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AML/CTF compliance in Vietnam

WHAT ARE THE

Money laundering and terrorism financing laws in Vietnam?

In Vietnam, Law No. 14/2022/QH15, Decree 88/2019/ND-CP, and Circular 26/2021/TT-NHNN are fundamental regulations related to the prevention of money laundering and terrorism financing. These regulations aim to bring Vietnam's anti-money laundering and counter-terrorism financing framework in line with international standards set by the Financial Action Task Force (FATF).

WHAT ARE THE

Key obligations reporting entities have under Vietnamese laws?

Vietnam's Anti-Money Laundering Law, reporting entities are required to comply with the following measures:

  • Customer Due Diligence or Know Your Customer (KYC): Identifying and verifying the identity of their customers, understanding the nature of their business, and assessing the risk of potential money laundering activities.
  • Assessment on Money-Laundering Risks: Reporting entities are required to assess the risk of money laundering in relation to their customers, products and services, transactions, and geographical locations.
  • Building Upon Internal Regulations on Anti-Money Laundering: Organizations should establish and implement internal policies, procedures, and controls to prevent and detect money laundering activities.
  • Reporting Suspicious Transactions : If a reporting entity suspects or has reasonable grounds to suspect that funds are the proceeds of a criminal activity, it should promptly report the suspicious transactions to the Anti-Money Laundering Office.
  • Storing/Recording Information and Documents: Entities must keep all necessary records on transactions, both domestic and international, for at least five years.
  • Applying Provisional Measures: In certain circumstances, reporting entities may be required to apply provisional measures, such as freezing transactions or assets, to prevent money laundering.

These requirements help to ensure that the financial system is not used for money laundering or terrorist financing purposes, and are in line with international standards set by the Financial Action Task Force (FATF).

WHO ARE THE

ML/TF regulators in Vietnam and what functions do they perform?

Under the New Anti-Money Laundering Law in Vietnam, the following key state agencies are assigned with responsibilities to prevent and combat money laundering. These agencies work together to ensure effective enforcement of anti-money laundering laws and regulations in Vietnam.

  • State Bank of Vietnam (SBV): SBV is primarily responsible for conducting state management of prevention and fight against money laundering. The Department of Preventing and Fighting against Money Laundering, a department under the SBV, plays an important role in creating and enforcing anti-money laundering policies. 
  • The People’s Procuracy and the People’s Court: These judicial bodies coordinate with other agencies in the investigation, prosecution, and resolution of money laundering crimes.
  • Other Relevant Ministries: Ministries such as the Ministry of Finance, Ministry of Construction, etc., are responsible for coordinating with the SBV and relevant state bodies in conducting state management on anti-money laundering in areas under their respective management.
  • People’s Committees at all levels: These local government bodies are responsible for conducting legal training on anti-money laundering in the province, coordinating with state authorities to implement policies, strategies, and plans to prevent and fight money laundering.

WHAT ARE THE

Industry sectors subject to ML/TF regulations?

Based on the New Anti-Money Laundering Law in Vietnam, various industry sectors are regulated for the purpose of preventing money laundering. These sectors can be broadly categorized into financial and non-financial entities:

Banks

This refers to all commercial banks, rural banks, and sharia banks. They are required to conduct customer due diligence, report suspicious transactions, and maintain comprehensive records.

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Insurance Companies

All types of insurance providers, including life, general, reinsurance, and sharia insurance companies, fall under the purview of AML/CFT laws. They need to adhere to the same standards of due diligence and reporting as banks and non-bank financial institutions.

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Securities Companies and Capital Markets

Securities underwriters, brokers, dealers, and investment managers, as well as mutual funds. They are obliged to follow AML/CFT regulations in their operations.

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Non-Bank Financial Institutions

Including money remitters, finance companies, credit unions, pawnshops, and leasing companies. Similar to banks, they are also obligated to comply with AML/CFT regulations.

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  • Non-Financial Entities

Larger Financial Institutions

Are more closely regulated due to the higher risks associated with their size and the volume of transactions they handle. This includes larger banks, insurance companies, and other financial services providers.

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The law has expanded the scope of "Reporting Entities" to now include entities conducting interim payment services (dịch vụ trung gian thanh toán), reflecting the growth of digital payment services and their potential use in money laundering.

WHAT ARE THE

Penalties for non-compliance with AML/CTF laws?

In Vietnam, non-compliance with Anti-Money Laundering and Counter-Terrorist Financing (AML/CTF) laws can result in both administrative and criminal penalties, as per the New AML Law, Decree 88/2019/ND-CP (as amended by Decree 143/2021/ND-CP), and the 2015 Criminal Code.

  • Administrative Penalties: Violations of AML/CTF regulations can result in administrative fines. The fines range up to VND 80 million to VND 500 million for individuals, and from VND 160 million to VND 1 billion for organizations. Additional supplemental remedial measures may also be applied.

  • Criminal Penalties: If the money-laundering violations constitute a crime under the 2015 Criminal Code, penalties can be more severe. An individual offender can be imprisoned for 1 to 10 years and may also face supplemental sanctions, such as a fine of up to VND 100 million or a ban from holding certain positions or conducting certain businesses for 1 to 5 years. For commercial entities (pháp nhân thương mại), the fines can range from VND 1 billion to VND 20 billion. They may also face a sanction banning them from operating in certain areas or raising capital for up to 3 years.

These penalties emphasize the importance of adherence to AML/CTF laws and regulations in Vietnam.

WHAT ARE THE

Largest fines for non-compliance with AML/CTF laws?

The largest fine as of this writing for non-compliance with AML/CFT laws in Vietnam is:

  • Foreign Nationals Case (Vietnam, 2023) - Three foreign nationals were charged with money laundering and conspiracy by the Magistrate's Court. A man is said to have committed money laundering by transferring VND64,574,000 within his bank accounts. Two women were also involved in the conspiracy related to the alleged money laundering offense. The charges, as stated by the prosecutor, carry severe penalties, including a maximum fine of BND500,000 and imprisonment up to 10 years, or both. The court has yet to record pleas from the defendants, and the case has been adjourned to a later date, demonstrating the seriousness of such financial crimes.