Thailand to Mandate Source Disclosure for Cash Deposits Over B5 Million

The Bank of Thailand (BoT) will mandate the disclosure of fund sources for cash deposits exceeding 5 million baht starting in the fourth quarter, as part of tightened measures to curb the 'grey economy' and illicit financial activities, according to BoT Governor Vitai Ratanakorn. Mr Vitai stated during a meeting with economic reporters that the central bank places high priority on tackling Thailand’s structural problems, particularly the informal economy, grey capital, and corruption. Consequently, the BoT aims to prevent financial institutions under its supervision from being used as channels for illegal activities, prompting enhanced oversight. Officials are currently renewing the scope of the central bank’s legal authority before finalising the deposit disclosure requirements. The measures will also cover large cash exchange transactions, requiring customers seeking to exchange 1,000-baht banknotes for 100- or 500-baht notes to explain the purpose of the transaction and why the smaller denominations are needed. Under a separate measure introduced earlier this year, cash withdrawals exceeding 5 million baht are subject to enhanced due diligence. Commercial banks and state-owned financial institutions are required to verify customers’ reasons for using cash and assess whether transactions could instead be conducted through electronic transfers or cheques. Legitimate business transactions remain permitted, Mr Vitai said. Since the measures took effect in April and May, large cash withdrawals have fallen by 35%, and enforcement will be standardised across all banks to further reduce such transactions. The central bank governor also called for structural reforms, observing the failure of successive governments to address the country’s long-term economic weaknesses. Thailand has relied primarily on short-term projects, promotion, and public relations while making little progress on long-term structural reforms. The Thai economy has proved more resilient than expected during the Middle East conflict, prompting the BoT to project GDP growth of a modest 2.3% this year instead of the 1.5% contraction feared under the worst-case scenario. However, the more pressing challenge remains deep-rooted structural problems, which continue to erode long-term growth potential. “We have structural problems because resources are concentrated in the hands of large businesses, and we also face issues relating to the grey economy,” he said. “What we have seen over the years are mainly short-term projects. There has been very little effort to solve long-term problems.” The structural weaknesses are evident in persistently low productivity caused by years of inadequate investment in innovation and modern infrastructure; an ageing society that is steadily shrinking the country’s workforce; and an increasingly unequal K-shaped recovery, in which large corporations continue to recover and access financing while low-income households and small businesses remain constrained and struggle to obtain formal credit.