FRIDAY, March 29, 2024
nationthailand

Thailand risks watch-list downgrade

Thailand risks watch-list downgrade

Global task force, capital market concerned about delay in legislation

Capital-market representatives have urged the government to speed up legislation against money-laundering, concerned over a possible slowdown of foreign-capital inflows and long-term development of the real sector.

The issue was raised as the annual meeting of the Financial Action Task Force (FATF) on money-laundering kicked off yesterday in France. The meeting, which runs until Friday, could downgrade Thailand on the matter. The rating will be officially announced on February 20.
Paiboon Nalintharuangkul, chairman of the Federation of Thai Capital Market Organisations, said yesterday that the FATF might raise Thailand from its second watch list to the first group, which currently includes Burma, Sri Lanka, Cuba, Bolivia and Ethiopia. The second group includes Vietnam, the Philippines, Indonesia and Thailand.
“The main reason for the possible downgrade is the delay in legislating anti-money-laundering and anti-terrorist-financing laws,” he said.
Paiboon added that Thailand would send representatives to the meeting and explain the delay in the legislation.
He said that if the rating were downgraded, it would be worrisome for the capital market. 
“If the government does not hurry to fix this, it will either have an impact on the country’s capital outflow or reduce foreign direct investment in the long term, affecting the country’s competitiveness.” 
He noted that the first watch list was close to the FATF’s blacklist, for so-called non-cooperative countries such as North Korea and Iran.
Pattera Dilokrungthirapop, chairwoman of the Association of Securities Companies, said combating money-laundering and terrorist financing was part of the financial sector’s good governance, to which the Group of 20 industrial countries had given importance. Countries that are downgraded would face more difficulty in financial transaction, as they would be required to comply with customer due diligence with a higher degree of restrictions. This would have an impact on that country’s overall economy. In addition, some funds are limited against investing in countries on a watch list.
Worawan Tharapoom, president of the Association of Investment Management Companies, said that if Thailand were downgraded, it would get harder to trade with G20 countries, which account for as much as 90 per cent of the world’s economy.
 
 
 
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