The regulator is conducting a public hearing on a proposal requiring financial institutions to ensure customers are present or have had their identities verified before conducting cash transactions, reports the Bangkok Post.
The draft rules also mandate the monitoring, detection and examination of abnormal transactions to prevent the facilitation of illegal activities, and to strengthen the stability of the financial system. The public hearing runs from Feb 10-24.
According to the central bank, cash transactions pose significant challenges for monitoring and tracing financial flows, potentially creating channels that could be used to support criminal activities.
As a result, financial institutions and specialised financial institutions (SFIs) are required to enhance their risk management frameworks.
Under the new guidelines, commercial banks and SFIs must adopt additional measures in line with customers’ risk profiles, transaction characteristics and service channels.
Banks are required to establish clear policies and procedures to detect and manage risks associated with cash transactions in a timely manner.
These measures must cover transaction patterns, transaction frequency, value thresholds and appropriate risk mitigation approaches.
Banks must ensure relevant staff clearly understand their roles and responsibilities, strictly complying with established policies and risk detection frameworks, noted the regulator.
Financial institutions must ensure customers complete identity verification before conducting cash transactions, with continued monitoring and scrutiny of such transactions.
“If abnormal cash movements are detected - particularly those inconsistent with a customer’s usual behaviour or lacking a clear economic rationale - banks must closely monitor the activity and take appropriate risk-based actions,” said the central bank.
In cases where transactions exceed risk thresholds or exhibit high-risk characteristics, banks must conduct enhanced customer due diligence. If an institution is unable to satisfactorily complete an enhanced review, it must reject the transaction, noted the regulator.
Suspicious cash transactions that may indicate unlawful activities must be reported to the central bank.
If after conducting enhanced due diligence, additional information indicates a reduced risk profile, banks should reassess and adjust the customer’s risk classification accordingly.
The measures aim to strengthen safeguards against financial crime while ensuring that risk management practices remain aligned with evolving transaction behaviour, the regulator said.
Central bank governor Vitai Ratanakorn recently said it detected unusually large cash withdrawals totalling more than B250 million, with some customers requesting only 500-baht banknotes. The regulator reported the suspicious transactions to the Election Commission.
The measures form part of the central bank’s efforts to tackle grey market funds and the informal economy, which have marred Thailand’s economic structure and stability.