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Official Gazette

Friday, October 7, 2022

Law on Anti-Money Laundering

Updated: 11:43’ - 06/02/2013

On January 1, the new Anti-Money Laundering Law took effect. The 50-article Law provides measures to prevent, detect, stop and handle organizations and individuals committing acts of money laundering. The prevention and combat of money laundering for the purpose of financing terrorism also comply with the Law.

Evolving from Decree No. 74 of 2005, on anti-money laundering, the Law clearly defines “money laundering” based on relevant international conventions.  As per the Law, money laundering means acts of organizations or individuals aiming to legalize the origin of property acquired from crimes, including the act prescribed in Article 251 of the Penal Code (Legalizing money and/or property acquired from a crime); assisting organizations and individuals involved in a crime in shirking their legal liability by legalizing the origin of property acquired from a crime; and possessing a property, if at the time of receipt of the property the possessing organization or individual clearly knows that the property is acquired from a crime, in order to legalize the origin of the property.

In general, the anti-money laundering mechanism under the Law is implemented through the collection and processing of information on client identification, high-value transactions and suspicious transactions, thereby building a database and identifying transactions having high risk of money laundering.

Client identification

Financial institutions, organizations and individuals conducting relevant non-financial business lines (reporting subjects) must apply measures to identify their clients in the cases defined in Article 8 of the Law.

Client identification information is divided into three groups: client identification information; beneficiary owner information; and the purpose of the client in relation to the reporting subject.

Foreign individual client identification information includes full name; date of birth; nationality; occupation, professional post; passport number, date and place of issue, entry visa; address of registered residence abroad and address of registered residence in Vietnam.

Institutional client identification information includes full and abbreviated transaction names; address of head office; phone number, fax number; areas of operation and business; information on the founder and representative.

Reporting subjects must identify the beneficiary owner and apply measures to acquire and update identification information on them.

Reporting subjects may use materials and data to verify client identification information such as identity card, valid passport or other papers of equivalent value issued by competent agencies, for individual clients; establishment license or decision, decision on the renaming, separation, splitting or merger, business registration certificate, decisions on appointment or contracts on hiring of the general director (director) and chief accountant, for institutional clients. In addition, reporting subjects may, through other organizations or individuals who had or currently have relations with clients, or through management agencies or other competent state agencies, collect information and compare with that provided by the clients. Reporting subjects may also hire other organizations to verify client identification information.

The Law adds provisions on risk-based client classification. Accordingly, reporting subjects must elaborate regulations on risk-based client classification by type of client, product, service used by client, place of residence or place of head office of client. Based on the client classification, reporting subjects can apply measures to identify clients at a lower level, for clients with low risk levels, or additionally apply measures of intensive assessment, for clients performing transactions with a high risk.

The list of foreign clients being individuals with political influence will be announced by the State Bank of Vietnam on the basis of recommendations of the international anti-money laundering organization. Reporting subjects must have a risk management system to identify these foreign clients, and apply the following measures: developing internal control regulations for the opening of accounts or establishment of transactions when clients or beneficiary owners are regarded as having political influence; identifying the origin of clients’ property; and intensifying client supervision and business relations with the clients.

For transactions related to a new technology, reporting subjects must introduce a process for detection and prevention of the use of the new technology for money laundering and management of money laundering risks upon establishing transactions with clients who use the new technology and do not meet reporting subjects face-to-face.

Transactions to be reported

According to the Law, reporting subjects must report to the State Bank of Vietnam upon implementing high-value transactions, suspicious transactions or money wire transfer transactions.

Under Article 21 of the Law, the Prime Minister will prescribe the minimum value of high-value transactions subject to reporting. Under Decree 74, such value is VND 500 million, or equivalent value, for foreign currencies or gold for one or more than one saving transaction conducted in a day by an organization or individual, or VND 200 million for other transactions.

Under Article 23 of the Law, money wire transfers of a value exceeding the value prescribed by the State Bank of Vietnam must be reported.

For suspicious transactions, the Law stipulates in Article 22 eight basic signs leading to suspicion: (i) the client provides incorrect, incomplete and inconsistent client identification information; (ii) the client persuades the reporting subject not to report on the transaction to a competent state agency; (iii) it is impossible to identify the client by the information provided by the client or the transaction is related to an unidentifiable party; (iv) the individual’s or agency’s phone number provided by the client is not contactable or does not exist after the opening of the account or performance of the transaction; (v) the transactions are performed at the request or under the authorization of an organization or individual on the warning list; (vi) the transactions, based on the client identification information or through the consideration of their economic and legal grounds, can determine the relationship between the parties taking part in the transactions and criminal activities or are related to organizations or individuals on the warning list; (vii) an organization or individual takes part in transactions with large amounts of money inconsistent with its/his/her income and business activities; and (viii) a client’s transaction conducted through the reporting subject does not comply with the process and procedures prescribed by law.

In addition to the above signs, other suspicious signs in banking, insurance business, securities, prize-winning games and casino and real estate business are stipulated in Article 22 of the Law.

Reporting time limit for a suspicious transaction is 48 hours after such transaction is performed. For high-value transactions and transactions of money wire transfer, reporting subjects must make daily reports, for electronic data file reports, or make reports within two working days after the transaction concerned is performed, for written reports or other forms of report.

Reporting subjects must regularly update client identification information throughout the period of establishing relations with their clients, and ensure that the transactions which the clients are conducting through the reporting subjects match the information already known about the clients, and their business operations, risks and the property origin.

International cooperation

The principles of international cooperation on money laundering prevention and combat include respect for independence, sovereignty, territorial integrity, equality and mutual benefit and compliance with the laws of Vietnam and treaties to which Vietnam is a contracting party.

International cooperation focuses on exchanging information and documents, identifying and blocking property of persons committing the crime of money laundering, providing legal assistance and cooperation on extradition of money laundering criminals, and other issues.

The State will facilitate the exchange of information and legal assistance on money laundering prevention and combat.-

VNL_KH1 

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