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| A banking transactions at Vietcombank’s headquarters__Photo: VNA |
The State Bank of Vietnam (SBV) is seeking public feedback on a draft circular setting out procedures for supervising compliance with anti-money laundering (AML) regulations in the monetary and banking sector.
The proposed circular aims to strengthen the legal framework, standardise supervisory procedures and align Vietnam’s AML supervision practices more closely with international standards.
In line with Recommendations 26, 27 and 28 of the Financial Action Task Force (FATF), the draft seeks to shift the emphasis from compliance supervision towards a risk-based approach.
To this end, the draft addresses four key aspects of AML supervision.
First, the draft establishes a three-stage supervisory process. The first stage involves receiving, collecting, compiling and processing data, information and documents. The second covers conducting compliance and risk-based supervision, while the final stage involves preparing reports and proposing appropriate measures to address identified issues.
Second, it specifies the risk-based supervisory methodology. Under the proposed regulations, supervisory units would use risk-scoring methods and tools approved by the SBV Governor to analyse, assess, score and classify supervised institutions based on their money laundering risk levels.
Risk scores would be determined based on a range of factors, including structural risks; inherent risks associated with customers, products, distribution channels and geographical locations; and each institution's capacity to manage and mitigate risks through its internal controls.
Based on the assessments, credit institutions and foreign bank branches would be classified as posing low, medium or high risks of money laundering. The results would serve as one of the bases for determining supervisory priorities, allowing authorities to allocate resources and adjust the frequency and intensity of supervision depending on the risk level of each institution.
Third, the draft specifies the types, scope and reporting periods for the information and data required for supervision. These include general information on organisational structures, governance models, internal controls, ownership structures, branch and operational networks, asset size, staffing and dedicated anti-money laundering units, as well as aggregated information on customers, products, services, distribution channels and geographical areas.
Notably, data used to assess an institution's risk level would be synthesised and would not include information on individual transactions or customers. The collection, management and use of such information must be carried out for the proper purposes, within the relevant authorities' powers and in compliance with legal requirements on information confidentiality and personal data protection.
Fourth, the draft provides supervisory measures tailored to different risk levels. Under the proposed framework, regulators would be required to intensify supervision of higher-risk institutions and sectors while applying proportionate measures to those presenting lower risks.
The draft builds on experience gained from piloting risk-based supervision over the past three years, involving nearly 100 domestic credit institutions and foreign bank branches operating in Vietnam. The initiative has reportedly received positive feedback from international experts and is expected to help Vietnam strengthen its AML framework, improve regulatory transparency and safeguard the stability of the financial system as the country deepens its international integration.- (VLLF)
