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Viet Nam Enhances Enforcement Agencies for Financial Crimes
Hanoi, Viet Nam - The National Assembly of Vietnam has approved an updated Anti-Money Laundering (AML) Law, which took effect on March 1, 2023. The new law aims to prevent financial crimes such as money laundering and corruption, enhancing the transparency of Vietnam’s financial system.
Key Changes in the AML Law
The revised AML Law introduces significant changes that establish a more rigorous anti-money laundering regime. These key changes include:
- Expanding the definition of money laundering activities
- Imposing additional reporting obligations on digital wallet providers
- Introducing new measures for client information verification
- Implementing a fresh risk assessment policy
Aligning with International Standards
The government has taken steps to align its policies, including the new AML Law, with international standards. These policies aim not only to safeguard the integrity of Vietnam’s financial system but also to bolster foreign investor confidence.
Broader Definition of Anti-Money Laundering
Under the 2022 AML Law, a broader definition of anti-money laundering includes the act of individuals or organizations seeking to legitimize the origins of properties obtained directly or indirectly from criminal activities.
Reporting Obligations and KYC Measures
The law requires organizations that provide payment services, such as digital wallet services, collection, and payment services, to implement know-your-customer (KYC) measures. Digital wallet services have gained popularity among consumers as their preferred payment method, spurred by the pandemic.
- Reporting entities must obtain the following information through the KYC reporting procedure:
- Determining if the customer is a Vietnamese citizen
- Identifying whether the customer is a foreigner with single citizenship
- Verifying whether the customer is a foreigner with multiple citizenship
- Assessing whether the customer falls into the category of “high-risk customers”
- Obtaining the customer’s proof of identity
Suspicious Transactions
The law provides clarity on suspicious transactions, which can include:
- Sudden changes in transaction volume
- Large volume transactions during the day while the balance remains at a relatively low level or zero
- Frequent small deposits followed by a large transfer to another e-wallet or withdrawal from the current account or vice versa
- Frequent small transactions transferred from various e-wallets to a specific e-wallet account over a short period
- Customers regularly selling their stocks in the portfolio and requesting the securities company to sign a payment order to withdraw cash from commercial banks
Reporting Timelines
Under the new law, reporting time for large-volume transactions and electronic transfers is done within one working day from the day the transaction takes place using electronic reporting, or within two working days from the transaction date if using paper reporting. Suspicious transactions must be reported within three days from the transaction date or one day from the time of recognition.
Adapting to the Changes
To adapt to the changes in the Anti-Money Laundering Law, businesses should:
- Train their employees on anti-money laundering best practices
- Develop a risk assessment framework that is revised periodically
- Have reliable anti-money laundering systems in place, such as using software that provides key data intelligence
About Us
ASEAN Briefing is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia and maintains offices throughout ASEAN, including in Singapore, Hanoi, Ho Chi Minh City, and Da Nang in Vietnam, in addition to Jakarta, in Indonesia. We also have partner firms in Malaysia, the Philippines, and Thailand as well as our practices in China and India. Please contact us at asean@dezshira.com or visit our website at www.dezshira.com.