Financial Crime World

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

Hanoi - Vietnam’s anti-money laundering and counter-terrorist financing (AML/CFT) regime has undergone significant reform in recent years, but challenges persist in several key areas.

Progress Made, Yet Technical Deficiencies Remain

According to a report by the Asia-Pacific Group on Money Laundering (APG), while Vietnam has made progress in implementing its AML/CFT framework, technical deficiencies remain and improvements are needed in many areas. The report highlights that changes to the legal and institutional framework have only begun to be implemented in limited areas.

Challenges Identified

Risk Assessments

  • Vietnam has a developing understanding of its money laundering (ML) and terrorist financing (TF) risks.
  • Major improvements are still needed, particularly in understanding ML/TF risks associated with virtual asset service providers (VASPs) and foreign trusts.

Financial Intelligence

  • Vietnam has a limited understanding of financial intelligence, which is essential for effective AML/CFT investigations.
  • The country’s Financial Intelligence Unit (FIU), the State Bank of Vietnam’s Anti-Money Laundering Department (AMLD), produces limited analysis and lacks an integrated IT tool to facilitate its analysis.

Private Sector Awareness

  • Private sector awareness and understanding of ML/TF risks in Vietnam is mixed across sectors, with larger financial institutions having some awareness of the risks, but smaller ones requiring significant improvements.

Law Enforcement Capacity

  • Law enforcement agencies have a broad range of powers and responsibilities to investigate and prosecute ML offenses.
  • However, the extent of ML investigations, prosecutions, and convictions is not commensurate with Vietnam’s risk profile.

Recommendations for Improvement

The APG report makes several key recommendations for Vietnam to address the remaining challenges in its AML/CFT regime:

Key Recommendations

  1. Strengthen Risk Assessments: Improve understanding of ML/TF risks, particularly those associated with VASPs and foreign trusts.
  2. Enhance Financial Intelligence Capabilities: Develop an integrated IT tool for financial intelligence analysis and improve the FIU’s capacity to produce comprehensive reports.
  3. Private Sector Awareness and Education: Implement targeted training and education programs to enhance private sector awareness and understanding of ML/TF risks.
  4. Strengthen Law Enforcement Capacity: Establish dedicated ML investigation teams and parallel financial investigations to improve law enforcement capacity.
  5. Improve Confiscation Rates: Enhance the recovery of property subject to a confiscation order by improving the effectiveness of confiscation procedures.

By addressing these challenges and implementing the APG’s recommendations, Vietnam can further strengthen its AML/CFT regime and better protect its financial system from money laundering and terrorist financing threats.