Money laundering is a process of transforming and obscuring the origins of funds acquired through criminal conduct. Essentially, this practice involves the manipulation of criminally-derived wealth to disguise its illegal origins, presenting it as legitimate earnings. Perpetrators engage in a variety of schemes such as complex financial transactions, business investments, or the trade of high-value assets, with the objective of converting 'dirty money'—money tainted by criminality—into 'clean money,' which appears to have a legal source. This article examines the evolution and intricacies of Vietnamese legislation aimed at combatting complex financial crime, charting its evolution and adjustments throughout time.
- The Era from 1999 to 2012
The Vietnamese legal framework began to address money laundering in the 1999 Penal Code, initially categorizing it under the broader offense of "legalizing proceeds from crime." The term "money laundering" was formally recognized in Vietnamese criminal jurisprudence following the 2009 amendment to the Penal Code. The updated legislation substituted the prior offense with a more specific designation—money laundering. Notably, the 2009 Penal Code refrained from providing an overarching definition of money laundering, instead delineating a set of specific actions that constitute the offense. These stipulated actions are largely in accordance with the provisions established in the 1988 United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances.
A significant milestone was achieved on November 30, 2011, when the Supreme People's Court, in collaboration with the Ministry of Public Security and other relevant bodies, promulgated Joint Circular No. 09/2011/TTLT-BCA-BQP-BTP-NHNNVN-VKSNDTC-TANDTC. This directive explicitly detailed the behaviors that fall under the ambit of the money laundering offense as outlined in the 2009 Penal Code revision.
- The Period from 2012 to 2022
This era marked a significant evolution in Vietnam's approach to combating money laundering, aligning more closely with international standards.
The landmark Anti-Money Laundering Law (AML Law) was introduced by the National Assembly in 2012, establishing a formal definition of money laundering as the process of legitimizing the origins of assets derived from criminal activities. This law broadened the scope of entities required to report high-risk transactions. These included various financial organizations engaged in activities such as deposit acceptance, lending, financial leasing, and payment services. Additionally, non-financial entities involved in businesses like prize-winning games, real estate management and brokerage, trading in precious metals and gems, as well as service providers in accounting, legal services, and enterprise management, were also mandated to report.
A key advancement with the AML Law was the introduction of preventative measures against money laundering, delineating the responsibilities of state agencies and stakeholders in this fight, and establishing protocols for international cooperation.
The criminal law perspective on money laundering remained largely consistent with prior legislation, but with noteworthy enhancements. The 2015 Penal Code, which replaced the 2009 version, provided more detailed provisions in Article 324 regarding the handling of assets obtained from various criminal sources. It outlined penalties for individuals involved in such crimes, with imprisonment ranging from 1 to 15 years, and introduced sanctions for legal entities, including substantial fines and potential suspension or cessation of business operations.
The 2015 AML Law refined the categorization of money laundering into four distinct activities: (i) engaging in transactions to obscure the illegal origins of criminally obtained money, (ii) using criminal proceeds in business operations or other activities, (iii) concealing or impeding the identification of information about the origin and nature of these proceeds, and (iv) involvement in transactions or activities related to the transfer, movement, or conversion of criminal proceeds.
Further clarifications were provided by the Council of Judges of the Supreme People's Court through Resolution No. 03/2019/NQ-HDTP, issued on May 24, 2019. This resolution elucidated critical terms such as "money or property obtained from crime" and expanded the list of predicate offenses leading to money laundering. It also detailed circumstances that constitute the crime and the factors influencing the sentencing framework, thereby enhancing the legal understanding and enforcement of money laundering regulations.
- The Period from 2022 to the Present
Despite previous measures, Vietnam's placement on the Financial Action Task Force's (FATF) increased monitoring list (the Grey List) persisted. In a decisive effort to address this, the Vietnamese National Assembly passed the new Anti-Money Laundering Law of 2022 on November 15, 2022, superseding the 2012 version. This law introduced substantial amendments, bolstering Vietnam's anti-money laundering framework. Following this, the Government and the State Bank of Vietnam issued Decree No. 19/2023/ND-CP and Circular No. 09/2023/TT-NHNN on April 28, 2023, and July 28, 2023, respectively, to further detail and guide the implementation of this law.
(i) Expanded Scope of Reporting Entities
Reflecting the dynamic economic landscape, the 2022 legislation broadened its ambit to encompass additional entities such as securities brokerage services, investment fund management, and securities portfolio management.
(ii) National Risk Assessment
A pivotal addition in the 2022 law is the provision for a national risk assessment related to money laundering. Every five years, the State Bank of Vietnam, in collaboration with relevant Ministries and sectors, is tasked with conducting this assessment and formulating a subsequent action plan for Government approval. The law delineates the roles and responsibilities of the Government and various Ministries in this collaborative effort.
(iii) Enhanced Prevention Measures
The law introduces more nuanced customer identification criteria, distinguishing between various categories of individual customers, including Vietnamese nationals, foreign nationals (residing or non-residing in Vietnam), dual/multiple nationality individuals, and stateless persons. It specifies the identification information required for each category and their representatives.
In terms of customer risk level classification, the new law adds an intermediate risk category to the existing low and high-risk categories, revising the criteria and assessment procedures for greater accuracy and relevance.
The law also updates and amends suspicious indicators for sectors like securities, insurance, and payment intermediaries, identified as having a medium-high to high risk of money laundering. Decision No. 11/2023/QD-TTg dated April 27, 2023, further adjusts the threshold for large-value transaction reporting from 300 million to 400 million VND for certain non-financial business sectors.
Entities with reporting obligations are mandated to implement comprehensive customer due diligence, risk assessments, and transaction controls. Non-compliance may result in substantial administrative penalties, as outlined in Decree No. 88/2019/ND-CP.
(iv) International Cooperation
The 2022 law establishes principles for international cooperation in anti-money laundering efforts. These principles emphasize respect for independence, sovereignty, national security, mutual benefit, adherence to national laws and international treaties, and bilateral agreements. In instances without existing treaties or agreements, information exchange and cooperation are based on reciprocity, while ensuring compliance with Vietnamese and international law and customs.
In recap, the evolution of Vietnam's anti-money laundering legislation reflects a determined and ongoing effort to align with global standards and combat financial crimes effectively. Starting from the initial legal provisions in the 1999 Penal Code to the comprehensive and detailed Anti-Money Laundering Law of 2022, Vietnam has demonstrated a progressive commitment to identifying, addressing, and preventing money laundering activities. These legislative changes, along with the corresponding decrees and circulars, not only enhance the regulatory framework but also signal Vietnam's dedication to international cooperation and compliance with the Financial Action Task Force's guidelines. As Vietnam continues to adapt its legal system to the dynamic nature of global finance and crime, these laws serve as a testament to the country's resilience and responsiveness in the face of complex financial challenges. The journey of Vietnamese anti-money laundering legislation is a vivid example of legal adaptation and reform, striving to safeguard the integrity of its financial systems and contribute to the global fight against money laundering.
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