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Vietnam’s Financial Institutions Required to Report Electronic Funds Transfers Under AML Regulations
The State Bank of Vietnam (SBV) has issued Circular 09/2023/TT-NHNN, requiring financial institutions to report electronic funds transfers (EFTs) with a minimum value of VND 500 million or USD 1,000. This move aims to strengthen anti-money laundering (AML) regulations and combat financial crimes.
Who is affected?
The new circular applies to:
- Initiating institutions
- Intermediary institutions
- Beneficiary institutions that conduct EFTs on behalf of clients
These institutions must report the transactions to the AML authority of SBV, providing complete and accurate information, including:
- Names and addresses of individual and corporate customers
- Transaction details such as account numbers, currency, date, and purpose of transaction
Exceptions
The reporting obligations do not extend to certain scenarios, including:
- E-transaction
- Debit or credit card payments
- Pre-paid cards
- Transactions between financial institutions
However, high-value transactions with a minimum value of VND 400 million (previously VND 300 million) must be reported starting from December 1, 2023.
New guidelines for identifying suspicious signs
The AML Law 2022 introduces more precise and comprehensive guidelines for identifying suspicious signs in the payment intermediary sector. The law distinguishes itself by providing specific indicators of suspicious activities, including:
- Fast deposits and withdrawals from e-wallets
- High-transaction volumes during the day but low or zero e-wallet balance
- Sudden receipt of substantial deposits
Additional requirements
The new regulations also require financial institutions to have a mechanism to identify non-compliant transfers and may reject, suspend, or implement post-transaction control measures or report such non-compliant transfers as suspicious transactions.
Impact on money transfers
The AML Law 2022 has implemented more stringent regulations, resulting in heightened barriers and controls for money transfers by individuals and organizations within Vietnam, as well as transactions involving foreign countries. The true test lies in effective execution by reporting entities, including reviews of existing policies, procedures, and systems to identify gaps against requirements under Circular 09.
Flexible regulations
The AML Law 2022 also introduces more flexible regulations, such as:
- Raising the minimum threshold for reporting high-value transactions
- Streamlining the know-your-customer (KYC) process
However, for these new regulations to be effectively implemented, it is necessary to receive support from state management agencies, including the establishment of a centralized KYC data center system and guidance from business registration agencies.
Contact
For further information, please contact:
Vu Thanh Minh Partner, LNT & Partners minh.vu@lntpartners.com