A classic nominee arrangement involves a Thai national holding shares on behalf of foreign investors to bypass restrictions under Thailand’s Foreign Business Act B.E. 2542 (1999). Such arrangements have long been illegal, but enforcement was historically driven by complaints, inspections or isolated investigations. That has now changed.
Since 2024, scrutiny has escalated significantly, driven by Thailand’s full operational maturity under the OECD’s Common Reporting Standard (CRS) and increased pressure from international peer reviews. The result is a shift from reactive enforcement to systematic, data-driven detection.
WHAT IS CRS?
Developed by the OECD, the Common Reporting Standard is a global framework for the automatic exchange of financial account information between tax authorities. Financial institutions must identify account holders, determine tax residency and report financial data ‒ including balances, dividends and proceeds ‒ to local authorities. This information is then exchanged with over 100 participating jurisdictions worldwide.
CRS as an Enforcement Multiplier: CRS is no longer a passive reporting exercise. In Thailand, it has become a powerful enforcement tool. Banks now report financial information of foreign tax residents to the Thai Revenue Department, enabling authorities to identify dividend flows, capital movements and remittances that are inconsistent with declared Thai ownership.
These inconsistencies often trigger broader investigations linking CRS data with beneficial ownership filings, corporate records and anti-money laundering checks. Even structures that appear compliant from a corporate law perspective may raise red flags when financial flows reveal a different economic reality. In some cases, this has resulted in account freezes, transaction delays and heightened audits across multiple agencies.
A System-Wide Burden: The crackdown extends beyond business. Banks are under increasing pressure to comply with overlapping obligations under CRS, Anti-Money Laundering, Foreign Account Tax Compliance Act (FATCA) and beneficial ownership regulations ‒ while also responding to requests from foreign tax authorities and correspondent banks. Compliance teams are expected not only to collect documents, but to challenge ownership explanations and assess substance, leading to longer onboarding times and growing de-risking measures.
Why This Matters: This is no longer just about deliberate non-compliance. Well-intentioned businesses may face scrutiny if their structures lack clarity or fail to reflect actual control and benefit. Nominee issues now sit at the intersection of the Department of Business Development, Revenue Department, Anti-Money Laundering Office, Bank of Thailand and international authorities.
What Businesses Should Do: Businesses should proactively prepare by declaring true controllers, aligning banking, tax and corporate records, and ensuring tax residency is properly supported with valid certificates. Legal alternatives ‒ such as BOI promotions or appropriate licenses ‒ should be explored. With more than 46,000 entities reportedly under review, reactive compliance is no longer sufficient.
In an era of automatic information exchange, transparency is not optional. Structures that rely on opacity are increasingly exposed ‒ often not through inspections, but through data.
For more information, contact: infophuket@bdo.th