Financial Crime World

Combating Financial Crimes in Vietnam: Challenges and Opportunities

Introduction

The financial service sector in Vietnam faces a multitude of challenges in combating financial crimes, with evolving technological developments, geopolitical events, and interconnected financial networks increasing the complexity of these risks. Regulatory bodies will remain focused on areas such as terrorist financing, beneficial ownership, sanctions/tax evasion, consumer scams, and potential compliance violations.

Regulatory Challenges

One of the key regulatory challenges is the anti-money laundering (AML) and counter-terrorist financing (CFT) framework, which aims to prevent illicit exploitation of access to the financial system. This includes shell companies, all-cash real estate purchases, and other high-risk transactions.

  • Anti-Money Laundering (AML): Regulators will continue to assess companies on their AML models, operations, and investigation processes.
  • Counter-Terrorist Financing (CFT): The CFT framework aims to prevent terrorist financing and ensure that financial institutions do not provide services to individuals or entities involved in terrorism.

Emerging Risks

The rapid growth of non-fungible tokens (NFTs) and decentralized finance (DeFi) platforms has also raised concerns about money laundering and terrorist financing. Sanctions and price cap compliance will remain a priority, particularly in light of ongoing geopolitical tensions.

  • Sanctions Compliance: Regulators expect companies to have effective systems in place to monitor and prevent sanctioned transactions.
  • Price Cap Compliance: Companies must ensure that their risk programs identify and mitigate fraud/scams directed at vulnerable populations.

Consumer Protection

The interplay with consumer protection is another critical area of focus, as regulators recognize the need for fair processing and treatment of consumer complaints, claims, and disputes. Companies must ensure that their risk programs identify and mitigate fraud/scams directed at vulnerable populations.

  • Vulnerable Populations: Regulators expect companies to have measures in place to protect vulnerable populations, such as the elderly, military personnel, and low- and moderate-income individuals.

Key Recommendations

To effectively combat financial crimes in Vietnam, finance sector providers must ensure they are protecting their customers by leveraging technology and data to monitor activity, coupled with a deep focus on customer experience. This includes being proactive in identifying trends and instilling a strong culture of doing the right thing.

  • Add Analytics and Automation: Companies should consider adding analytics and automation to client onboarding.
  • Eliminate Antiquated Technology: Finance sector providers must eliminate antiquated technology that can create vulnerabilities.
  • Establish a Mature Conduct Risk Program: A mature conduct risk program is essential for identifying and mitigating risks.
  • Strengthen Controls in Regulatory Focal Areas: Companies should strengthen controls in regulatory focal areas, such as FinCEN priorities.

Conclusion

By addressing these challenges, regulators and finance sector providers can work together to mitigate the risks of financial crimes in Vietnam and protect consumers.