Thailand’s UBO Crackdown: Is Your Foreign Business at Risk?

Foreign Entrepreneurs Beware: Thailand is launching a major crackdown on hidden company ownership – from Ultimate Beneficial Owner (UBO) disclosures to illegal Thai “nominee” shareholders. The warning signs are everywhere: in one recent sweep, 231 foreign business operators were arrested in Phuket for using Thai proxies to secretly run their firms . And this is just the beginning. A wave of audits, investigations, and legal enforcements is underway that could drastically impact foreign businesses in Thailand. If your company’s structure relies on outdated or shady arrangements, it’s time to pay attention. This slightly alarmist (but necessary) briefing explains what’s happening, why global pressure is forcing Thailand’s hand, and how to protect your business in this new era of transparency.

The Looming Crackdown on Hidden Ownership in Thailand

Thai authorities have sounded the alarm: opaque ownership and nominee arrangements are no longer tolerated. In early 2024, the Department of Business Development (DBD) – Thailand’s business registry authority – launched large-scale investigations into companies suspected of using nominee shareholders . Hundreds of firms across Bangkok, Chiang Mai, Phuket, and other provinces were suddenly under the microscope for hiding their true owners . By 2025, the net has widened dramatically. At least 852 companies suspected of using Thai “nominees” to mask foreign ownership have already been investigated, and a staggering 49,000 more with foreign shareholders are now under scrutiny .

This crackdown isn’t just on paper – it’s playing out in real raids and audits. Authorities, including the DBD and Thailand’s Department of Special Investigation (DSI), are inspecting corporate records, demanding proof of legitimate ownership, and pursuing legal action where they find wrongdoing . A special “Nominee Business Complaint Center” has even been established to encourage whistleblowers to report companies using proxy Thai owners . The message from the government is loud and clear: foreign business in Thailand must transparently identify who is in control, or face the consequences.

Why Now? FATF, OECD and Global Pressure for Transparency

Why is Thailand getting so serious, so fast? The answer lies in mounting international pressure and Thailand’s desire to align with global standards. In recent years, the Financial Action Task Force (FATF) and the OECD have been pushing countries worldwide toward greater corporate transparency. FATF Recommendation 24, updated in 2022, specifically urges countries to crack down on opaque corporate structures and reveal the Ultimate Beneficial Owners behind companies . Thailand has taken this to heart. A 2023 FATF review praised Thailand’s progress on UBO transparency reforms – but also signaled that more work was needed to fully “close gaps” in anti-money laundering frameworks and avoid the dreaded grey list .

Simply put, Thailand cannot afford to be seen as a haven for hidden ownership, money laundering, or tax evasion. Global bodies and trade partners (including the United States) have raised concerns about Thailand’s lax enforcement in the past . The OECD’s Global Forum on Transparency has similarly pressured Thailand to strengthen its beneficial ownership identification and information-sharing for tax purposes . Failing to act could result in international blackmarks, sanctions, or loss of investor confidence. Thus, the Thai government is overhauling laws and regulations to shine light on every company’s real owners. Crucially, this includes proposed amendments to the Anti-Money Laundering Act that explicitly criminalize nominee arrangements and mandate UBO disclosures in line with FATF standards . The legislative reforms are expected by late 2025, but enforcement has effectively begun already – catching many businesses off guard.

Thai Nominee Structures Under the Microscope

At the center of this storm is the longstanding practice of using Thai nominee shareholders. This occurs when a Thai citizen’s name is put on company shares while a foreigner is the true owner pulling the strings . For decades, some foreign entrepreneurs in Thailand saw nominees as a convenient workaround – a way to skirt the Foreign Business Act, which limits foreign ownership in certain sectors to 49%. By registering a company with Thai “partners” on paper, foreigners could operate in restricted industries (like tourism, real estate, retail, or agriculture) without obtaining a foreign business license . It was an open secret: many formation services even offered “friendly” Thai shareholders to meet the 51% local ownership requirement . Everyone knew these Thai shareholders often invested no money and had no real role, acting purely as figureheads while the foreign investor ran the show .

But what was once viewed as a tolerated grey area is now flat-out illegal and under intense scrutiny. Thai law has long prohibited nominee arrangements on paper, yet enforcement was sporadic. That complacency is over. The current crackdown means authorities are actively hunting for companies where Thais are holding shares on behalf of foreigners. No sector or region is off-limits – while early investigations zeroed in on tourism hotspots like Phuket and Chiang Mai, officials warn that any business using nominees can be targeted . In 2024 alone, the DBD reviewed 26,019 companies in four high-risk sectors (tourism, real estate, hotels/resorts, and logistics), flagging dozens of firms for potential nominee violations and referring cases for prosecution . And this year, they plan to scour another 26,830 companies across seven provinces (from Bangkok to island and border provinces) looking for proxy ownership red flags .

The crackdown has already yielded eye-popping cases. Aside from the mass Phuket arrests noted earlier, authorities have busted complex nominee schemes across Thailand. In one operation, police raided seven locations in Surat Thani, arresting multiple suspects for running businesses on behalf of foreign owners . In another, the government seized 1,500 rai (~593 acres) of illegally acquired forest land in Chachoengsao after discovering it was held by a Thai company acting as a nominee for Chinese investors . That land was being turned into durian plantations and housing for foreign nationals – all under a fake Thai front. In Chiang Mai, officials uncovered how a group of Chinese businessmen bought several land plots through Thai proxies to build private complexes and even set up an international school, facilitating visas for Chinese migrants . These real-world scenarios read like crime thrillers, but they underscore a serious point: using nominee structures is a high-risk game, and the Thai government is in no mood to play around.

Even legitimate foreign-run companies are feeling the heat. Many SMEs that quietly used Thai relatives, spouses, or employees as nominal shareholders are now racing to verify if they’re in compliance. The Thai Chamber of Commerce has publicly backed the government’s efforts, noting that foreign nominee businesses often “use Thailand as a base for tax evasion and money laundering” and undermine fair competition . This has galvanized regulators to get even more aggressive – including new proposals to require all shareholders and directors to disclose their source of investment funds and to deploy big data analytics to spot suspicious shareholder patterns . In short, the era of “don’t ask, don’t tell” in Thai company structures is ending. Every foreign entrepreneur should assume their corporate setup will face some level of scrutiny in the near future.

The Risks of Outdated or Shady Structures

The risks of ignoring these developments are very real and growing by the day. If your company is found to be using illegal nominee arrangements or hiding its true UBO (Ultimate Beneficial Owner), the penalties can be severe. Under the Foreign Business Act and related laws, both the Thai proxy and the foreign beneficiary can face up to 3 years in prison and a 1 million THB fine for participation in a nominee scheme . Recent legal reforms aim to reinforce this joint liability – no longer can a foreign owner claim ignorance or pin blame solely on their Thai partner. Foreign investors who knowingly use Thai nominees will face equal legal consequences under the new regime . In fact, Thailand’s draft anti-money laundering amendments are set to categorize nominee arrangements as a form of money laundering predicate offense, closing any loopholes that previously allowed such practices to slide .

Financial punishment is only one part of the fallout. Authorities can also strip the business of its operating license or force it to shut down if found in violation. Courts are empowered to order the cessation of businesses operating illegally under nominee setups , and failing to comply with such orders can incur hefty daily fines on top of initial penalties . If your company owns assets (like land) through a prohibited structure, those assets can be seized or forced to be sold. For example, foreigners who have acquired land via nominee-owned companies may be compelled to divest within a short period or face government-forced sale of the land . The reputational damage is also hard to quantify – being embroiled in a nominee scandal can tarnish your business’s image with banks, partners, and customers.

Don’t forget the immigration implications. Many foreigners in Thailand rely on their company to secure a business visa and work permit. If that company is flagged for legal breaches, you could find your visa status in jeopardy. We’ve already seen cases where foreign directors faced arrest; a criminal charge could lead to detention, deportation, and blacklisting from Thailand. Even absent an arrest, a company under investigation might struggle to renew work permits or visas for its foreign staff, as immigration authorities tighten checks to ensure businesses are legitimate. In short, a shaky corporate structure can put your very right to live and work in Thailand at risk.

Perhaps the biggest risk, though, is complacency. It’s easy to think, “I’ve operated this way for years without issues” or “everyone uses nominees – why would they pick on me?” That mindset is exactly what Thai regulators are targeting now. As one legal expert noted, a decade ago people assumed enforcement was rare and limited to obvious cases in tourist areas, but today any sense of complacency is misplaced – and frankly hazardous – given the authorities’ appetite for investigations . In other words, the fact that a structure was common or unchallenged in the past is no guarantee of safety tomorrow. The crackdown is real, and it’s accelerating – so every foreign business owner must proactively assess their risk exposure.

Common Mistakes Foreign Entrepreneurs Make

What kind of missteps are putting foreign SMEs in danger? From our observations, several common mistakes can lead businesses straight into the nominee trap:

• Using “Paper” Thai Shareholders: Perhaps the most widespread error is appointing a Thai friend, employee, or even a hired name to hold 51% of shares without any genuine investment or control. This token Thai shareholder arrangement is exactly what investigators are trained to uncover. If the Thai partner cannot prove independent financial means or a legitimate role in the company, it screams nominee.

• Assuming Small Scale = Low Profile: Some entrepreneurs think their small business will fly under the radar. But Thai authorities are not only targeting big corporations – even small restaurants, shops, or startups can get caught up in the audits if their ownership structure looks suspicious. Remember, the DBD’s 2025 audit list ranges from tourism operators to tiny e-commerce firms . Size is no shield.

• Outdated Company Setup Strategies: Many long-time expats in Thailand set up companies years ago under advice that might have been technically legal then but is risky now. For example, splitting shares among several nominee shareholders to hide the foreign majority, or using layered holding companies to obscure the real owner. These tactics are increasingly ineffective against modern scrutiny (with data analytics and inter-agency cooperation ferreting out patterns ). Clinging to an old strategy without re-evaluating it in light of new laws is a recipe for trouble.

• Neglecting Proper Documentation: If you do have Thai partners, failing to document their capital contributions or roles is a mistake. Authorities will ask: did your Thai shareholder actually pay for their shares? Do they receive dividends commensurate with their stake? Is there any side agreement that the Thai will transfer shares or profits back to the foreigner? Any such side agreements, if discovered, are smoking guns for a nominee setup. Not having clear paperwork (or worse, having incriminating paperwork) can sink your defense quickly.

• Ignoring UBO Reporting Duties: As transparency rules ramp up, companies will be required to disclose their ultimate beneficial owners – the flesh-and-blood individuals who ultimately control or profit from the company. Some businesses might be tempted to shrug this off or provide partial info. That would be a grave error. Regulators are instituting hefty fines for failure to report UBO information (up to THB 500,000 plus daily penalties under the proposed law) . And banks in Thailand are already demanding UBO info for corporate accounts as part of FATF-aligned due diligence. Ignoring these disclosure requirements could not only result in fines but also get your bank account frozen or closed.

The bottom line: what may have been a “normal” way of doing business in the past is now a legal liability. Foreign entrepreneurs must shake off any false sense of security and critically examine whether their company setup could withstand an audit or investigation. If not, it’s time to take action – before the authorities take action against you.

How to Future-Proof Your Business in Thailand

If all this sounds alarming, take it as a prompt to strengthen your business rather than a reason to panic. There are clear steps you can take to protect your company and stay on the right side of the law:

1. Conduct a Nominee Structure Audit: Start by reviewing your current company ownership. Identify all shareholders and trace who the real beneficial owner is. Ask hard questions – if you have Thai shareholders, are they genuinely invested in the business? Can they prove the source of the funds they used to buy shares (in case authorities ask) ? If you discover any “empty” Thai nominees in the mix, consider restructuring immediately. This might mean transferring shares to a truly independent Thai partner or reducing foreign involvement in regulated sectors until you obtain proper licenses.

2. Get Compliant or Get Licensed: For businesses operating in sectors restricted by the Foreign Business Act, the legal way for majority foreign ownership is to obtain a Foreign Business License (FBL) or promotion through the Board of Investment (BOI) in some cases. Yes, these processes can be time-consuming and paperwork-heavy , but they provide a legitimate path to control your company without subterfuge. If you’ve been avoiding the FBL route by using nominees, now is the time to reassess. The short-term convenience of a nominee setup is not worth the long-term risk. Consider transitioning to a properly licensed structure – it’s an investment in your business’s stability.

3. Embrace UBO Transparency: Rather than fearing the UBO disclosure requirements, use them as an opportunity to clean house. Ensure your company’s records clearly indicate who the ultimate beneficial owners are. If your ownership chain involves foreign holding companies or trusts, be prepared to provide clarity on the individuals at the top of the chain. This not only keeps you compliant with impending regulations, but also reassures banks and partners of your legitimacy. Staying ahead of UBO compliance will save you headaches – and potential fines – later on.

4. Tighten Corporate Governance: With increased scrutiny, good corporate governance is your friend. Keep thorough records of all capital contributions, share transfers, and shareholder meetings. If you have Thai shareholders, involve them transparently in the business (even if just via meeting minutes or consultations) to evidence their role. Avoid any side deals that could be interpreted as hiding a nominee arrangement (for instance, unofficial agreements to pay a Thai shareholder a fixed fee for lending their name). The cleaner and more robust your corporate paperwork, the easier it is to demonstrate compliance during an audit.

5. Monitor Legal Changes: The regulatory landscape in Thailand is evolving rapidly on these issues. Stay informed on new laws or guidelines – such as the forthcoming AML law amendments – that may affect your obligations. For example, if (or when) Thailand establishes a formal beneficial ownership registry or starts requiring annual confirmation of UBOs for companies, be ready to comply. Knowledge is power; by keeping up with changes, you won’t be caught off guard. Consider engaging a compliance advisor if necessary to get updates on FATF-related rules, tax transparency initiatives, and enforcement trends.

By taking these proactive steps, you can transform a looming threat into a manageable compliance project. Many reputable foreign businesses in Thailand are already adapting to operate with full transparency, and they continue to thrive. The key is to act before the authorities come knocking. As the saying goes, fix the roof while the sun is shining – not in the middle of the storm.

Thai-Co: Your Partner in Compliance and Peace of Mind

Navigating these regulatory challenges can be complex, especially if you’re focused on actually running your business. This is where Thai-Co’s expert services come into play as a future-proof solution for foreign entrepreneurs in Thailand. Thai-Co is a specialized consultancy that helps businesses stay ahead of Thai regulations while achieving their growth goals. Our team has been following every twist and turn of the UBO and nominee crackdown, and we’re here to guide you through it. Here’s how we can help:

• Professional Company Setup (No Shady Shortcuts): If you’re planning to set up a company in Thailand, start off on the right foot. Thai-Co assists with company incorporation that is fully compliant with Thai law. We’ll help you explore legitimate structuring options – whether that means finding trustworthy Thai business partners, securing the appropriate Foreign Business License for majority foreign ownership, or obtaining BOI promotion for your venture. Our goal is to structure your company setup in Thailand so that you never have to worry about nominee risks down the road.

• Nominee Structure Audits & Restructuring: For those already operating in Thailand, Thai-Co offers a comprehensive “nominee risk” audit of your current structure. We delve into your shareholder arrangements and identify any red flags or hidden vulnerabilities. If your setup is outdated or risky, we’ll provide a roadmap to restructure it safely. This might involve re-registering shares, adjusting control agreements, or bringing in new shareholders in a way that eliminates illegal nominee arrangements. Think of it as a stress test for your company’s foundation – and we’ll help reinforce any weak spots before the authorities do it for you.

• UBO Compliance & FATF Advisory: Unsure about the new FATF compliance Thailand is implementing? Worried about UBO disclosure forms and deadlines? Thai-Co has you covered. We stay up-to-date with every new rule on Ultimate Beneficial Ownership in Thailand and the broader AML/KYC landscape. Our experts can assist in preparing your beneficial ownership reports, liaising with Thai banks or regulators, and putting robust internal compliance measures in place. When global standards shift, we make sure your business shifts with them seamlessly.

• Visa and Work Permit Support: Your business and your legal residence in Thailand go hand in hand. A compliant company is the backbone of a secure visa and work permit. Thai-Co’s immigration specialists will ensure that your visa and work permit in Thailand are obtained and renewed without hiccups. We coordinate the corporate documents and proof of business activity that immigration officers expect, especially in this era of heightened scrutiny. By keeping your company above board, we help safeguard the permits that allow you and your expatriate staff to live and work here. No more sleepless nights before the immigration renewal appointment – we’ll make sure your paperwork is bulletproof.

• Ongoing Compliance Consulting: Laws change, and what’s compliant today might need an update tomorrow. Thai-Co offers retainer-based consulting to continuously monitor your compliance status. We’ll alert you of relevant legal changes (for example, if authorities announce new audits or reporting requirements), conduct periodic check-ups on your corporate records, and even train your staff on compliance best practices. Consider us your outsourced compliance department – your eyes and ears on Thailand’s regulatory pulse, so you can focus on growing your business.

Thai-Co prides itself on blending urgency with thought leadership. We understand the pressure foreign entrepreneurs are under right now – but we also know the ins and outs of Thai regulations to expertly steer you out of danger. Our approach isn’t about scare tactics; it’s about proactive solutions. We’ve helped numerous clients convert dubious nominee setups into solid, legitimate enterprises that can confidently face audits and due diligence. With Thai-Co by your side, you can turn this crackdown into an opportunity to build a stronger, more transparent company.

Thriving in Thailand’s New Era of Transparency

Thailand’s pivot toward greater transparency and stricter enforcement is a game-changer for foreign businesses. The days of quietly operating behind local nominee fronts are fading, replaced by an era of “show me your true owners”. For SME entrepreneurs who love doing business in Thailand, this might feel unsettling – but it doesn’t have to spell doom. By understanding the risks and taking swift action to comply, you can not only avoid legal troubles but also position your business as a credible, future-ready player in the Thai market.

The ongoing UBO and nominee crackdown is a clear signal that Thailand is aligning with global business norms. In the long run, this fosters a fairer playing field and a more stable investment environment. Yes, it means some short-term upheaval for those who need to overhaul their structures. But entrepreneurs who adapt will ultimately benefit from greater legitimacy and trust – whether it’s dealing with banks, partners, or government agencies. Think of compliance as an investment in your company’s longevity in Thailand.

As you navigate these changes, keep the urgency in mind: audits are happening, laws are tightening, and the window to “wait and see” is closing. If you suspect your business might be at risk, the time to act is now. Perform your due diligence, seek expert help if needed (Thai-Co is always a call away), and get your house in order. The cost of inaction – fines, jail, lost visas, or a shuttered business – is simply too high.

Foreign business in Thailand has always come with unique challenges, and this new compliance push is just the latest. But armed with the right knowledge and support, you can turn this challenge into an opportunity. By embracing transparency and robust structures, you’ll not only avoid the crack of the regulatory whip but also earn the peace of mind that your Thai venture is truly built to last. In the end, staying on the right side of the law is the best foundation for sustainable success in the Land of Smiles. Stay informed, stay compliant, and your business can continue to thrive in Thailand’s new era of transparency.

Share this article with fellow entrepreneurs who might be unaware of the coming changes – a heads-up now could save a business later. In an environment where knowledge is power and compliance is king, spreading the word is a collective investment in a fair and flourishing foreign business community in Thailand.

Sources: Recent Thai government statements and news reports on the crackdown ; expert analyses of new AML laws and FATF-driven reforms ; law firm commentaries on nominee risks and legal penalties ; and media accounts of enforcement actions and industry reactions .

Disclaimer:Thai-Co is not a law firm and does not provide legal advice. The information contained in this article is for general informational purposes only and is based on publicly available sources and our experience as a business consultancy. While we strive to ensure accuracy and relevance, readers are strongly encouraged to consult a licensed Thai lawyer or legal advisor for formal legal opinions, especially in matters involving regulatory compliance, nominee structures, and corporate legal risk.