Thailand is a founder member of the Asia Pacific Group but is not a member of the Financial Action Task Force. In the Asia Pacific Group’s Follow-Up Report to its mutual evaluation of Thailand (2021) Thailand’s rating was improved in relation to seven of the 40 Recommendations.

However, Thailand remains ″in enhanced follow-up.″ A further follow-up was due on 1 February 2022.

What this means, in summary, is that Thailand is not regarded as being of major concern for its legal and regulatory systems but there are some aspects that raise its risk profile.

It follows, then, that banks and commercial concerns dealing with financial institutions and businesses in Thailand should already be alert to the possibility of increased risk awareness requirements.

Thailand has for decades been at the centre of South East Asia’s Golden Triangle, originally an area at the convergence of Thailand, Loas and Myanmar (Burma) where the Ruak and Mekong rivers meet but over time widened to include deeper into the three countries and, sometimes, the entire countries. The principle cause for concern has, historically, been that the North-East of Myanmar is the second largest opium producing area (after Afghanistan) and that means it is a vital source of supply to the heroin trade. There is also opium production in Laos but to a much smaller extent. Both of those countries have restrictive border controls for both people and goods and have relatively limited connectivity by both air and sea. But they both have impossible to police land borders with Thailand, in the middle, which is far more welcoming to travellers and is a much, much larger trading nation.

Thailand also has its own, much smaller, opium production.

It is the opium that is often said to be root cause of the near-constant political upheaval in Myanmar: some want to benefit, some want to control and benefit and some want to eradicate it. Heroin is, to a degree, falling out of fashion and so poppy production has been falling worldwide but economic conditions indicate that heroin may increase in popularity again.

It follows, then, that it is Thailand’s role as a transit country for the Opium from the Triangle that has long made it a country that has an elevated risk profile in relation to drugs trafficking.

A report by the US Department of Justice in 1992 explained the distribution of cultivation and refining of heroin including the then notorious ″China White,″ a name which was adopted by a London Nightclub that became an instant success by association.

However, by the early 2020s, Thailand had turned some of its poppy production into coffee plantations. This stemmed from a discovery by His Majesty King Bhumibol Adulyadej The Great of Thailand who, in 1969, found that the poppy growers didn’t earn as much as everyone thought. In fact, those that grew peaches earned as much. So he encouraged the swap from poppies to peaches and, over time, the growth of coffee which is more profitable.

All of this means that Thailand’s role in the production of heroin has diminished but it remains an important transit country.

However, Thailand’s relationship with marijuana has been far more complex and, in modern times, the trouble started with US troops on R&R from Vietnam and on military bases the USA put there. An article in The Diplomat says that the first bundle of Thai marijuana arrive in the USA in ″the 1960s″ via the Army Post Office. That’s a bit too vague for me and so I think we can’t rely on it being a fact.

Marijuana was not new in Thailand: it had been used for centuries but rarely to excess. It was a common ingredient in Thai cooking. The climate is suited to growing cannabis plants which can often be found growing as weeds, as it can on the roadside in Bhutan.

The article in The Diplomat, from 2018, says ″there have been signs that the Thai government is softening its stance on marijuana.″ The article starts ″For decades, Thailand was one of America’s most resolute allies in the war on drugs. After zero tolerance policies left the Kingdom with the highest rate of incarceration in Asia and a methamphetamine (ya ba) epidemic that not even the most draconian measures could stop, Justice Minister Paiboon Koomchaya shocked the nation in 2016 when he conceded that “the world has lost the war on drugs.”″

It then goes on to say that a Justice Minister had suggested legalising methamphetamine.

While meth, an artificial drug created in a lab, remains absolutely banned, Thailand in June this year legalised the possession and use of cannabis. What the world is concerned about is not the back-garden grower of a few pot plants for the use of the grower and his mates but the wholesale, large scale, production. And with ideal conditions in the north, it’s a far from unrealistic proposition.

Thailand gets empty jails - amnesties are being arranged for non-violent dealers and users. The rest of the region gets a headache.

What all of this means, then, is that, the risk of drugs money being involved in dealings with Thailand has not significantly changed as a result of the policy introduced in June 2022.

But something has changed. Now there are two quite specific problems.

1. If the money generated from dealing in cannabis in Thailand by a Thai national is legal in Thailand, is it legal everywhere?

2. Is the money generated from dealing in cannabis in Thailand by a non- Thai national is legal in Thailand and if so, is it legal everywhere?

Some of Thailand's near neighbours have the most severe of penalties for possession of drugs: while Malaysia has recently removed mandatory death penalties (they remain an option open to the Judge at trial), Singapore has recently enraged many around the world by executing a man of limited intellectual capacity: in Singapore possessing a quantity of a drug such that it might indicate dealing does not require proof of intent and so capacity is not relevant.

In Laos possession of cannabis can result in a sentence of 20 years in jail and dealing with a sentence of death. Bizarrely, some possession of some other illegal narcotics have a maximum jail sentence of 12 years. In Myanmar, the principle producer in the Golden Triangle, the penalty for possession is a minimum of five years and for trafficking a minimum of ten years, says Frontier Myanmar.

The article says that in Myanmar the Dark Web is a step too far and that the trade "largely plays out in open groups on Facebook – much like every other aspect of the country’s online life". Some 45,000, more than half of the total prison population, are in jail on drugs offences. It is the move towards methamphetamines that is currently driving the country's drugs trade, the article says.

Surprisingly, the Frontier says that online weed dealers are often selling product grown in Thailand or Laos. It also says that FinTech WaveMoney is at the centre of the payments system for weed transactions because it can be used anonymously. But it's real money, not crypto. This is relevant because it demonstrates that, even when growing cannabis was a crime in Thailand, and despite the crop replacement schemes mentioned above, there was nevertheless a thriving illegal trade. Making domestic possession and use legal does nothing to reduce that trade and increases the supply available for export.

In the "arrivals hall" at Singapore Immigration there are signs reminding citizens and permanent residents that it is illegal for them to consume, anywhere in the world, drugs which are illegal in Singapore. When the Netherlands relaxed its laws on marijuana, British customs were almost aggressive in stopping passengers arriving from there and special attention is paid to their luggage and pockets even today. Will arrivals from Thailand be subject to similar attention? There seems to be no good reason why they should not. Even a small amount smuggled and sold in e.g. Malaysia, can cover the costs for a short trip to pretty much anywhere in Thailand.

Part 1: https://worldmoneylaunderingreport.com/publications/web/wmlr_articles/t…

Part 2: https://worldmoneylaunderingreport.com/publications/web/wmlr_articles/t…

Part 3 and further reading: https://worldmoneylaunderingreport.com/publications/web/wmlr_articles/t…