Regulatory Measures Regarding Security Token Offering in Decentralized Systems for Combatting Money Laundering in Thailand

Abstract

This research undertakes a comparative analysis of Thailand’s anti-money laundering (“AML”) regulatory framework in relation to the most recent recommendations issued by the Financial Action Task Force (“FATF”) concerning money laundering risks associated with Security Token Offerings (“STOs”) conducted via blockchain technology. The objective is to identify potential regulatory gaps and areas for improvement in Thailand’s existing AML measures, particularly in the areas of regulatory oversight, licensing requirements, customer due diligence (“CDD”), recordkeeping obligations, and the reporting of suspicious transactions by virtual asset service providers (“VASPs”). The methodological basis of the research is the comparative analysis method, examining Thailand’s applicable AML laws and regulations alongside FATF guidelines, relevant literature, and case law. The research found that Thailand’s applicable AML laws, including the relevant regulations, are inadequacies and inefficiencies in the regulatory oversight of securities offerings that utilize emerging technologies. Specifically, the current regulatory framework is insufficient in effectively preventing or mitigating risks related to money laundering and the financing of terrorism for investors. As a result, it does not adequately ensure the security and integrity of investments in decentralized systems, therefore, it fails to provide sufficient safeguards to protect investors from inadvertently becoming involved in unlawful activities. These shortcomings indicate a lack of alignment with international standards issued by the FATF. This research is useful to legislative authorities, lawyers, law students, and regulatory bodies, especially in Thailand, and only limited to the regulation of money laundering in Thailand and does not provide empirical research.