Illicit Financial Flows Along Thai Borders – The Diplomat


Every year, the illegal trade in goods and the smuggling of narcotics generate billions of dollars in illicit financial flows in Southeast Asia. Methamphetamine seizures alone hit a record high in 2021, reaching 1 billion tablets and almost eight times the weight of seizures a decade ago. Drug trafficking in Asia-Pacific is estimated at $61.4 billion a year, with more than 90% of tablets seized in Asia coming from four countries: Thailand, Myanmar, Cambodia and Laos.

Thailand has consistently ranked first in drug arrests and methamphetamine seizures in East and Southeast Asia. The country made one of its biggest heroin seizures last year, confiscating 694 pounds of heroin worth up to 944 million baht ($29 million) bound for Australia . The country’s reliance on traditional law enforcement operations and seizures, however, has led to little progress in curbing the narcotics trade amid a pandemic-related supply glut and instability along the border between Thailand and Myanmar. Organized crime groups and illicit financial networks have thrived in this anomalous situation.

Organized crime networks have proven highly resilient to heightened border patrols, adopting new tactics to take advantage of the fallout from the COVID-19 pandemic. Government shutdowns and pandemic-related travel restrictions have contributed to long-term unemployment and reduced purchasing power, increasing the trade and consumption of illegal drugs. Thailand’s strained vaccine supply chain and slow and inefficient vaccine deployment have created an opening for illicit suppliers to enter the pharmaceutical market to meet growing demand. Criminal syndicates have preyed on Thailand’s poor and sick by spreading counterfeit COVID-19 products through social media on Facebook, Twitter and LINE.

In contrast to the increase in methamphetamine seizures, interceptions of chemical precursors (ingredients) to methamphetamines, such as pseudoephedrine and ephedrine, have declined. Drug traffickers have become more creative in exploiting loopholes in Thai customs laws, either buying methamphetamine powder from big networks and pressing pills themselves, or acquiring “pre-precursors”. The pre-precursors are legal in normal commercial use and allow crime syndicates to circumvent strict chemical controls, allowing them to diversify their manufacturing base and bypass high-surveillance regions, including the eastern borders of the Myanmar, northern Thailand and western Laos, also known as the “Golden Triangle.”

Drug syndicates have also taken advantage of weak law enforcement cooperation along the border, a symptom of corruption and lack of capacity. Despite orders from the central government, official checks and controls have been weakly enforced along Thailand’s northern border. Money laundering activities are rampant, a consequence of the country’s highly centralized governance and tax system and a non-existent tax system. The combination of an isolated terrain with a multitude of problems, including a pandemic and a migration crisis, has led to a lack of incentive to avoid corrupt money-making activities. Despite efforts to strengthen border security, the lack of will to apply these measures at the local level reduces their effectiveness.

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Drug trafficking also funds both sides of the fighting in Myanmar. Profits from illicit narcotics have become so lucrative that they exceed the formal economy in Shan and Kachin states, and the self-governing autonomous division of Wa. Billion-dollar “super labs” producing crystal meth, also known as “ice,” have flourished since the 2021 coup, operated largely by insurgent groups. Agreements with the Myanmar military have also allowed pro-government militias to remain isolated from law enforcement, giving them more leeway to pursue criminal activities. Neither side has any incentive to demobilize, given that territorial control and the absence of state investment and institutions are essential to maintaining narcotics revenues.

Efforts to bolster security along the Thailand-Myanmar border have led criminal groups to divert their trafficking routes to the less-policed ​​Thailand-Laos border. A growing share of illicit goods now transit through Laos before moving along the Mekong to Isan, the northeast region of Thailand. Among the top 10 provinces seized in 2021, Isan alone accounted for 49% of ice cream seizures and 39% of methamphetamine pill seizures, four times the amount seized in 2019 and 2020 combined.

With Isan being the poorest region of the country, smuggling rings easily recruited couriers and middlemen from marginalized communities in the northeast. Meanwhile, unprecedented levels of methamphetamine pill production have caused wholesale and street prices to plummet to 10-20 baht ($0.28 to $0.56) per pill, with dire social consequences for a region that has limited health and harm reduction services. The Mekong Delta and the Isan region have also been exploited for the illegal trafficking of wildlife products and weapons.

Cross-border cooperation is key to setting priorities and rebalancing law enforcement strategies and approaches. The United Nations Office on Drugs and Crime (UNODC) Drug Control Memorandum of Understanding on the Mekong has provided Thailand, Laos, Vietnam, Myanmar, Cambodia and China an operational platform to combat drug trafficking and other related issues, including human trafficking and transnational terrorism. . Intelligence sharing and cooperation under the Mekong Memorandum has enabled the Thai Border Patrol to implement more effective customs operations, border policing and immigration inspections.

As criminal networks become more sophisticated, the technology needed to monitor their movements will need to adapt accordingly. Analytics-centric approaches that enhance law enforcement coordination through maritime domain awareness or bilateral law enforcement training provide a geospatial advantage in combating illicit financial flows and continue to be an important component of the US-Thai strategic alliance and partnership. Reflecting the United States’ growing role in combating drug trafficking in Thailand, the United States Department of State’s International Narcotics and Law Enforcement Bureau donated approximately $370,000 worth of equipment to the Northeast Border Police. UNODC’s Global Maritime Crime Program has also helped strengthen the efforts of the Royal Thai Navy and the Royal Thai Maritime Police to crack down on methamphetamine shipping routes in the Andaman Sea and Gulf of Thailand by providing them with surveillance and identification systems to track the activities of illegal vessels. .

In early June this year, the Thai government introduced a decriminalization law to tackle the illegal cannabis market – and profit from it. While the bill has been withdrawn for further parliamentary reviews, central to decriminalization is the hope that the economic benefits will increase national income. Allowing farmers to monetize the plant as a medical product or cash crop, particularly in Isan, could prove a useful strategy to reduce reliance on illicit cultivation or the trade in chemical precursors.

Furthermore, a sub-area that has rarely received attention in discussions of illicit finance in Southeast Asia is the need for fiscal autonomy. Tax revenues allow local governments to maintain operations and meet local needs, contribute to poverty reduction and discourage illicit economic exchanges. The tax pillar of the Indo-Pacific Economic Framework, of which Thailand is a participating member, can also have a promising effect on enacting and enforcing effective taxes as well as cracking down on money laundering or corrupt schemes.

Thailand’s war on illicit trade cannot be waged using strict enforcement tactics alone, but must be complemented by policy interventions at the national and regional level. Concerted efforts between Thailand and the wider ASEAN community – with the support of the United States and other key partners – are needed to tackle illicit markets before they take irreversible root. into local economies and become too big to fail.

This article originally appeared on New Perspectives on Asia from the Center for Strategic and International Studies and is reproduced with permission.


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