Financial Institutions Now Required to Report EFTs Under Anti-Money Laundering Regulations
New Regulation Aimed at Combating Money Laundering and Terrorist Financing
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 500,000 Vietnamese dongs or $1,000 USD. This new regulation aims to combat money laundering and terrorist financing.
Reporting Obligations
According to the circular, financial institutions that initiate, intermediate, or receive EFTs must report the transactions to the SBV’s Anti-Money Laundering (AML) authority. The reports must include information such as:
- Initiating and beneficiary institutions
- Individual and corporate customers
- Transaction details like account numbers, currency, date, and purpose of transaction
Exemptions
The reporting obligations do not apply to EFTs made through:
- E-transactions
- Debit or credit card payments
- Pre-paid cards for the purchase of goods or services
Additionally, high-value transactions with a minimum value of 400,000,000 Vietnamese dongs must be reported starting from December 1, 2023.
New Suspicious Signs
The AML Law 2022 has introduced new suspicious signs in the payment intermediary sector, including:
- Fast deposits and withdrawals from e-wallets
- Unusual transaction patterns
- Deposits into or withdrawals from e-wallets made by organizations or individuals involved in illegal activities
Implementation Requirements
In response to the new regulations, financial institutions must:
- Review their existing policies, procedures, and systems to identify gaps against the requirements under Circular 09
- Invest in training their staff and upgrading their systems to ensure effective execution
- Establish a mechanism to identify non-compliant transfers and may reject, suspend, or implement post-transaction control measures or report suspicious transactions
Centralized KYC Data Center System
The SBV is expected to establish a centralized KYC data center system to facilitate access and utilization of customer information for all financial institutions operating in the market.
Expert Insights
“Implementing these regulations requires significant changes to our reporting processes and compliance functions,” said Vu Thanh Minh, Partner at LNT & Partners. “Financial institutions must invest in training their staff and upgrading their systems to ensure effective execution.”
The AML Law 2022 has raised the minimum threshold for reporting high-value transactions and streamlined the KYC process by allowing financial institutions to leverage KYC results obtained from another financial institution or an outsourced service.
Contact Information
For further information, please contact Vu Thanh Minh at minh.vu@lntpartners.com.