The Bank of Thailand (BoT) is currently developing guidelines to clarify the circumstances under which banks must assume full responsibility for financial fraud incidents involving customers. The initiative aims to streamline the process of returning funds to victims of fraud while working with relevant authorities to draft new legislation that ensures quicker refunds.
Daraanee Saeju, Assistant Governor of the Payment Systems and Financial Consumer Protection Group at BoT, emphasized the need for clearer regulations regarding the timeframe for refunding victims.
Presently, there is no specified duration for returning money after perpetrators are apprehended. The existing process involves evaluating the number of parties involved in the fraud before distributing any recovered funds to victims. In cases with no other claimants, authorities can immediately refund the victim, although such situations are rare.
To facilitate a more efficient refund process, BoT is collaborating with the Anti-Money Laundering Office (AMLO) and other relevant entities to draft new legislation. This law will enable faster refunds to citizens who fall prey to scams.
BoT is examining the possibility of mandating banks to reimburse customers in full (100%) in cases of fraud. If a financial institution fails to comply, it may be held accountable for the losses incurred by victims.
For instance, BoT has instructed banks to address vulnerabilities in their systems within one month. If a bank does not rectify these issues, it will be responsible for compensating any affected individuals fully.
Daraanee noted the complexity of defining banks’ responsibilities, particularly in scenarios where fraudsters collaborate to exploit financial institutions. Therefore, it is crucial to clearly outline the banks’ obligations and the consequences of non-compliance.
The Bank of Thailand is also studying international practices to establish definitive regulations. For example, Singapore mandates that banks must refund customers when funds are transferred without an accompanying SMS notification. Conversely, if an SMS alert is sent, banks are not required to cover the losses.
BoT has implemented measures to reduce financial fraud, such as prohibiting banks from sending links via SMS, which has contributed to a decline in fraud incidents. However, scammers have adapted their tactics, now impersonating government agencies in their phishing attempts.
Daraanee highlighted the necessity of collaboration among all parties involved. Banks cannot bear the entire burden; prevention measures must extend beyond financial institutions to include stopping scammers from sending fraudulent SMS messages.
Regarding the management of “mule accounts,” BoT’s recent initiatives allow for the exchange of data on suspicious accounts across banks, effective from August 1, 2024. All banks are now interconnected for data sharing. Recent findings revealed 38,000 “black” accounts—those restricted from transactions—across more than 340,000 accounts from March 2023 to May 2024. These accounts will be handled by AMLO.
Banks can immediately suspend services for black accounts, inputting the data into a centralized system within a day. Account holders who are not fraudulent can negotiate with law enforcement to regain banking services, though they cannot open new accounts during this period.
“Gray” accounts, totaling 15,000, represent another concern, with 36,000 such accounts requiring identity verification at bank branches for continued service.
“Brown” accounts—those that raise suspicion within banks—are yet to be fully integrated into the data-sharing system, resulting in unclear figures due to ongoing data compilation efforts by individual banks.
BoT has observed that measures requiring identity verification for transactions exceeding 50,000 Baht have led to a reduction in “one-time” mule accounts. However, “sustained” mule accounts—where individuals receive ongoing compensation—continue to persist. There has been a noticeable increase in the market value for these accounts, now ranging between 20,000 and 40,000 Baht, alongside rising monthly fees.
Although information sharing among banks has effectively reduced the prevalence of rotating mule accounts, challenges remain in closing these accounts due to the high rewards and relatively low penalties faced by fraudsters.
