Financial Crime World

Transaction Reporting: Temporary Measure to Enhance Financial Sector’s Anti-Money Laundering Efforts

In an effort to combat money laundering (ML) and terrorist financing (TF), Vietnam has introduced a new law requiring financial institutions to report suspicious transactions to the State Bank of Vietnam (SBV). This temporary measure aims to strengthen the country’s anti-money laundering (AML) framework and enhance cooperation between financial institutions and regulatory bodies.

New Law Sets Out Suspicious Signs

The new law identifies various sectors, including:

  • Banking
  • Payment intermediaries
  • Life insurance
  • Securities
  • Prize-awarding games/gaming
  • Real estate businesses

as high-risk areas prone to ML/TF activities. It also outlines elements of suspicious transactions that require reporting, including cases where the transaction is conducted at the request of an accused, defendant, or convicted person.

Time Limits for Reporting

The law has introduced new time limits for reporting:

  • High-value transactions and electronic money transfers: within one working day (e-day) for e-reporting and two working days for paper reporting.
  • Suspicious transactions: within three working days from the transaction date or within one working day from the detection of suspicious activity.
  • Criminal activities detected in customer requests: report to relevant authorities and the SBV within 24 hours.

What Firms Need to Do

To implement the new law, financial institutions should:

Establish Robust Governance

  • Strong oversight from top management
  • Clear duty segregation
  • Collaboration mechanisms across three levels of management

Implement Effective Reporting Framework

  • Provide senior management with timely and actionable information
  • Promote a robust AML/CFT culture
  • Ensure compliance with regulations

Effectively Implement AML Technology System

  • Ensure data accuracy and completeness
  • Interaction with upstream and downstream applications
  • Sufficient resources with required skills and experience

Conduct Effective Investigations

  • Adequately train staff to identify and assess criminal activity
  • Establish minimum standards for investigating alerts
  • Use a well-designed transaction monitoring system

Implement Effective Outsourcing Programme

  • Establish good governance and strong oversight of outsourced functions
  • Ensure compliance with local regulations

Develop Effective Quality Assurance (QA) Programme

  • Risk-focused QA with varying frequency and intensity
  • Independent governance
  • Reporting lines to escalate issues/weaknesses

By implementing these measures, financial institutions can effectively report suspicious transactions, enhance their AML/CFT frameworks, and contribute to the overall efforts to combat ML/TF in Vietnam.