While Vietnam remains a predominantly cash-based economy, its legal frame work on anti-money laundering, according to the Asian Pacific Group on Money Laundering (APG)’s assessment in its Mutual Evaluation Report dated January 2022, is still incomprehensive and limited, which makes the country itself vulnerable to risks of money laundering. Pursuant to the report on national risk assessment on money laundering and terrorism financing conducted by the Vietnamese authority for the period of 2012-2017, the risk of money laundering in Vietnam is assessed at “medium high” (trung bình cao). Of which, while banking and underground remittance are the sectors where the money-laundering risks are assessed at “high” (cao) level, corruption and gambling are the crimes identified to have high money-laundering risks.
In an effort to mitigate money-laundering risks and further enhance the country’s capacity against money laundering, on 5 August 2022, the Vietnam Prime Minister issued Decision No. 941/QD-TTg on the national action plan on anti-money laundering, terrorism financing, and financing for proliferation of mass-destruction weapons. Based upon this plan, the Vietnam National Assembly adopted the Law on Anti-money Laundering (Law No. 14/2022/QH15) dated 15 November 2022 (“New AML Law”). The New AML Law takes effect from 01 March 2023 and replaces the Law on Anti-money Laundering 2012 (the “2012 AML Law”).
The guideline below is mainly aimed to provide readers with an overview of Vietnam’s regulation on anti-money laundering and salient points of the New AML Law in comparison with the old one.
1. What is money laundering?
The New AML Law defines “money laundering” as an act of an individual or an organization to legitimize the origin of property obtained from crime.
Notably, while the 2012 AML Law keeps silent on what the “property obtained from crime” is, under the New AML Law, it means any property directly or indirectly obtained from a criminal act and any income, benefit or profit derived from the property obtained from a criminal act.
2. Who will be subject to the governance of the New AML Law?
The New AML Law shall be applied to (i) the reporting entities (đối tượng báo cáo) as mentioned in detail below, including financial entities, companies and individuals conducting related non-financial businesses, (ii) Vietnamese individuals/entities, foreign individuals/entities and other international organizations transacting with the reporting entities and (iii) other organizations, individuals, and agencies pertaining to anti-money laundering.
3. What are the reporting entities? Which entities shall be considered as reporting entities in particular?
The reporting entities (or đối tượng báo cáo in Vietnamese) is a legal concept under the AML Law being used to refer to companies and individuals that have obligations to conduct measures against anti-money laundering and comply with other obligations as required by the AML Law (the “Reporting Entities”).
Acording to the New AML Law, the Reporting Entities are classified into two groups as below:
(a) Financial entities (or Tổ chức tài chính in Vietnamese): This group includes entities being licensed to conduct one or more of the following business activities: acceptance of deposit; lending; finance leasing; payment services; intermediary payment services; issuance of negotiable instruments; credit cards; debit cards; debit cards; transfer instruction; banking guarantees and financinal undertakings, provision of foreign exchange services and monetary instruments in the monetary market; services of securities brokerage, securities investment consultancy and underwriting in securities issues; management of investment capital portfolios; life insurances and money exchange services
(b) Non-financial entities (or Tổ chức, cá nhân kinh doanh ngành nghề phi tài chính in Vietnamese): This group includes entities, individuals that conduct one or more of the following activities: prized gaming businesses, real estate businesses (except for real estate leasing and real estate consultancy), precious metals/stones dealers, accountant service, notary services, legal services of lawyers/law firms, services of establishing, managing and running an enterprise, provision of directorship and secretary services to a third party and legal arrangement services).
Compared to the 2012 AML Law, the concept of “Reporting Entities” under the New AML Law is regulated in a broader manner covering more business activities. Notably, having considered recent money laundering activities in the country, as well as the recommendations from the Financial Action Task Force (FATF), entities conducting interim payment services (dịch vụ trung gian thanh toán) are supplemented to the Reporting Entities under the New AML Law.
4. If an enterprise is classified as the Reporting Entity under the New AML, what are its statutory obligations?
The New AML Law requires an organization and/or individual being the Reporting Entity to (i) conduct measures of anti-money laundering and (ii) comply with other statutory obligations (e.g., reporting obligations). Accordingly, in terms of conducting measures against money laundering, subject to specific circumstances as required by law, the Reporting Entities must conduct, inter alia, the following measures:
(i) Customer due diligence (Nhận biết khách hàng) (a.k.a KYC);
(ii) Assessment on money-laundering risks (Đánh giá rủi ro về rửa tiền);
(iii) Building upon internal regulations on anti-money laundering (Xây dựng quy định nội bộ về phòng, chống rửa tiền);
(iv) Reporting suspicious transactions (Báo cáo giao dịch đáng ngờ);
(v) Storing/recording information and documents (Lưu trữ thông tin, hồ sơ, tài liệu, báo cáo); and
(vi) Applying provisional measures (Áp dụng các biện pháp tạm thời)
5. What does “customer due diligence” means? And under what circumstances must this measure be applied?
The customer due diligence (“CDD”) means the collection, updating, and verification of the identity of a customer, its beneficial owners, and the assigned person working as an agent of the customer (if any), as well as the information on the customer’s purpose and nature of the business relationship.
A financial institution must undertake CDD measures where (i) opening an account for or establishing a business relationship with a (new) customer, or (ii) conducting occasional transactions involving an amount equal to or above the statutory threshold or wire transfers without details of the name, address, bank account or transaction code of the sender, or (iii) it suspects money laundering, or (iv) it suspects the accuracy or adequacy of previously collected information.
The CDD measures shall also be applicable to non-financial businesses and professions under certain circumstances. For example, enterprises conducting real estate businesses are required to undertake CDD measures when they provide services of real estate trading for their customers.
Remarkably, the New AML Law allows the Reporting Entities to rely upon a third party to implement CDD measures provided that the third party satisfies all conditions set out in this Law. Nonetheless, the Reporting Entity remains ultimate responsibility for the collection, updating, and verification of the customer identification.
The customer’s information to be collected by the Reporting Entities under the CDD measures may include, amongst other things: name, date of birth, nationality, occupation, title, phone number, ID card or passport numbers, address (for customers being individuals); trading name, headquarter, tax code, phone number, website (if any), business sector, information of founders, legal representatives, directors/general director or chief account (for customers being organizations).
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