Tightening Regulations on Anti-Money Laundering

On July 28, 2023, the State Bank of Vietnam (SBV) issued Circular No. 09/2023/TT-NHNN providing guidelines to the implement of the Law on Anti-money laundering, in which special attention is paid to the reporting mechanism for certain types of remittance transactions.

Detailed provisions

Circular No. 09/2023/TT-NHNN has specified the reporting mechanisim on large-value transactions (Article 6); suspicious trading activities (Article 7) and electronic transaction (Article 9).

In details, when conducting electronic transactions, the following cases must be reported to agencies with anti-money laundering functions:

• Transactions valued at 500 million VND or more, or its equivalent in other foreign currencies (for domestic transfers between two and above Vietnam’s financial institutions);
• Transactions valued at 1000 USD or more, or its equivalent in other foreign currencies (for international transactions when there is at least one of the financial institutions in countries and territories outside Vietnam).

When suspicious transactions are found, (including those with suspects stipulated in Clause 1, Article 25 of the Law on Anti-Money Laundering, such as transactions performed at the request of persons on the warning list; transactions of unusual large values; frequent money transfers and from many accounts; transactions with vague information…), the reporters need to report these to the competent authorities for settlement.

In terms of domestic cash transactions of high values, if the values reach 400 million VND or above, reports are also required in accordance with the Decision No. 11/2023/QD-TTg and Circular No. 09/2023/TT-NHNN.

In addition, the Circular also raises the reporters’ responsibilities in assessing and managing risks of money laundering, classifying customers by risk levels, as well as gives some internal regulations (Articles 3, 4, 5), in order to improve the effectiveness of detecting money laundering activities.

Possible impacts of anti-money laundering regulations

According to the SBV, the enactment of these regulations aim to give detailed guidance on the rates that a transaction could be considered as a “high value” and needs to be reported in accordance with the Law on Anti-money laundering that has come into force since March 2023. This has contributed to a significant improvement in the effectiveness of anti-money laundering activities, and at the same time, helped to upgrade our legal system in line with international standards and requirements on anti-money laundering, to which Vietnam has obligations. Specifically, these regulations are expected to put stricter supervision on unusual transactions that are conducted for illegal purposes, while still adhering to the principles of customer information protection; the competent bodies will only monitor and take appropriate measures when problems arise.

However, tightening regulations on high value transactions also raises great concerns from some customers to perform banking transactions, about their confidentiality and the possibility of being questioned about the origins of their own money in the account. More or less, this will somehow affect the number of future remittance transactions.

Some recommendations for businesses

With the aim of a strict compliance with the provisions of Circular No. 09/2023/TT-NHNN, enterprises should pay more attention to the following issues:

For those obligated to report (the reporters): Enterprises that are legal financial institutions or non-financial organizations dealing in prize-winning games; real estates; precious metals and precious stones; and some special service businesses (Article 4 of the Law on Anti-Money Laundering), must report for large-value transactions as analyzed above. The content of the report should comply with the provisions of Article 9.3 of the Circular, including specific information about the originating financial institution and the beneficiary; Information about customers; Transaction information (account number, amount, currency)… At the same time, it is necessary for these enterprises to comply regulations on the risk assessment process, internal regulations and risk management…

For other businesses:

• Enterprises, when conducting electronic transactions, need to stay transparent and timely update information about enterprises themselves and beneficiaries (including information about business activities, information about agreement between the two parties; account information, transaction amount…).
• Getting a thorough information on your partners before making any money transfers, in order to avoid being scammed, or tricked into transferring money to a criminal or person in the bank’s warning list.

By Trang Linh – Midland & Partners