ARTICLE
13 September 2023

Country Update-Vietnam: AML

DM
Duane Morris LLP

Contributor

Duane Morris LLP, a law firm with more than 800 attorneys in offices across the United States and internationally, is asked by a broad array of clients to provide innovative solutions to today's legal and business challenges.
Member of Financial Action Task Force (FATF)? No, Vietnam is currently not a member of FATF
Vietnam Government, Public Sector
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Member of Financial Action Task Force (FATF)? No, Vietnam is currently not a member of FATF.

Vietnam is a member of the Asia/Pacific Group on Money Laundering (APG).

For more information about the assessment of the implementation of anti-money laundering and counter-terrorist financing (AML/CFT) measures in Vietnam, please consult the APG website.

On FATF Blacklist? No.

Member of Egmont? No.

ML background in region

Overview of country risks

Vietnam's deeper integration into the regional and world's economy for the past few years has been a great opportunity for international money laundering crimes. However, money laundering activities only become clearly visible recently though bank accounts opening, securities trading, gambling, illegal transfer of foreign currencies out of the country, use of credit cards, etc.

Combating money laundering becomes one of the top concerns, not only for the State Bank of Vietnam, but also other relevant authorities in Vietnam. According to a report of the State Bank of Vietnam, in 2012, suspicious transactions had a total value of VND51,000 billion, while in 2013 it was VND79,000 billion and in 2014, the value went up to VND119,000 billion. This shows an increasing and alarming number of transactions suspicious of money laundering. We note that the Law on Anti-money Laundering took effect on January 1, 2013.

However, it seems that the anti-money laundering legal framework is still not sufficient, guiding implementation remains unclear, awareness of credit institutions of money laundering is low, ability to detect money laundering activities is weak, information technology in anti-money laundering activities is not sufficient, and especially punishment regime for violating acts of the AML is only formalistic. The government, especially the State Bank of Vietnam, is strongly recommended to tighten their regulations in this sector.

Key directives/Legislative framework

Law on Prevention of and Anti Money Laundering No. 14/2022/QH15, issued by the National Assembly on November 15, 2022 (AML);

  • Decree No. 19/2023/ND-CP dated April 28, 2023 issued by the Government on detailing the implementation of certain provisions of the AML (Decree 19);
  • Decree No. 88/2019/ND-CP dated November 14, 2019 issued by the Government on sanctions for administrative violations against currency and banking legal regulations (Decree 88), amended by Decree 143/2021/NĐ-CP;
  • Decision No. 20/2013/QD-TTg dated April 18, 2013 of the Prime Minister on determination of high value transactions subject to report obligation (Decision 20);
  • Circular No. 09/2023/TT-NHNN on guiding the implementation of certain regulations on anti- money laundering, issued by the State Bank of Vietnam on July 28, 2023; and
  • Penal Code No. 100/2015/QH13 issued by the National Assembly on November 27, 2015, as amended by Law No. 12/2017/QH14 dated June 20, 2017 (Penal Code 2017). Penal Code 2017 became effective January 1, 2018.

Who are the regulators/monitoring authorities

Who are affected/reporting entities?

The following state authorities are responsible for reporting, preventing, and fighting against money laundering activities:

  • SBV is mainly responsible to the Government for state administering the implementation of AML regulations;
  • Ministry of Public Security is responsible for collecting, receiving and investigating information of money laundering related crimes;
  • Ministry of National Defence is responsible for exchanging information and documents on money laundering activities aimed at financing for proliferation of weapons of mass destruction in Vietnam and foreign countries with the State Bank of Vietnam.
  • Ministry of Finance is responsible for implementing AML measures in insurance business, securities sector, accounting service, prize-winning games and casinos, lottery, betting and other service sectors under the state management of the Ministry of Finance;
  • Ministry of Construction is responsible for implementing AML measures in real estate business sector, except real estate leasing, subleasing and real estate consulting services;
  • Ministry of Justice is responsible for implementing AML measures applicable to the notary public and law practising sectors;
  • Ministry of Industry and Trade is responsible for implementing AML measures applicable to trading in precious metals and gems sectors, except for trading in gold bars and gold jewellery and fine arts.
  • Ministry of Planning and Investment is responsible for implementing AML measures applicable to the sectors under its management.
  • Ministry of Home Affairs is responsible for implementing AML measures applicable to associations, social funds, charity funds and religious institutions.
  • Ministry of Foreign Affairs is responsible for implementing AML measures applicable to foreign non-governmental organizations.
  • Ministry of Information and Communications is responsible for implementing AML measures applicable to telecommunications or Internet network-based game business sector.
  • The People's Procuracy and the People's Court coordinate with other agencies in the investigation, prosecution, and resolution of money laundering crimes;
  • People's Committees at all levels are responsible for conducting legal training on anti-money laundering in the province, co-ordinating with state authorities to implement policies, strategies, and plans to prevent and fight money laundering; and
  • The Anti-Money Laundering Steering Committee is responsible for assisting the Prime Minister in preparing strategy, plans, policies and programs in the process of preventing and fighting against money laundering:
  • Client acceptance policy;
  • Processes and procedures to identify clients, verify and update client information;
  • Transactions which must be reported;
  • The process of review, detection, handling and reporting of suspicious transactions; the way to communicate with the clients who make suspicious transaction;
  • Information keeping and security;
  • Applying temporary measures and principles of handling the cases of transaction delay;
  • Reporting and information supply regime to the State Bank of Vietnam and the competent state agencies;
  • Professional training on the prevention of and combating money laundering;
  • Internally controlling and auditing the compliance with the policies, regulations, processes and procedures related to the prevention of and combating money laundering, responsibilities of each individual and division in the implementation of internal rules in the prevention of and combating money laundering.

For financial institutions

  • The clients open accounts or set up transactions with the financial institutions for the first time;
  • The clients do not have a bank account or make no transactions for the past 6 months or deposit, withdraw or make a bank transfer of at least VND 400,000,000, or a foreign-currency amount of equal or greater value per day, except for final settlements or withdrawals of savings interest, credit card debt repayments, repayments of loans to financial institutions, instalment payments registered with financial institutions, withdrawals of profits from securities or bond investment portfolios ;
  • There are doubts about transaction or the parties concerned in transactions are related to the money laundering;
  • There are doubts about the accuracy or completeness of the clients identification information previously collected.
  • For relevant non-financial institutions or individuals:
  • Doing business in prize-winning games, including prize-awarding electronic games; telecommunications network-based games, Internet-based games; casinos; lottery tickets: clients implementing high value transactions (i.e.¸ over VND70 million per day);
  • Doing real estate business and management services, except for real property leasing, subleasing, and consulting services: when providing these services to the buyer, purchaser and asset owner;
  • Trading in precious metals and stones: when clients performing the sale and purchase transaction in cash of precious metals and stones with value of over VND400 million per day;
  • Providing legal agreement services: when acting on behalf of the customer to perform a transaction related to establishment, administration or management of legal agreements;
  • Providing services of establishment, management and executive of enterprise; supplying registration office, address or place of business; supplying services of company representative : clients requesting such services;
  • Providing services of director and secretary provision of the enterprise to a third party: third party and director / secretary to such director;

Legal requirements for KYC

Customer due diligence

Application of measures to identify clients are required depend on the results of money-laundering risk assessment. Procedures for management of money laundering risks cover classification of customers by low, medium and high level of risk. In particular, the abovementioned services providers/entities must update the client identification information on a regular basis during the period of having relations with the clients.

In addition, clients must also be classified into different groups, product and services used, their place of residence or headquarter based on different risk exposure levels.

Reporting requirements/obligations

Recordkeeping

Information, documents, records relating to customer identification, results of the reporting entity's analysis and assessment of customers and/or reporting transactions and other related documents must be kept for at least five years from closing date of the transaction or the date of account closure or the reporting date. Reports of high value transactions (i.e., from VND400 million), suspicious transactions and transactions of electronic money transfer exceeding VND500 million or equivalent amount in foreign currency (for domestic transfer) or $1,000 (for inbound or outbound transfer) and information, documents and records of the transactions, must be kept for at least five years from the date of the transaction.

Tipping off

The reporting entity/ individual, management or employees of reporting entity/individual is not allowed to inform a person involved in a suspicious transaction that it has reported or will report the transaction to the State Bank of Vietnam.

Whistle-blowing

The AML only sets out regulations on reporting to the following state agencies instead of whistle-blowing.

  • State Bank of Vietnam;
  • Investigating agencies, agencies assigned to conduct a number of investigative activities, or People's Procuracies, national security protection agencies under the People's Public Security;
  • State inspection agencies, agencies assigned to perform the function of conducting the specialized inspection of reporting entities.

Offences

Enforcements

If the parties related to the transactions are included in the blacklist or there are grounds to believe that the transaction required to be performed is related to the criminal activities or requested by competent state authorities, the reporting entity/ individual must apply measures to delay the transaction within maximum three working days and must immediately report in writing and notify via phone to the competent State agencies and the SBV for cooperation. If the reporting entity/individual does not receive any feedback from the competent state agencies after three working days, it can proceed the transaction.

In addition, the reporting entity/individual must block the accounts or seal or temporarily seize assets of the individuals/organizations upon having decision of competent state agencies under the law and make report on the implementation to the State Bank of Vietnam.

Penalties

Persons violating the AML are subject to administrative sanctions of up to VND500 million, discipline or criminal penalty depending on the nature and seriousness of such violations. The criminal sanctions varies from one year to maximum 15 year imprisonment, together with partly or wholly confiscation of assets, monetary fine of up to three times of the violated amount, abandonment of holding certain positions or titles from one to five years.

The criminal sanctions against corporate legal entities include monetary fine of VND1 billion up to VND20 billion, together with business operation suspension of one to three years, banning from particular business field operations of one to three years, or forced termination and liquidation.

Internal procedures and training

Pursuant to Article 24 of the AML, reporting entities/ individuals must establish internal procedures on prevention and combating money laundering with the following contents:

  • Customer acceptance policy;
  • Customer identification procedures and processes;
  • Risk management policies and procedures;
  • Procedures for reporting of should-be-reported transactions;
  • Steps in examining, detecting, handling and reporting suspicious transactions;
  • Methods of contact with customers performing suspicious transactions;
  • Storage, security and confidentiality of information;
  • Apply provisional measures, principles for handling postponement of transactions;
  • Regimes for reporting or providing information to the State Bank of Vietnam and other competent state authorities;
  • Recruitment and training of personnel specializing in AML activities;
  • Internal control, audit of compliance with policies, regulations, regulatory processes and procedures relating to AML activities; responsibilities of each natural person or department for implementation of internal rules and regulations on AML.

Sanctions

International conventions

International cooperation in the field of prevention of and combating money laundering includes: (i) exchange and provide information on prevention of and combating money laundering; (ii) determining and blocking assets of the violating persons; (iii) performing judicial assistance; (iv) research, training, information support, technical assistance, financial aid and AML experience exchange and (v) other aspects. The process, procedures and cooperation methods are in accordance with international agreements to which Vietnam is a party.

CTF – Countering terrorist finance

The Ministry of Public Security is tasked with the preparation of a list of organizations and individuals related to terrorism and terrorist finance (blacklist). The reporting entity/ individual must promptly report to the competent anti-terrorism authorities, and at the same time send reports to the State Bank of Vietnam upon detecting organizations and individuals to conduct transactions included in the blacklist or when there is evidence that other organizations and individuals commit acts related to the money laundering crime for terrorism financing.

At the same time, the reporting entity/individual must apply measures to delay the transaction and block the accounts or seal or temporarily seize assets of the individuals/ organizations.

Anti bribery and corruption laws

Corruption is widespread throughout Vietnam. For information, Vietnam ranks 77/180 according to the 2022 Corruption Perception Index, a significant increase compared with its rank in 2021 (87th). Sectors most affected by corruption are police; public administration; health sector, judiciary; and land management. The Vietnamese government acknowledges the negative impact of corruption on both Vietnam's future prosperity and the party's own legitimacy, thus has adopted one of the most comprehensive and ambitious anti-corruption laws in Asia. The anti-corruption legal framework has seen some improvements after the adoption of the Anti-corruption Law by the National Assembly in 2005 (as amended in 2007, 2012 and 2018) and the National Strategy on Anti-corruption to 2030.

However, in the last 10 years of implementation, considering the increasing level of complexity of corruption cases, the current legal framework has been proved to be inadequate to combat corruption in Vietnam. This prompted the Vietnamese government to refine the current regime to make the policies fully effective and operational in practice.

There is no definition of "bribery" under Vietnam laws. However, in essence, it could be defined as an act of offering, promising, making or receiving money or anything of value (minimum threshold: VND 2 million (approx. $90) or intangible benefit: no clear guidance but sex, job positions, and education acceptance offerings may be considered) to induce or influence an act/omission or decision. The current laws only target people with positions and power (i.e., state officials). Please note the receipt of minimum VND 1 billion is subject to death penalty.

This country profile was kindly provided by Dr. Oliver Massmann, general director of Duane Morris Vietnam LLC

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.

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