Laundering the money-laundering law

29 July 1998

Last week parliament savaged the bill against money-laundering. The lower house peppered the draft with amendments to reduce its scope and effectiveness. The senate speaker departed from his usual serious character and tried to dismiss the remainder with jokes.

The idea of anti-money-laundering legislation originated from the US fight against the drug trade. Traffickers often neutralise the usual processes of police investigation and judicial prosecution through a combination of money and violence. The authorities hit on the idea of attacking the traffickers at the point where they converted their profits into legitimate money.

To control international drug-trafficking, the US urged other countries like Thailand to pass similar laws. But when drafts began to be discussed in Thailand, the context of the legislation quickly changed. Here it is not only drug-traffickers who use money and power to neutralise the law. Many other illegal businesses secure immunity by this route. Why then should Thailand limit the money-laundering legislation to the drug trade?

In 1994, when legislation was first being drafted, a Chulalongkorn University research team made a survey of people likely to have a view on money-laundering legislation - lawyers, bankers, administrators, politicians and opinion-leaders. They supported the idea of money-laundering legislation, and wanted to expand its scope. They wanted the law to cover profits not only from drugs, but also from other illegal activities like corruption, smuggling, arms-trading and prostitution. They wanted the law extended to accomplices and to Thais overseas. They thought the monitoring of money-laundering should cover not only bank deposits but stock, land and foreign exchange transactions.

The draft legislation was modified to reflect these views to some extent. The final draft extended the scope to cover nine illegal businesses besides drug-trading.

But the legislation faced a big problem. The law-makers include a large number of law-breakers. Several MPs are suspected of involvement in drug-running, smuggling, gambling ventures, arms trading, and human trafficking. Others are dependent on the money and support of those involved in such activities. The super-profits of illegal businesses are a large input into ‘money politics’.

The bill took a long time to reach parliament. During the premierships of Banharn and Chavalit, other matters always seemed to have a higher priority. Last week, MPs reduced the scope of the bill back to drugs and prostitution, and introduced other amendments which will limit its effectiveness.

This was predictable, and can be explained in terms of simple self-interest. But the reaction of the Senate speaker, Mechai Ruchupan, showed another side of opposition to this law.

Nobody would accuse Mechai of being a drug trafficker or operator of any other criminal business. Equally nobody would call him unintelligent, and nobody would credit him with any talent for humour. But confronted with this bill, he seemed to lose his head completely.

Why, he asked, should the bill cover prostitution? The prostitution business, he claimed, is trivial. But on a conservative estimate, the direct profits from prostitution are around 100 billion baht a year, and the indirect profits (from related tourist and entertainment business) may be several times larger.

The law is unnecessary, he continued, because prostitution is already illegal and covered by other laws. But nobody pretends these laws are effective.

The money-laundering law will, he claimed, be an additional burden on prostitutes who are already victimised. But does he really think an individual sex-worker is going to make a two million baht bank deposit - the amount needed to trigger investigation under the money-laundering law? Of course it is the large-scale agents, entrepreneurs and slave-traffickers who are placed at risk under the law.

Mechai ended with a smirky joke about five hundred baht notes which does not bear repeating.

What prompted Mechai to this pathetic display? Was it simply that he aligns himself with other legislators who see the money-laundering law as a threat to the political system as it is currently constituted? Or was it something more basic, something which surfaces whenever the sex trade comes under political discussion: the male-dominated parliament rallies to protect the assumed right of men to buy women without any complication of law or human rights?

Both the MPs’ treatment of the money-laundering bill, and Mechai Ruchupan’s performance over prostitution, show how the powerful in Thai society treat the institution of the law. The powerful have special rights which must be protected from the enforcement of law.

At a seminar last week, Prawase Wasi argued that there is no social justice in Thailand because there is no rule of law. Little people cannot turn to the law for protection against officials, politicians or other powerful people. Why is this so, why are attempts to advance the rule of law always blocked? Prawase delivered the answer with a quiet gentleness which made his message even more startling: "because the rich hate the poor".

Since taking up office last November, Chuan Leekpai’s responses to reporters’ questions have become consistent and predictable. We must study the issue in relation to law. We must act according to law. We cannot treat individual cases but we must apply the law evenly. We are preparing a new law on this issue. And so on.

Chuan has positioned the Democrats as the party of the rule of law-in contrast to the rule of patronage and influence of some of his predecessors. This is a key part of the Democrats’ claim to be the party of modern, world-standard Thailand. But it is a hard position to sustain in the realities of day-to-day parliamentary politics. Parliament has laundered the money-laundering law so hard it may emerge bleached, frayed and useless. Will the law-loving Democrats go along with this?