A new Anti-Money Laundering Law ("AML Law") was passed by the National Assembly on November 15, 2022. It replaced AML Law 2012 and applies to financial institutions, businesses and individuals, whether Vietnamese or foreign1 (each a "Reporting Entity").
The entity primarily responsible for enforcement of the AML Law is the State Bank of Vietnam ("SBVN"). Within the SBVN, the Anti-Money Laundering Department ("AMLD") has primary responsibility.
Two key Prime Ministerial documents are: Decision No. 941/QD-TTg dated August 5, 2022 which details the action plan to combat money laundering, terrorist financing and financing the proliferation of weapons of mass destruction 2021 – 2025; and Decision No. 194/QD-TTg of February 23, 2024 with 17 actions directed to the international Financial Action Task Force with the goal to remove Vietnam as a country that requires special monitoring.
Reporting requirements
High-value transaction: A Reporting Entity must report transactions valued at VND 400 million or more (US$1.00 = VND25,000). It must act via electronic means. If it exists it can use an information technology platform2.
Suspicious transactions: A Reporting Entity is responsible to report a suspicious transaction to the AMLD when:
- the transaction involves a suspect, defendant or convicted person, and there is reason to believe that the assets involved are owned or controlled by that person; or
- based on one or more suspicious signs there is a reasonable basis to believe that the assets relate to money laundering.
Suspicious signs:
- the client or customer refuses to provide information or provides inaccurate, incomplete, or inconsistent information;
- the customer tries to persuade the Reporting Entity not to report a suspicious transaction to the authorities;
- the customer is unidentifiable or the transaction involves an unidentifiable party;
- The telephone number provided is not contactable or does not exist;
- A transaction involves an entity named on the warning list;
- Based on all information available, there appears to be a criminal link among the parties involved or there is a relationship between the parties and an individual/entity on the warning list;
- The transaction involves a sum of money which does not correlate to the income or business of the organization/individual; or
- The customer requests the Reporting Entity to act contrary to the law.
The AML Law highlights several signs that relate to banking, intermediary payments, life insurance, securities, prize-awarding games, real estate business which should raise suspicions. A Reporting Entity is obliged to report to the SBVN transactions that involve wire transfers that exceed certain amounts.
Reporting deadlines are tight: Reports on high-value transactions/wire transfers must be sent to the AMLD within two working days from the date discovered. If the report is made in the form of an electronic file, the Reporting Entity must send it before 4 pm of the working day following the date on which the transaction arises. If the day on which the report is supposed to be sent is a public holiday, or weekend, the report can be sent on the next working day.
Reports on suspicious transactions must be made within three working days from the time of the transaction, or within one working day from the date discovered.
If criminal activity is detected in a suspicious transaction, the transaction must be reported to the SBVN and the provincial police department within 24 hours.
Disciplinary action for non-compliance
AML violations can be disciplined, administratively sanctioned, or criminally examined depending on various factors. The offender must compensate damages.
Money laundering offences include3:
- Failure to take steps to identify, verify and update client information;
- Failure to establish a risk management process;
- Failure to classify customers based on risk exposure;
- Failure to issue internal rules on anti-money laundering, anti-terrorism financing, and the like;
- Failure to establish a risk management system to identify politically exposed foreigners;
- Failure to report a suspicious transaction, a high-value transaction and other reports;
- Failure to postpone a transaction, or to freeze accounts, or to seal/seize assets as required;
- Conduct of prohibited acts;
- Failure to follow regulations on correspondent banking, new technology, and to supervise transactions;
- Failure to provide required information; and
- Ignoring risk assessment.
Failure to comply with reporting requirements is subject to monetary fines and sanctions pursuant to Decree No. 88/2019/ND-CP of the Government dated November 14, 2019. In certain circumstances, failure to report can be criminally charged under the Penal Code.
Conviction of any of the following acts can result in imprisonment of one to five years under the Penal Code:
a. Finance or other transactions intended to conceal the illegal origin of money or property obtained through commission of a crime;
b. Use of property obtained through commission of a crime;
c. Concealment or obstruction of information that involves the origin, nature, location, movement or ownership of money or property obtained from a crime;
d. Commission of any offence specified above, knowing that value was received through another's crime.
An individual offender may be subject to the following penalties:
- Confiscation of all or part of his/her property;
- A fine from VND20,000,000 to VND100,000,000;
- Prohibition from holding certain positions or employment for one to five years; or
- Imprisonment from five to 15 years depending on aggravating factors (eg, organized crime).
A corporate legal entity may be liable to a fine from VND1 billion to VND20 billion, or its operation may be suspended for one to three years and even permanently shut down, or it may be banned from raising capital for one to three years.
Certain state entities have special responsibilities to report, prevent, and combat money laundering:
Allocation of responsibility
- As mentioned above, the SBVN is primarily responsible for enforcement. The AMLD within SBVN assists the Chief Inspector of the SBVN;
- The Ministry of Public Security is responsible for discovery and investigation of money laundering crimes;
- The Ministry of National Defense exchanges information and documents with SBVN on money laundering and dealing with weapons of mass destruction;
- The Ministry of Finance implements AML measures that involve life insurance, securities, accounting services, prize-awarding electronic games, casinos, lotteries, betting and similar service sectors within its competency;
- The Ministry of Construction implements measures that relate to the real estate business (with some exceptions);
- The Ministry of Justice implements AML measures which apply to lawyers, legal practice groups, notaries and notary public offices;
- The Ministry of Industry and Trade implements AML measures in trading precious metals and jewels (but excluding gold bullion, gold jewelries or fine arts gold);
- The Ministry of Information and Communication is responsible to implement AML measures in connection with the telecommunications or internet network-based game business sector.
Footnotes
1 A financial entity is licensed to conduct one of the following activities: a) Acceptance of deposits; b) Lending;
c) Financial leasing; d) Payment services; e) Payment intermediary services; f) Issuing negotiable instruments, bank cards, money transfer orders; g) Bank guarantees and financial commitments;
h) Providing foreign exchange services, money market instruments; i) Securities brokerage; advice to security investment, provision of security for securities issues; k) Securities investment fund management and securities investment portfolio management; l) Life insurance business; m) Money and currency conversion.
A non-financial entity which conducts one of the following activities: a) Prize-awarding games, including electronic games; telecommunications network-based games, Internet-based games; casinos; lottery tickets; betting; b) Real estate business, except leasing or subleasing of real property and real estate consulting; c) Dealing in precious metals, jewels; d) Supply of accounting services; provision of notarial services; provision of legal services rendered by lawyers, legal professional organizations; e) Providing business formation, company management and administration services; services of acting as a director or secretary of a company to third parties; legal arrangement service.
2 Article 6 of Circular No. 09/2023/TT-NHNN of the SBVN dated July 28, 2023.
3 Decree No. 88/2019/ND-CP of the Government dated November 14, 2019 (as amended by Decree no. 143/2021/ND-CP of the Government dated December 31, 2021).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.