The Bank of Thailand is preparing to cap gold trading to prevent money laundering after last year's trading volume surged. Gold traders note that gray market operators use cash to purchase over 100 million baht at a time, fearing that increased taxation could disrupt the system.
The Bank of Thailand is soliciting opinions on revising gold trading regulations to help maintain exchange rate stability. It plans to set trading limits, such as allowing purchases and sales of no more than 20 to 100 million baht per person per day per platform. This urgent regulatory adjustment aims to reduce the impact of gold transactions on baht volatility and support exchange rate stability.
The Bank of Thailand is gathering feedback through meetings, inviting directly affected parties such as gold business operators.
From the operators' perspective, the Thairath Online special team interviewed Patarin Wachirakapan, Deputy Managing Director of Leng Hong Commodities Co., Ltd., who analyzed that the finance minister has authorized the Bank of Thailand to oversee gold shops. The goal is to control the exchange rate and clamp down on gray market capital or criminals who might use gold shops to launder money.
Last year, online gold transactions on various platforms surged significantly as gold prices multiplied several times. Previously, 10 baht of gold sold for about 200,000 baht; now, the price has soared to 600,000 baht for 10 baht. Sales volumes increased sharply, especially among Thais who mostly buy gold with baht. However, gold shops trading with foreign partners must transact in US dollars for imports. Buying gold online in baht carries risks to baht stability.
Currently, the control measures are still in the consultation stage with no finalized regulations. The Bank of Thailand is asking every gold shop what is feasible and what is not.
"The Bank of Thailand is concerned about full withdrawals and payments. Leng Hong strictly complies with regulations and does not offset debts internally. Another key point is that purchases will not allow customers to immediately receive gold to prevent money laundering or criminals paying then taking gold right away. Also, only the account holder's name can be used for trading," Patarin said.
Regarding the proposed trading caps, Patarin noted rumors that individuals may be limited to transactions between 20 and 100 million baht per person per day per platform. However, gold shops often trade amounts exceeding this initial estimate daily. These figures are still under consideration.
Gray market operators generally purchase gold with cash. According to regulations, any gold purchase over 2 million baht must be reported to the Anti-Money Laundering Office (AMLO). For bank transfers, the account holder's name must match the transaction party.
When asked if Bank of Thailand controls would affect traders, Patarin said individuals typically trade under 100 million baht per day, but for gold shops, transactions exceeding 100 million baht daily are not unusual.
From the traders' viewpoint, they largely agree with measures to prevent gold being used for money laundering. However, they worry about the potential imposition of purchase or VAT taxes, though this is not yet under review. Currently, gold prices stand at 68,000 baht per baht unit. Adding a 7% tax, about 5,000 baht more, could drive prices up and reduce buyers, negatively impacting Thailand's gold trading industry.