Thailand Cracks Down on Shell Companies Used to Bypass Foreign Ownership Laws

Thailand has intensified its efforts to combat shell companies that foreigners use to circumvent ownership laws. Authorities have launched widespread inspections, uncovering hundreds of violations, leading to arrests and multi-billion baht fines. The crackdown spans key provinces and involves multiple agencies, including the Department of Special Investigation (DSI), the Central Investigation Bureau (CIB), and other law enforcement bodies. The goal is to eliminate fraudulent business structures and protect the country’s economic interests.

What Are Shell Companies, and Why Are They Illegal?

Under Thailand’s Foreign Business Act (FBA), foreigners are restricted from owning certain types of businesses outright. However, some investors have exploited a loophole by using Thai nominees—local citizens who appear as the majority shareholders on paper while foreigners retain actual control.

This method has been widely used in tourism, real estate, and logistics sectors. To counter this, authorities have increased audits, financial investigations, and corporate inspections in recent months.

Mass Inspections and High-Risk Areas

Since early 2024, the DSI and Department of Business Development (DBD) have reviewed tens of thousands of companies suspected of using nominee shareholders.

• In 2024, the DBD audited 26,019 businesses.
• In 2025, an additional 26,830 companies will be inspected.

The focus is on provinces with high levels of foreign investment, including:

• Phuket
• Chiang Mai
• Chonburi (Pattaya)
• Bangkok

Authorities are using financial tracking systems, corporate record audits, and intelligence from informants to identify illegal business structures.

Crackdowns in Phuket Reveal Large-Scale Fraud

Authorities in Phuket have uncovered shell companies managing hotels, luxury villas, and international schools. Recent raids resulted in the arrest of 23 individuals, including two Chinese nationals accused of controlling multi-million baht assets through Thai proxies.

Key findings from Phuket operations:

• THB 4.1 million in cash was confiscated.
• Accounting firms involved in nominee schemes are under investigation.
• Identified fraudulent businesses had a total turnover exceeding THB 1 billion.

Government Statement and Ongoing Investigations

Deputy Government Spokesperson Sasikan Watthanachan reported that since September 2024, authorities have launched 820 legal cases, with estimated damages reaching THB 12.5 billion. Many of these involve money laundering networks.

Authorities are now:

• Analyzing shareholder structures to identify hidden foreign control.
• Tracking payments and financial flows linked to nominee companies.
• Investigating fraudulent ownership where registered shareholders include taxi drivers or housemaids who serve as fake business owners.

Expanding Investigations into Real Estate

In Chiang Mai, authorities are targeting luxury real estate transactions using nominee ownership schemes. This has triggered additional audits and site inspections. Officials now conduct on-site visits to verify whether Thai shareholders are genuinely running the businesses.

Legal Consequences for Violators

Foreign investors caught violating nominee shareholder laws face severe penalties, including:

• Up to 3 years in prison.
• Fines of up to THB 1 million.
• Daily fines of THB 50,000 for continued violations.

For cases involving money laundering, penalties can be more severe, including asset confiscation and extended prison sentences. Fraudulent businesses will be dissolved, potentially resulting in total financial loss for foreign investors.

Beyond Business Fraud: Crackdown on Mule Accounts and Illegal Finance

Authorities are not only targeting shell companies but also cracking down on illegal financial operations. More than 200,000 mule accounts have been linked to fraudulent transactions.

The Anti-Online Crime Center (AOC) is currently investigating 1,159 companies suspected of running illegal financial schemes.

High-Profile Arrests and Land Seizures

Recent operations have led to major arrests and asset seizures:

• In Chachoengsao Province, authorities confiscated 1,500 rai (approximately 593 acres) of land, illegally acquired by Chinese investors using nominee companies.
• In Surat Thani, six individuals were arrested for fraudulent activities.
• In Nakhon Si Thammarat, authorities shut down an illegal e-cigarette manufacturing operation linked to nominee businesses.

International Scope: Cases Involving Foreign Investors

The investigations are not limited to Chinese nationals. In Phuket, officials are probing five separate cases involving Russian, Iranian, and Australian nationals suspected of violating business ownership laws.

Seven foreign nationals were also arrested for working without permits, signaling heightened enforcement across multiple sectors.

Final Warning to Foreign Investors

The Thai government has made it clear that fraudulent business practices will no longer be tolerated. The enforcement of nominee ownership laws will continue, and authorities are actively monitoring foreign investments.

Foreign investors are strongly advised to:
✔️ Comply with Thai business laws.
✔️ Seek legal consultation before structuring ownership.
✔️ Avoid nominee schemes, which can result in severe financial and legal consequences.

With ongoing enforcement and legal reforms, Thailand is sending a strong message: Illegal business structures will be dismantled, and those who attempt to bypass the law will face consequences.