Vietnam: Financial Crime Prevention Strategies Get a Boost with New AML Law
Strengthening Vietnam’s Financial System
On March 1, 2023, Vietnam updated its Anti-Money Laundering (AML) Law to strengthen its financial system and prevent financial crimes. The new law aims to curb money laundering and corruption, while enhancing transparency in the country’s financial sector.
Key Changes in the New AML Law
- Expands the definition of money laundering activities
- Imposes additional reporting obligations on digital wallet providers
- Introduces new measures for client information verification
- Implements a fresh risk assessment policy
Broadened Definition of Money Laundering Activities
The law now includes individuals or organizations seeking to legitimize properties obtained from criminal activities in the definition of money laundering.
New Measures for Digital Wallet Providers
Organizations providing payment services, such as digital wallets, must implement know-your-customer (KYC) measures. This includes obtaining specific information about customers, including:
- Identification of Vietnamese citizens
- Foreigners with single or multiple citizenships
- Stateless individuals
- Organizations
Risk Assessment Policy and Reporting Obligations
The law introduces a money laundering risk assessment policy, which will be reviewed every five years by the government in cooperation with the State Bank of Vietnam. Reporting entities must conduct their own AML assessments and disseminate any updates publicly to relevant authorities.
Client Information Verification
Client information verification has been broadened to include foreign individuals with political influence holding senior positions in organizations in Vietnam or abroad, who are considered politically exposed persons (PEPs).
Simplified Requirements for Micro-Enterprises and Individuals
The law relaxes the requirements for micro-enterprises and individuals to develop internal regulations. However, they must still:
- Develop a customer acceptance policy
- Provide internal training
- Promote awareness across their operations
- Report suspicious transactions within specific timeframes
Identifying Suspicious Transactions
Suspicious transactions include:
- Sudden changes in transaction volumes
- Frequent small deposits followed by large transfers
- Unusual large deposits
Reporting entities must implement KYC measures thoroughly to identify such transactions and report them within specific timeframes.
Compliance Recommendations for Businesses
To adapt to the new law, businesses should:
- Train employees on anti-money laundering best practices
- Develop a risk assessment framework
- Have reliable AML systems in place