulation of e-money businesses and will limit the transfer amounts of accounts that are at risk of being used for illegal activities.

During the election period, the BoT worked with commercial banks to report unusual cash withdrawals, which proved to be effective in reducing the volume of suspicious transactions. As a result, the BoT is preparing to announce new criteria to regulate large cash withdrawals and deposits within two weeks, making the measures a more permanent system.

Under the new rules, any cash withdrawal or deposit over 5 million Baht will require the financial institution to inquire about the purpose of the transaction (Due Diligence) with greater scrutiny.

“If customers have a clear business reason or can explain their personal use of the funds, the transaction will proceed as usual. However, if they cannot clearly explain the reason for withdrawing or depositing more than 5 million Baht, the bank has the right to refuse the transaction. This will force money outside the system or money stored outside the system to reveal its source if it is entering the banking system. If necessary, we may reduce the limit on cash withdrawals and deposits to 3 million Baht in the future,” said Vitai.

The main aim of this measure is to prevent cash from being used in undesirable activities such as illegal transactions and money laundering. With financial alternatives like transfers or checks being safer and more convenient, this measure aims to reduce cash-based activities.

These measures aim to improve transparency in Thailand’s economic system and close the loopholes that gray capital attempts to exploit using alternative assets such as gold, US dollars, or cryptocurrencies like USDT, which the BoT is monitoring closely.