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| A view of Thu Thiem New Urban Area in Ho Chi Minh City, which will host the first phase of the International Financial Center__Photo: VNA |
The State Bank of Vietnam (SBV) is gathering comments on a draft circular guiding the foreign exchange management at the International Financial Center (IFC). The circular is expected to enhance cash flow transparency, enabling competent agencies to collect accurate statistics and monitor capital flows, thereby mitigating risks of money laundering and terrorist financing.
Consisting of 40 articles arranged in 10 chapters, the draft provides detailed guidance on the use of foreign currency accounts, borrowing and lending activities, offshore direct and indirect investments, as well as reporting, registration and declaration obligations. It applies to the IFC members, foreign investors, domestic organizations and individuals involved in lending, borrowing or investment activities with the IFC members, as well as banks that provide payment services.
According to the draft, all foreign exchange transactions would have to go through accounts opened at licensed commercial banks or Vietnam-based foreign bank branches. Specifically, foreign investors’ payment accounts may record inflows such as funds from abroad, earnings from share transfers, dividends, bond interest and other lawful revenues; and may be used for capital contributions, share purchases, tax payments, and profit remittances abroad.
Meanwhile, capital accounts of non-bank members would be permitted to receive inflows including foreign loans, investment returns, capital transfers, debt collections, and income from indirect investment, and to make payments for debts, overseas loan disbursements, direct investment transfers, and purchased indirect investment instruments, etc.
The IFC members may also use foreign currency payment accounts to pay service charges and salaries for foreign employees, or to make cash withdrawals for business purposes.
To enhance cash flow transparency, the draft requires every transfer order to clearly state its purpose, transaction type, and related contract contents. Banks, in turn, would be responsible for monitoring transactions and ensuring client compliance.
Regarding declaration and registration obligations, the draft requires declaration of any foreign loan or overseas lending transaction valued at USD 20,000 or more. In addition, members whose charter capital not wholly owned by foreign investors that lend abroad over USD 5 million or have a loan term exceeding 65 days, would be required to register in advance.
Domestic borrowers would have to register loans provided by the IFC members as medium- or long-term loans exceeding USD 10 million for production and business operations, or those exceeding USD 20 million for investment projects. For smaller loans, post-transaction reporting would be required.
For offshore investment, members whose charter capital is not wholly foreign-owned would have to register foreign currency transactions before transferring direct investment funds. Changes in project members, capital accounts, investment capital or disbursement schedules would also have to be registered. Fully foreign-owned members would be exempt from registration but still have to submit periodic reports.
The draft requires domestic commercial banks carrying out indirect or entrusted offshore investments to apply for a registration certificate. The application dossier would comprise audited financial statements, tax compliance confirmations, reports on prudential ratio compliance, and internal regulations on risk management.
As for the foreign exchange management at the IFC, during the first five years, the SBV would directly receive declarations, confirm registrations, and manage reports. Transactions exceeding USD 30 million in value would be subject to approval by the Foreign Exchange Management Department.
From the sixth year onward, these responsibilities would be transferred to the IFC’s executive body.- (VLLF)
