VVIP Pune Call Girls Katraj (7001035870) Pune Escorts Nearby with Complete Sa...
KBank Capital Market perspective, FATFs slap on the wrist
1. KBank Capital Markets Perspectives 20 February 2012
bps ov er Libor
FATF’s slap on the wrist Thai CDS 5Y
250
Amidst the European credit downgrades, Thailand is
handed a wake up call by FATF (Financial Action Task 230
Force) due to its lack of progress on fighting money
laundering and terrorism financing 210
Thailand joins : Algeria, Angola, Antigua and Barbuda,
190
Argentina, Bangladesh, Brunei Darussalam, Cambodia,
Ecuador, Ghana, Honduras, Indonesia, Kyrgyzstan, 170
Mongolia, Morocco, Namibia, Nepal, Nicaragua, Pakistan,
Paraguay, Philippines, Sudan, Tajikistan, Tanzania, 150
Trinidad and Tobago, Turkmenistan, Venezuela, Vietnam,
Yemen, and Zimbabwe 130
Inconveniences will be in store as fund transfers will be
under higher scrutiny for legitimacy. Unless Thailand 110
follows up on FATF’s recommendations, slippages into
the higher risk group and economic retribution by FATF 90
members will take its toll
Kobsidthi Silpachai, CFA
70
kobsidthi.s@kasikornbank.com
Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12
Disclaimer: For private circulation only. The foregoing is for informational purposes only and not to be considered as an offer to buy or sell, or a solicitation of an offer to buy or sell any security. Although the information herein was obtained from
sources we believe to be reliable, we do not guarantee its accuracy nor do we assume responsibility for any error or mistake contained herein. Further information on the securities referred to herein may be obtained upon request.
1
2. Thailand is now on FATF’s watch list
Amidst the downgrades in Europe as its sovereign debt crisis FATF issues public statements three times a year on high risk and
unfolds, Thailand had recently experienced a downgrade of its non-cooperative jurisdictions.
own by the Financial Action Task Force on Money Laundering
Since October 2011, FATF advises its members (presently there
(FATF), http://www.fatf-gafi.org. FATF is an international
are 34 member nations and 2 regional organizations) to “to apply
organization established in 1989 by the G7 to combat money
counter-measures to protect the international financial system
laundering and terrorism financing. The organization noted that :
from the on-going and substantial money laundering and terrorist
Despite Thailand’s high-level political commitment to work financing (ML/TF) risks emanating from: Iran, North Korea
with the FATF and APG to address its strategic AML/CFT
Other nations which the FATF deems as high risk with regards to
deficiencies, the FATF is not yet satisfied that Thailand
addressing the deficiencies or have not committed to an action
has made sufficient progress in implementing its action
plan developed with FATF to combat money laundering and
plan, and certain strategic deficiencies remain. Thailand
terrorism financing are: Cuba, Bolivia, Ethiopia, Kenya,
should work on implementing its action plan to address
Myanmar, Nigeria, São Tomé and Príncipe, Sri Lanka, Syria
these deficiencies, including by:
and Turkey.
(1) adequately criminalizing terrorist financing (Special
Thailand is now in the third group deemed as risky as per the
Recommendation II);
previous FATF statement i.e. these countries have expressed high
(2) establishing and implementing adequate procedures to political commitment but have come short on the implementation
identify and freeze terrorist assets (Special of the action plan. Apart from Thailand, other countries in this
Recommendation III); and category are: Algeria, Angola, Antigua and Barbuda,
Argentina, Bangladesh, Brunei Darussalam, Cambodia,
(3) further strengthening AML/CFT supervision
Ecuador, Ghana, Honduras, Indonesia, Kyrgyzstan, Mongolia,
(Recommendation 23). The FATF encourages Thailand to
Morocco, Namibia, Nepal, Nicaragua, Pakistan, Paraguay,
address its remaining deficiencies and continue the process
Philippines, Sudan, Tajikistan, Tanzania, Trinidad and
of implementing its action plan.
Tobago, Turkmenistan, Venezuela, Vietnam, Yemen, and
Zimbabwe.
2
3. Thailand is now on FATF’s watch list
Share of GDP between FATF members and
Implications and our thoughts non-members
The FATF is a wake up call for Thai authorities to comply or else
risk joining the second list and hence retribution on cross border
flows with FATF members. non-FATF
FAFT members consist of : Argentina, Australia, Austria, Belgium, members
Brazil, Canada, China, Denmark, European Commission, Finland, 17%
France, Germany, Greece, Gulf Co-operation Council, Hong
Kong, China, Iceland, India, Ireland, Italy, Japan, Kingdom of the
Netherlands, Luxembourg, Mexico, New Zealand, Norway,
Portugal, Republic of Korea, Russian Federation, Singapore,
South Africa, Spain, Sweden, Switzerland, Turkey, United
Kingdom and the United States
Note the fact that Turkey is a member is a bit of a paradox
since it is also on high risk list
The members of FATF make about 83% of the global economy.
Should there be retribution by FATF, the impact on the Thai
economy would be unavoidable. FATF
members
83%
3
4. Thailand is now on FATF’s watch list
Implications and our thoughts FATF recommendations for Thailand…what we need to do
At this stage, the fact that Thailand is on the third list for high-risk In the earlier statements, FATF noted the recommendations for
and non-cooperative jurisdiction should cause more of an Thailand to comply. Special Recommendation II is now
inconvenience rather than the onset of sanctions and embargoes recommendation number 5, Special Recommendation III is now
by FATF members. Here are some examples of inconveniences: recommendation number 6 and Recommendation 23 is now
number 26 (http://www.fatf-gafi.org/recommendations)
If a Thai parent had to transfer funds to pay for their child’s
tuition studying in FATF member countries, more Recommendation 5: Terrorist financing offence: Countries
documents are needed to substantiate that the source and should criminalize terrorist financing on the basis of the Terrorist
use of the funds are legitimate. Financing Convention, and should criminalize not only the
financing of terrorist acts but also the financing of terrorist
Thai businesses remitting funds to pay for imported goods
organizations and individual terrorists even in the absence of a link
are required to submit more documents as for the same
to a specific terrorist act or acts. Countries should ensure that
reason i.e. to substantiate that the source and use of the
such offences are designated as money laundering predicate
funds are legitimate.
offences.
Reputation risk: Potential investors from FATF members may
have strict corporate guidelines which may restrain investing in
“watch list” countries for fear that future dividend remittances
would be heavily scrutinized
4
5. Thailand is now on FATF’s watch list
Recommendation 6: Targeted financial sanctions related to Recommendation 26: Regulation and supervision of financial
terrorism and terrorist financing: Countries should implement institutions: Countries should ensure that financial institutions are
targeted financial sanctions regimes to comply with United Nations subject to adequate regulation and supervision and are effectively
Security Council resolutions relating to the prevention and implementing the FATF Recommendations. Competent authorities
suppression of terrorism and terrorist financing. The resolutions or financial supervisors should take the necessary legal or
require countries to freeze without delay the funds or other assets regulatory measures to prevent criminals or their associates from
of, and to ensure that no funds or other assets are made available, holding, or being the beneficial owner of, a significant or controlling
directly or indirectly, to or for the benefit of, any person or entity interest, or holding a management function in, a financial
either (i) designated by, or under the authority of, the United institution. Countries should not approve the establishment, or
Nations Security Council under Chapter VII of the Charter of the continued operation, of shell banks.
United Nations, including in accordance with resolution 1267
For financial institutions subject to the Core Principles, the
(1999) and its successor resolutions; or (ii) designated by that
regulatory and supervisory measures that apply for prudential
country pursuant to resolution 1373 (2001).
purposes, and which are also relevant to money laundering and
terrorist financing, should apply in a similar manner for AML/CFT
purposes. This should include applying consolidated group
supervision for AML/CFT purposes.
Other financial institutions should be licensed or registered and
adequately regulated, and subject to supervision or monitoring for
AML/CFT purposes, having regard to the risk of money laundering
or terrorist financing in that sector. At a minimum, where financial
institutions provide a service of money or value transfer, or of
money or currency changing, they should be licensed or
registered, and subject to effective systems for monitoring and
ensuring compliance with national AML/CFT requirements.
5