Thailand’s digital asset sector has intensified its anti-money laundering measures in response to the prevalence of mule accounts.

According to the Thai Digital Asset Operators Trade Association (TDO), over 10,000 suspicious accounts have been locked under the newly implemented ‘Speed Bump’ rule. This initiative is designed to detect and mitigate the transfer of illicit funds.

Major Anti-Money Laundering Initiative

In an interview with the Bangkok Post, Att Thongyai Asavanund, the CEO of KuCoin Thailand and TDO’s chairman, emphasized that mule accounts constitute a major vulnerability in the crypto ecosystem.

Criminal organizations typically transfer illegal funds through various bank accounts, later consolidating them into a single account before moving to a crypto exchange. Upon arrival, the funds are swiftly converted into digital currencies and sent overseas.

Despite the tracing capabilities of blockchain, Asavanund pointed out the challenges of identifying the actual person behind a wallet address. While transaction flows can be monitored, pinpointing the true owner remains difficult.

To counteract this issue, the TDO’s ‘Speed Bump’ mechanism mandates a 24-hour lock on transactions exceeding 50,000 baht. Users are then required to undertake enhanced identity verification, including video checks, prior to the release of funds.

Asavanund stated that this delay is intended to hinder the rapid movement of funds used by criminal organizations, aiming to prevent them from slipping through the system before detection. This enhanced scrutiny has already led to the suspension of thousands of accounts suspected to be mule accounts.

Nonetheless, as investigations into suspicious transactions grow, crypto operators are grappling with heightened compliance costs and operational hurdles. Criminal entities are also attempting to overcome these restrictions by employing new individuals to open substitute accounts whenever previously used ones are flagged.

In addition to the ‘Speed Bump’ rule, the TDO is collaborating with authorities to bolster financial system safeguards. This includes integrating suspect databases with the Bank of Thailand’s payment systems and law enforcement bodies to monitor individuals categorized as high-risk.

Additional Industry Steps

Last August, Thailand rolled out a scheme called TouristDigiPay, allowing visitors to convert cryptocurrency to Thai baht for payments. Tourists must establish accounts with licensed digital asset providers and go through thorough identity verifications.

Earlier in June, the government approved a five-year exemption on cryptocurrency profits for local investors to encourage more funds to stay in Thailand after seeing a significant decline in foreign investments following stricter taxation on foreign income the prior year. Moreover, the Thai Revenue Department is gearing up to enact the Crypto-Asset Reporting Framework (CARF) to facilitate international sharing of digital asset account information.