In recent years, on account of Vietnam’s rapidly development of new technologies along with strong digitization of banking products and services have contributed to promoting and attracting a significant number of users to shift from offline to online method of payment, using various cashless payment methods.
In fact, according to the e-newspaper Thi Truong Tai Chinh Tien Te, the money laundering crimes have undergone a transformation and are becoming more sophisticated, thus anti-money laundering work has also become a key mission of the Vietnamese Government.
Consequently, for the foreign businesses desiring to invest in this market, acknowledging the rule against money laundering is one of the crucial steps that the government needs to seriously consider.
First of all, money laundering is the act of organizations or individuals seeking to legitimize the origin of assets obtained through criminal activities. In addition, assets obtained through criminal activities are acquired directly or indirectly from criminal behavior, including the portion of income, benefits, gains, or profits generated from assets acquired through criminal activities.
Under the Anti-Money Laundering Law 2022, effective since March 1st 2023, and other relevant legal documents, there is number of rules that foreign businesses are required to be aware and comply, more specifically:
· Companies have to file a Suspicious Transaction Report:
Reporting suspicious transactions is the process of reviewing, collecting and analyzing potentially suspicious transactions of clients, implemented by Organizations and Individuals and updated annually for the State Bank of Vietnam and the State management agencies by sector to prevent money laundering crime.
Entities required to perform such operation, namely the “Reporting Entities”, can file Suspicious Transaction Report online or offline, via fax, email, telephone. However, they must ensure the safety and security of the reported information data.
Reporting Entities include financial organizations (banks, securities companies, insurance companies…), non-financial organizations (limited liability companies including manufactures, traders, law firms, real estate agencies, etc.) and individuals engaging in non-financial business activities. In another words, if a business operates in these aforementioned fields, that business has to file a suspicious transaction report.
· Responsibilities of the Reporting Entities according to Circular No 09/2023 TT-NHNN:
a) Training and professional development on anti-money laundering for leaders and employees involved in anti-money laundering activities.
b) Review and update the anti-money laundering legal regulations, policies, and risk management procedures. Send internal regulations on anti-money laundering to the authority responsible for anti-money laundering functions and tasks, for example Anti-Money Laundering Department, within 30 days from the issuance date or modification, addition, replacement of internal regulations on anti-money laundering.
c) Submit internal audit reports on anti-money laundering to the reporting entity for the authority responsible for anti-money laundering functions and tasks within 60 days from the end of the financial year, except for reporting entities exempt from internal audit according to legal regulations.
d) Register information of the person responsible for anti-money laundering for necessary communication.
· Prohibited acts in Anti-Money Laundering
According to Article 8 of Anti-Money Laundering 2022, acts such as “organizing, participating in or supporting the conduct of money laundering”, “creating and maintaining anonymous or pseudonymous accounts” and “illegally providing services that involve the acceptance of cash, cheques, other monetary instruments” can be considered as prohibited acts.
· Provisional measures and handling violations
In case a business is suspected of engaging in violations of legal provisions on anti-money laundering, it may face disciplinary actions, administrative sanctions, or criminal prosecution, depending on the nature and severity of the violation. If damage is incurred, compensation must be provided in accordance with the legal regulations. Additionally, provisional measures including “transaction suspension”, “freezing of bank accounts” and “freezing, seizing, or temporarily block of assets” will also be implemented if there is suspicion of money-laundering.
To conclude, the Vietnamese government has recognized the critical importance of robust anti-money laundering efforts as the sophistication of money laundering crimes evolves. Therefore, for foreign businesses eyeing investment opportunities in the Vietnamese market, adherence to anti-money laundering regulations is paramount.
In D’Andrea & Partners Legal Counsel we have authored innovative publications exploring Vietnam, produced in order to provide foreign investors and businesses with more practical guidance on how to do business in Vietnam, as it requires a specific context of the economic and legal framework of the country, including the Anti-Money Laundering issues.
Disclaimer:
The above content is provided for informational purposes only. The provision of this article does not create an attorney-client relationship between D’Andrea & Partners and the reader and does not constitute legal advice. Legal advice must be tailored to the specific circumstances of each case, and the contents of this article are not a substitute for legal counsel.
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