Is Gold the Culprit? Causes of Baht Volatility and Money Laundering Concerns BOT Urges Gold Dealers to Submit Transaction Data

Gold, a safe-haven asset consistently favored by Thai people, has another side: due to the high volume of gold trading in Thailand, it can at times influence the baht's exchange rate movements. Additionally, a major concern is whether gold is a popular tool for money laundering.

Chayawadee Chayanun, Assistant Governor for Corporate Relations at the Bank of Thailand (BOT). She explained that although the main factor influencing the baht’s direction is the strength or weakness of the U.S. dollar and currency exchanges in the market, another important aspect is the correlation between gold prices and the baht. On days when gold prices rise, the baht can face downward pressure, with correlations observed at 10-20% during certain periods.

These factors have prompted the BOT to expedite various measures to manage baht volatility, such as: Proposing that the Ministry of Finance revise regulations to increase the exemption limit for foreign income not repatriated into Thailand to 10 million U.S. dollars per transaction. (Previously capped at 1 million U.S. dollars per transaction.) The proposal is currently in the hearing phase and is expected to be implemented by the end of 2025. This is anticipated to reduce the volume of money flowing into Thailand.

Regarding gold, the central bank is currently in discussions with gold dealers, gold shops, and the Gold Traders Association to request cooperation in submitting reports of gold purchase and sale transactions to the BOT. Currently, daily transaction data are collected via gold trading applications, but the BOT plans to increase reporting from various gold shops, with reports expected at the end of each day.

Having clear data will help identify transaction sources and allow for better analysis of investor behavior. It will also provide transparent financial trails, reducing money laundering and related criminal activities. Additionally, discussions are ongoing regarding tax measures related to gold purchases, although no further details have been finalized.

Regarding gold transactions through banks, banks must obtain comprehensive information about transactions, including their nature, purpose, and supporting documents. This also applies to gold import-export transactions, which must clearly report payment methods—whether cryptocurrency, baht, or U.S. dollars. Currently, banks handle foreign exchange transactions that are typically accompanied by customs documents and report this information to the BOT.

Recently, in the case where the Anti-Money Laundering Office (AMLO) seized and froze assets worth billions of baht linked to a major scammer network, reports indicate that Thai financial institutions terminated relationships with the clients upon learning of their possible involvement with the scammer network. They also reported suspicious transactions to AMLO according to legal procedures, without waiting for AMLO's asset seizure announcement.

To counter money laundering and illegal transactions, the BOT is working to require banks to submit suspicious transaction reports directly to the BOT, in addition to the current process of reporting to AMLO under legal authority.

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