Financial Crime World

Financial Crime Prevention Techniques in Vietnam: What You Need to Know

In 2022, Vietnam’s National Assembly updated its Anti-Money Laundering (AML) Law to enhance transparency and prevent financial crimes. The new law took effect on March 1, 2023, introducing significant changes that establish a more rigorous anti-money laundering regime.

Key Changes in the AML Law

  • Expanded Definition of Money Laundering: The law now includes activities aimed at legitimizing properties obtained directly or indirectly from criminal activities.
  • Additional Reporting Obligations: Digital wallet providers must report suspicious transactions, and new measures for client information verification have been introduced.
  • Broader Scope of Business Entities: A wider range of businesses must implement know-your-customer (KYC) measures, including:
    • Financial leasing activities
    • Payment services
    • Bank guarantees activities
    • Stockbrokers
    • Securities investment consulting
    • Securities underwriting
    • Management of securities investment funds
    • Life insurance business
    • Casino business
    • Currency exchange activities
    • Accounting and legal services
    • Trading in precious metals
    • Foreign exchange services
    • Management of securities investment funds

Know-Your-Customer (KYC) Requirements

  • Customer Information: Reporting entities must obtain the following information through KYC reporting:
    • Determine if the customer is a Vietnamese citizen
    • Identify whether the customer is a foreigner with single citizenship
    • Verify whether the customer is a foreigner with multiple citizenship
    • Assess whether the customer falls into the category of a ‘stateless individual’
    • Identify if the customer is an organization

Risk Assessment and Politically Exposed Persons (PEPs)

  • Risk Assessment: Reporting entities must conduct their own AML assessments every five years in cooperation with the State Bank of Vietnam.
  • PEPs: The law broadens the definition to include foreign individuals with political influence and holding senior positions in organizations in Vietnam or abroad.

Compliance Requirements

To comply with the new law, businesses must:

  • Develop internal regulations on anti-money laundering practices
  • Create a Customer Acceptance Policy (CAP)
  • Provide internal training for employees
  • Promote awareness across the entity’s operation
  • Implement suspicious transaction reporting procedures, including:
    • Unusual changes in transaction volumes
    • Frequent small deposits
    • Large transfers to other accounts

Adaptation and Implementation

To adapt to these changes, businesses in Vietnam should:

  • Train employees on anti-money laundering best practices
  • Develop risk assessment frameworks
  • Have reliable anti-money laundering systems in place