Thailand cracks down on foreign companies using fig leaf of local ownership

Thai authorities are ramping up enforcement of local ownership rules, stoking anxiety among foreign businesses.

Bangkok, Thailand – On paper, it was registered as a nail salon.

In reality, it was allegedly a front for an adult content business run by an Israeli woman through the subscription-based website OnlyFans.

The woman’s company in the southern province of Krabi was just one of nearly 500 businesses – ranging from beauty salons to cannabis farms – that Thai authorities say were registered by a single accounting firm.

All of the companies were linked to foreigners who had falsely listed a Thai “nominee” as the majority owner to get around the law on foreign ownership, according to authorities.

Under the Foreign Business Act, noncitizens are generally prohibited from holding more than a 49 percent stake in local businesses.

To get around the rule, some foreign entrepreneurs pay locals to fill out paperwork stating that they own at least 51 percent of their company despite having little or no involvement in the business.

After years of turning a blind eye to the dubious use of Thai nominees, authorities are now cracking down and demanding proof that citizens listed as local partners have real holdings in the firms they are registered to.

After launching a wave of inspections across popular tourist areas and cross-checking official databases using artificial intelligence, the government has identified 50,000 foreign-linked companies for greater scrutiny.

Legal firms say they are being inundated with inquiries from foreign businesses and property owners who fear their assets could be frozen or seized if they are found to be part of illicit nominee schemes.

“All of them fear losing their investment and being charged with a criminal case,” Brian Ramsden, general manager of foreign affairs at Lawyers for Expats Thailand, told Al Jazeera.

“It’s always the same excuse: ‘We knew it was illegal, but the lawyers told us it’s OK,'” Ramsden said, explaining that his firm has been getting more than 100 calls a day, “asking us what to do”.

“If the company is not trading, it’s a red flag,” Ramsden added.

Thai Prime Minister Anutin Charnvirakul has been among those leading the charge against fraudulently registered companies.

On a tour of popular tourist areas in southern Thailand last month, Anutin pledged to throw the book at illegal businesses and take down any criminal organisations using shell companies, a matter of growing concern amid the proliferation of cyber-scam networks in Southeast Asia.

“In cases where … one person holds shares and owns o