Thai banks to declare transactions of US$200,000 and up

[BANGKOK] The Bank of Thailand has instructed commercial banks and state-owned financial institutions to declare foreign currency transactions of US$200,000 and above, to help it manage the baht’s persistent appreciation.

It is the latest in a series of measures the central bank has taken to address the strength of the baht, which has weighed on the nation’s export and tourism sectors.

The baht has risen nearly 10 per cent this year, the second-best performer in Asia.

“This is to ensure that such foreign exchange transactions are conducted for trade or investment purposes and are consistent with the declared objectives,” governor Vitai Ratanakorn said in a circular letter issued on Dec 26.

Effective Dec 29, banks must request evidence of sales abroad for every foreign currency transaction relating to gold, indicated the Bank of Thailand’s letter.

Documentation may be submitted on the trade date or by the next business day for transactions conducted outside business hours.

Meanwhile, billing documents and gold customs declarations must be requested within two business days from the settlement date.

Authorities have been concerned about the impact of gold trading on the baht for more than three months, with the central bank in September meeting representatives of the Thai Gold Traders Association and urging them to closely monitor bullion transactions. 

The finance ministry is also exploring a business tax for online gold transactions, after a surge in activity was blamed for driving the baht to multi-year highs.

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The central bank is discussing with the finance ministry as it seeks more oversight on gold transactions, which have an effect on the foreign exchange rate, Vitai said, adding that clarity is expected early next year.

“Gold speculation doesn’t help the economy to grow,” Vitai told reporters. “We see clear information that this puts pressure on the baht, and we will have to manage as this has a negative effect on the economy.”

The measures:

• For foreign currency transactions not related to gold value or foreign banknotes involving amounts of US$200,000 or above, banks can request supporting documents from customers on a transaction-by-transaction basis.
• An exception may be made for routine transactions of well-known customers for whom due diligence procedures have been regularly conducted. However, this may not be applied where the transaction amount is US$200,000 and above and the purpose falls under certain categories, including Thai real estate and digital asset transactions.
• For foreign banknotes in amounts of US$15,000 and above, banks must request documentation demonstrating that such foreign currency was brought into the country.
• For foreign currency received from abroad into foreign currency deposit accounts of residents, banks shall apply the same requirements as those for spot foreign currency purchase transactions. BLOOMBERG