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Vietnam’s Anti-Money Laundering and Counter-Terrorist Financing Regime Undergoes Significant Reform

Hanoi, Vietnam - In a bid to strengthen its fight against money laundering (ML) and terrorist financing (TF), Vietnam has undergone significant reforms in its anti-money laundering and counter-terrorist financing regime.

Assessment by the Asian-Pacific Group (APG)

According to a recent assessment by the APG, while Vietnam’s ML/CFT regime has made some improvements, it still faces several technical deficiencies and shortcomings. The assessment highlighted that changes to the legal and institutional framework have only been implemented in limited areas, with significant technical improvements needed in many areas.

Key Findings

• Moderate results in terms of effectiveness, particularly in relation to:
  • Risk
  • Policy
  • Coordination
  • International cooperation
  • TF investigation and prosecution
• Fundamental improvements are required in several key areas, including:
  • Supervision
  • Preventive measures
  • Development and use of financial intelligence
  • ML investigations and prosecution
  • TF preventive measures and TFS
  • Transparency of legal persons and legal arrangements
  • TFS against proliferation of weapons of mass destruction
  • Pursuit of international cooperation

Risk Assessment Processes

The assessment also highlighted the need for Vietnam to make significant improvements in its risk assessment processes. While Vietnam has completed its first National Risk Assessment (NRA) in April 2019, it noted that there are still major gaps in understanding ML/TF risks associated with: + Vietnamese authorities’ (VASPs) + Foreign trusts + Other sectors

Lack of Comprehensive Risk-Based Approach

Furthermore, the APG criticized Vietnam’s lack of a comprehensive risk-based approach to allocating resources or implementing measures to prevent ML/TF.

Shortcomings in Anti-Money Laundering Regime

• Limited analysis produced by the Anti-Money Laundering Department (AMLD)
• Lack of an integrated IT tool to facilitate its analysis
• Limited number and quality of suspicious transaction reports (STRs) received from reporting entities

Progress Made

Despite these challenges, the APG acknowledged that Vietnam has made some progress in strengthening its anti-money laundering regime. For example: + The country’s LEAs have a broad range of powers and responsibilities to investigate and prosecute ML offences + There are only minor technical shortcomings in the criminalization of ML

Recommendations

The assessment concluded that while Vietnam’s anti-money laundering and counter-terrorist financing regime has made some progress, significant improvements are still required to effectively combat ML/TF. The APG recommended that Vietnam: + Strengthen its risk assessment processes + Improve its analysis and dissemination of STRs + Enhance its ML investigation capacity + Increase its confiscation rates

Sources

• Asian-Pacific Group (APG) - Anti-Money Laundering and Counter-Terrorist Financing Measures in Vietnam