Financial Crime World

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Vietnam’s Efforts to Combat Money Laundering and Terrorist Financing Fall Short

Background

Despite having a well-established policy-level inter-agency cooperation and coordination framework, Vietnam’s efforts to combat money laundering (ML) and terrorist financing (TF) have been deemed inadequate by international standards.

Identified Shortcomings

According to the latest assessment, enhanced measures for identified high-risk areas such as:

  • Banking
  • Real estate
  • Foreign exchange
  • Remittance sectors

have not been implemented. Additionally, Vietnam does not apply simplified measures for lower-risk sectors, a move that has raised concerns among experts.

Limited Awareness of ML/TF Risks

The report highlights the limited awareness of ML/TF risks among:

  • Smaller financial institutions (FIs)
  • Designated non-financial businesses and professions (DNFBPs)

Larger FIs have some understanding of ML/TF risks in Vietnam, but significant improvements are required for smaller entities.

Limited Use of Financial Intelligence

Vietnamese law enforcement agencies (LEAs) make limited use of financial intelligence to investigate predicate offenses and trace criminal proceeds. The LEAs do not develop or use financial intelligence to open ML investigations or parallel financial investigations when predicate investigations indicate a financial link.

Challenges Faced by the Financial Intelligence Unit (FIU)

The FIU, also known as the State Bank of Vietnam’s Anti-Money Laundering Department (AMLD), produces limited analysis, with few disclosures contributing to ML or predicate offense investigations. The AMLD faces technological challenges, including:

  • Manual receipt of reports
  • Lack of an integrated IT tool to facilitate analysis

Suspicious Transaction Reports (STRs)

The report also criticizes the low quality and limited number of STRs received by the AMLD from a narrow range of reporting entities. STRs do not provide a good basis for the AMLD’s analysis, and disseminated reports are primarily related to predicate offenses.

Law Enforcement Agencies’ Capacity

Vietnam’s LEAs have a broad range of powers and responsibilities to investigate and prosecute ML offenses, but the extent of ML investigations, prosecutions, and convictions is not commensurate with Vietnam’s risk profile. There were only three ML prosecutions in the 10 years leading up to the onsite visit in November 2019.

Conclusion

The report concludes that Vietnam’s law enforcement agencies lack the capacity to conduct effective ML investigations, and there appears to be a general lack of awareness of ML offenses or the value of “following the money.” The country’s confiscation system has also produced limited results, with a low recovery rate of property subject to confiscation orders.

Expert Recommendations

Experts say that Vietnam needs to take immediate action to address these deficiencies and strengthen its AML/CFT regime to meet international standards.