Vietnam

1. Does Vietnam have legislation making it a criminal offence to engage in money laundering and/or terrorist financing?

Vietnam has legislation in place predominantly comprising of: (a) Criminal Code 2015 (“Criminal Code”); (b) Law on Anti-Money Laundering 2012, as amended by the National Assembly on 15 November 2022, and such amendments will take effect as from 1 March 2023 (“Anti-Money Laundering Law”), Law on Counter-Terrorism 2013 (“Counter-Terrorism Law”), and Decrees & Circulars detailing and providing guidelines for the implementation of these laws.

2. To whom does the legislation apply?

The Counter-Terrorism Law applies to Vietnamese citizens, agencies and organisations; international or foreign organisations, and foreigners residing or operating within the territory of Vietnam, except where an international treaty of which Vietnam is a member contains some other provision.

Applicable entities under the Anti-Money Laundering Law include: (i) Financial entities; (ii) Organisations and individuals conducting non-financial related business lines; (iii) Vietnamese organisations and individuals; foreigners or foreign/international organisations and carrying out transactions with the organisations and individuals mentioned in (i) and (ii); and (iv) Other organisations and individuals and agencies involved in the prevention and combating of money laundering.

3. What does the legislation prohibit?

The Counter-Terrorism Law prohibits (i) acts of terrorism and financing terrorism; (ii) concealing, harbouring and not reporting on acts of terrorism and financing terrorism; (iii) revealing state secrets in anti-terrorism activities; (iv) intentionally spreading false information on terrorism and financing of terrorism; obstructing and causing difficulties to the prevention and combat of terrorism; and (v) abusing position and power in the prevention and combat of terrorism to infringe upon the State’s interests and rights and legitimate interests of organisations and individuals. This Law also requires that money and property related to terrorism and terrorism financing must be suspended from circulation, blockaded, sealed off, temporarily seized, and dealt with in accordance with the law.

Acts prohibited by the Anti-Money Laundering Law include: (i) Organizing, participating in or facilitating the implementation of money laundering acts; (ii) Establishing or maintaining anonymous accounts or accounts with false names; (iii) Establishing and maintaining business relationships with any bank which is established in a country or territory but is not physically present in such country or territory and is not subject to the management and supervision of a competent administrative body; (iv) Illegally providing services of receipt of cash, cheques, other monetary instruments or archived instruments with a value, and make payments to beneficiaries at another location; (v) Abusing position and power in prevention and combating of money laundering to infringe the legitimate rights and interests of organisations and individuals; (vi) Hindering the provision of information serving the prevention and combating of money laundering; (vii) Threatening or taking reprisals against any person who discovers, provides information, reports or denounces a money laundering act.

4. How is money laundering defined? Does underlying criminal activity have to be proven?

The Anti-Money Laundering Law defines “Money laundering” as an act of an organisation or individual seeking a way to legalize the origin of assets obtained as a result of crime, comprising: (a) Acts stipulated in the Criminal Code; (b) Provision of assistance to any organisation or individual involved in the crime in order to evade legal responsibilities by way of legalizing the source of assets obtained as a result of the crime; (c) Possession of assets if at the time of receipt of such assets it is thoroughly known that they were obtained as a result of the crime, in order to legalize the origin of the assets.

[Money laundering is considered complete when an offender commits one of the above-mentioned acts without determining the consequences. If the offender has committed an act but has not yet accomplished the purpose of committing the crime, it shall be classified as an incomplete crime and the offender still has to bear criminal responsibility.]

5. What level of intent or knowledge is required to establish a violation?

According to Vietnam’s legislation, all financial institutions and non-financial individuals/entities have obligations to apply counter-terrorism financing measures prescribed by law. Vietnam’ legislation lists a number of grounds which relevant institutions in Vietnam can take into account when determining whether a transaction relates to terrorist financing such as irregularly high value or complicated transactions; transaction being carried out relates to organisations or individuals listed in the relevant resolutions of the UNSC issued under Chapter VII of the UN Charter; or transactions with organisations or individuals in nations or territories on the list announced by the Financial Action Task Force (“FATF”) for the purpose of prevention of and fighting against money laundering or on the warning list.]

The Anti-Money Laundering Law requires:

• Assessment by the reporting subject of money laundering risk

The reporting subject must assess the risk of money laundering; develop a money laundering risk management process, classify customers according to low, medium and high risk levels and apply corresponding measures.

The Governor of the State Bank of Vietnam (SBV) shall prescribe criteria and methods for assessment by the reporting subjects of money laundering risk.

• National risk assessment on money laundering: Every five years, the SBV shall assume the prime responsibility for, and coordinate with relevant ministries and branches in, conducting a national risk assessment on money laundering and submit to the Government for approval the assessment results, the action plan after the assessment. A national risk assessment on money laundering is carried out for newly emerging activities that may present a money laundering risk.

Ministries and branches are responsible for disseminating the results of national risk assessment on money laundering within their respective ministries and branches and to reporting subjects under their respective management, and at the same time taking measures to minimize determined risks.

Update money laundering risks based on the implementation of the action plan after the assessment or when there are risks arising under the management of their ministries or branches and send them to the SBV. On the basis of the risk update results of the ministries and branches, the SBV summarizes and submits to the Government for approving the results of updating national risks on money laundering, and the action plan after the update.

The Government shall stipulate principles, criteria and methods of national risk assessment on money laundering.

6. What are the potential penalties for infringing the legislation?

The nature of the sanctions imposed in Vietnam include asset freezes, restrictions on the direct or indirect provision of financial or economic resources as well as other specified services to designated individuals/entities as well as trade restrictions.

Moreover, subject to the nature and seriousness of the act of violation committed, according to the Criminal Code:

• Individuals involved in terrorist financing shall be sentenced to between 5 and 10 years of imprisonment; offenders may also be subject to probation, residence ban for between 1 and 5 years, or confiscation of part or the whole of their property. A corporate legal entity that commits this offence shall be liable to a fine of from VND7,000,000,000 to VND15,000,000,000 and an additional fine of from VND 1,000,000,000 to VND 5,000,000,000, has its operation suspended for 6 – 36 months or permanently shut down, be banned from operating in certain fields or raising capital for 1 – 3 years; and
• Individuals involved in money laundering be sentenced to between 1 and 15 years of imprisonment; a person preparing for the commission of this offence shall face a penalty of between 1 and 5 years’ imprisonment; and the offender might also be liable to a fine of from VND 20,000,000 to VND 100,000,000 or prohibited from holding certain positions or doing certain jobs for 1 – 5 years or have part or all of his/her property confiscated. A corporate legal entity that commits this offence shall be liable to a fine of from VND 1,000,000,000 to VND20,000,000,000 and an additional fine of from VND 1,000,000,000 to VND 5,000,000,000, or have its operation suspended for 1-3 years or permanently shut down, and be banned from operating in certain fields or raising capital for 1-3 years.

7. Does the legislation have extra-territorial reach?

Yes. According to the Criminal Code, (a) Any Vietnamese citizen, Vietnamese corporate legal entity, or stateless resident of Vietnam that commits an act outside the territory of Vietnam which is defined as a criminal offence by this Code; and (b) Any foreigner or foreign corporate legal entity that commit a criminal offence outside the territory of Vietnam if such offence infringes the lawful rights and interests of Vietnamese citizens or interest of Vietnam or under an international agreement to which Vietnam is a signatory; shall face criminal prosecution in Vietnam as prescribed by this Code.

8. Are there additional anti-money laundering or counter terrorist financing regulations or obligations, such as registration or reporting obligations, for businesses or individuals that operate in particular sectors or undertake particular activities?

According to Vietnam’s legislation, all financial institutions carrying out one or more of the following activities: (a) Acceptance of deposits; (b) Lending; (c) Financial leasing; (d) Payment services; (e) Intermediary payment services; (f) Issuance of negotiable instruments, credit cards, debit cards, transfer instructions, electronic money; (f) Securities brokerage, Consultancy on investment in securities; (g) Business of life insurance services; (h) Currency conversion; etc.

and non-financial individuals/entities carrying out one or more of the following activities: (a) Prized gaming (electronic games with prizes, casino and lottery business); (b) Business of real estate; (c) Precious metal and gems business; (d) Provision of notarization and accounting services; legal services of lawyers and legal practising organizations; (e) Services for the establishment, management and operation of enterprises; etc.

(The Government shall stipulate newly arising activities with risk of money laundering of the reporting subjects which have not been specified in the Law on Anti-Money Laundering after obtaining the consent of the National Assembly Standing Committee)

have obligations:

• To monitor and report timely any suspicion of terrorist financing or money-laundering acts for terrorist financing to the antiterrorism forces of the MoPS and concurrently to the Anti-Money Laundering Department of the State Bank of Vietnam (“SBV”) when it discovers any organisation or individual conducting a transaction on the black list or when there is any basis to assume that another organisation or individual conducts an act related to a money-laundering crime for the purpose of terrorist financing (such reports shall be made on a daily basis if presented under electronic data file), and the MoPS forces have the power to apply temporary measures in order to combat money laundering and terrorist financing;
• For the purpose of prevention of and fighting against money laundering,

1. to promulgate policies and regulations to identify customers and assess money laundering risks before providing new products and services and existing products and services applying innovative technology and applying other measures to reduce the risk of money laundering;
2. to collect information about a partner bank, evaluate the implementation of anti-money laundering measures, understand the partner bank’s anti-money laundering responsibilities in the agency relationship when establishing relationships with partner banks to provide banking, payment and other services to such banks;
3. to know customers in which the reporting subjects can exploit information in national databases in accordance with the laws to compare and verify information provided by customers, or identify customers through third parties on the basis of business activities via referrals specified in the Law on Anti-Money Laundering and verify customer identification information through hire another organization;
4. to take appropriate measures to verify the origin of assets of foreign individuals with political influence of international organizations, who are the beneficial owners; and conduct business relationship monitoring throughout the course of conducting transaction(s) with this customer;
5. to monitor and report any unusual or complicated high value transaction (i.e. VND60,000,000 or more within a day if related to games with prizes or casino, and VND300,000,000 or more within a day for others), or electronic transfer transaction when providing transfer services, which exceeds the value stipulated by the SBV (such reports shall be made on a daily basis if presented under electronic data file or within two working days from the time the transaction arises if presented under paper file); transactions with organizations and individuals in jurisdictions falling on the list published by the FATF to combat money laundering or the Warning List; suspicious transaction in the fields of securities, life insurance and intermediary payment services, etc. within 48 hours from the time the transaction arises; to the SBV;
6. to implement measures to delay transactions to ensure timeliness in accordance with the recommendations of international organizations; and
7. to store transaction files of a customer for a period of at least 5 years from the date a transaction arises; customer identification files, accounting source documents and reports accompanied by relevant source and other documents for at least five years from the date of completion of the transaction or from the date of closing the account or from the reporting date; and provide relevant files, stored documents and information to the SBV and any competent State body or when requested.

9. What are the potential penalties for failing to comply with these obligations?

Violations against regulations on anti-money laundering and counter-terrorist financing will be subject to administrative penalties, including:

• A monetary fine of between VND 100,000,000 and VND 500,000,000. The fines incurred by organisational violators will be twice; and
• Remedial measures such as:

1. Enforced implementation of regulations on identifying, updating, and verifying identification information of customers in accordance with regulations of the Law on Anti-money Laundering and Law on Anti-terrorism;
2. Enforced implementation of measures, enforced issuance of procedures, and enforced special supervision over some transactions, and enforced implementation of regulations on the assessment of risks of money laundering and terrorism financing prescribed in the Law on Anti-money Laundering;
3. Proposed suspension of violating entities and/or individuals responsible for the violation from holding the management, executive or supervision position for 1-3 months, proposed dismissal or prohibition from holding the management, executive or supervision position at a credit institution or foreign bank branch;
4. Proposed dismissal and implementation of other appropriate measures against violating entities (within the competence of a credit institution or foreign bank branch) may be applied to (i) violations against regulations on identifying, updating, and verifying identification information of customers; (ii) violations regulations on correspondent banking relationships, transactions related to new technologies, and special supervision of transactions; (iii) violations against regulations on reporting on high-value transactions, suspicious transactions, electronic money transfer, money laundering for terrorism financing purposes, financing terrorism, and proliferation of weapons of mass destruction; (iv) violations against regulations on information provision; (v) violations against regulations on transaction delay, account freeze, and asset sealing or impoundment; (vi) violations against regulations on risk assessment; and (vii) violations against regulations on prohibited acts in anti-money laundering anti-terrorism financing;
5. Enforced compliance with regulations of the laws when issuing internal regulations or the termination of internal regulations with content against the regulations of the laws; and
6. Enforced submission of sufficient and accurate reports.

10. Who are the relevant enforcement authorities in Vietnam and what are their contact details?

There are a variety of State agencies responsible for implementing the legislation. These include:

The Government, which performs the unified state management of money laundering prevention and combat, and promulgates legal documents according to its competence on money laundering prevention and combat.

The Prime Minister, who directs the ministries, ministerial-level agencies and agencies attached to the Government to coordinate with the Supreme People’s Court and the Supreme People’s Procuracy in preventing and combating money laundering; direct the coordination of money laundering prevention and combat and the prevention and combat of terrorist financing and proliferation of weapons of mass destruction.

thongtinchinhphu@chinhphu.vn

https://chinhphu.vn/ (Vietnamese) or https://vietnam.gov.vn/ (English)