Thursday, December 12, 2019

‘Criminals exploiting technology to cheat the public’

Apr 10. 2016
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By Piyanuch Thamnukasetchai
The

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Caretaker secretary-general of the Anti-Money Laundering Office (AMLO) Sihanart Prayoonrat, who has recently been appointed as adviser to AMLO, talks to The Nation’s Piyanuch Thamnukasetchai about the toughest part of his work, which is detecting and figh
WHAT WAS THE HIGHEST PRESSURE YOU FACED DURING YOUR FOUR YEARS AS AMLO SECRETARY-GENERAL?
There is no particular case I can think of – but the pressure was to complete a massive amount of work with time constraints. For instance, in the Klongchan Credit Union Cooperative (KCUC) case, the money embezzled from the public by the cooperative executives was used to buy many plots of land. We had to work against time to prevent these assets from changing hands. We had to work fast before the media reported the scam, especially as former cooperative chairman Supachai Srisupaaksorn had not been arrested.
The kickback case against Pol General Pongpat Chayapan, former chief of the Central Investigation Bureau, involved many business transactions and was linked to many people. Many assets had to be seized and checked and put up for auction.
 
HOW DO OFFSHORE COMPANIES AVOID TAX AND LAUNDER MONEY?
Offshore companies are set up to transfer profits made domestically to foreign countries in order to pay less tax or to avoid double taxation – without having to open actual business operations in the country of the offshore companies being registered.
The process is to export goods to countries of buyers – but to mark down the price on the invoice to less than the selling price. For instance, the selling price is Bt200 but the invoice price is Bt130. This is to pay less tax. The goods would be shipped to the country of the buyer – but payment is made in the country where the company has an account without having to transfer money to the Cayman Islands, British Virgin Islands or Bermuda. Since the money is not transferred to Thailand, the Revenue Department cannot collect tax. This is a legally correct way that is done across the world. It is not money laundering but AMLO has to watch out because there could be politicians or government officials using this method to launder money. The Revenue Department’s methods of checking are different from AMLO’s.
This method, however, is not used by law-abiding countries such as the United States. The US Federal Reserve has regulations that all banks in the world must submit reports to it if a US citizen opens a bank account with US$50,000 upwards. The US central bank will deduct 30 per cent from the total deposit without having to prove anything. The Revenue Department has a measure of collecting 15 per cent in tax from deposits transferred out of the country.
 
HOW DOES THE EXISTING LAW PREVENT POLITICAL INTERFERENCE IN AMLO – AS POLITICIANS CAN USE THE OFFICE AS A TOOL TO SABOTAGE POLITICAL RIVALS?
Previous and current governments have passed laws on AMLO by transferring the agency – which was under the jurisdiction of the Justice Ministry – to be under the PM, who cannot interfere in AMLO’s operations. Many state agencies seek support from AMLO to analyse financial transactions of any suspected cases of corruption and irregularities and they can seize assets of corrupt officials very fast.
 
ARE CURRENT MONEY LAUNDERING LAWS EFFECTIVE IN PREVENTING CRIMES?
The latest amendment to the money laundering law extended the law to cover 24 offences. The international standard is for each country to have anti-money laundering actions against 20 offences.
 
HOW DO YOU FORESEE CRIMINALS DEVELOPING NEW MONEY LAUNDERING ACTIVITIES?
Previously, drug traders opened – for instance – gold shops, car for rent businesses to front their illegal businesses. But [now] as they can trade their goods online, they don’t need front businesses. In some regions, criminals still operate legal and illegal businesses together. AMLO has set up a division to monitor illegal technology activities and found a lot of offences that led to seizure of assets. Criminals have exploited technology to cheat the public by luring them to buy goods and services.
AMLO has taken the right path by adopting standard practices. If we can block financial transactions, we can block criminal activities. Countries that have anti-money laundering agencies that do not meet FATF standards would be boycotted from trading and financial transactions.
When countries have good standards on financial checks, investors are confident they can invest without being cheated, thus, it is good for the country’s economy. If there is liberation of financial transaction through an online system, concerned agencies must adopt anti-money laundering standards to prevent criminals from exploiting financial liberalisation.

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