Financial Crime World

Vietnam’s AML/CFT Regime Undergoes Significant Reform, But Gaps Remain

Vietnam’s anti-money laundering and counter-terrorism financing (AML/CFT) regime has undergone significant reforms in recent years, but despite these efforts, the country still faces technical deficiencies and needs to improve its effectiveness in combating financial crimes.

Reforms and Progress

According to a report by the Asia-Pacific Group on Money Laundering (APG), Vietnam’s new Penal Code, which came into effect in 2015, introduced revised money laundering and terrorism financing offences and corporate criminal liability. Additionally, the country has enacted laws and implementing decrees aimed at strengthening its AML/CFT framework.

  • The new Penal Code introduced revised money laundering and terrorism financing offences
  • Corporate criminal liability was introduced to hold companies accountable for financial crimes

Technical Deficiencies Remain

While these reforms have led to some improvements in Vietnam’s AML/CFT system and an increase in technical compliance, significant technical deficiencies remain. The report highlights that changes to the legal and institutional framework have only been implemented in limited areas, leaving many gaps to be addressed.

  • Technical deficiencies remain in supervision, preventive measures, financial intelligence, money laundering investigations, and prosecutions
  • Limited analysis and dissemination of suspicious transaction reports
  • Inadequate resources for money laundering investigations

Effectiveness in Combating Financial Crimes

Vietnam has moderate results in relation to risk, policy, and coordination, international cooperation, and terrorism financing investigation and prosecution. While some measures are in place, the country needs to make fundamental improvements in several key areas.

  • Supervision: Vietnam’s supervisory bodies need to be strengthened to effectively monitor financial institutions
  • Preventive measures: The country needs to improve its prevention of money laundering and terrorist financing through measures such as customer due diligence and transaction monitoring
  • Financial intelligence: Vietnam needs to develop and use its financial intelligence more effectively to identify and disrupt financial crimes
  • Money laundering investigations and prosecutions: The country’s law enforcement agencies need to improve their investigation and prosecution of money laundering cases
  • Terrorism financing prevention and suppression: Vietnam needs to strengthen its efforts to prevent and suppress terrorist financing

Challenges and Progress

Despite these challenges, Vietnam has made some progress in combating financial crimes. The country has demonstrated that sanctions applied in completed money laundering prosecutions were proportionate and dissuasive, and its conviction-based confiscation system has produced results that reflect its risk profile to some extent.

  • Sanctions applied in completed money laundering prosecutions were proportionate and dissuasive
  • Conviction-based confiscation system has produced results reflecting the country’s risk profile

Conclusion

While Vietnam’s AML/CFT regime has undergone significant reforms, the country still faces several challenges that need to be addressed to improve its effectiveness in combating financial crimes. The government needs to prioritize strengthening supervision, preventive measures, financial intelligence, money laundering investigations and prosecutions, and terrorism financing prevention and suppression. With continued efforts, Vietnam can further improve its AML/CFT regime and effectively combat financial crimes.