Vietnam's deeper integration into regional and world's economy for the past few years has been a great opportunity for international money laundering crimes. However, money laundering activities only become clearly visible recently though bank accounts opening, securities trading, gambling, illegal transfer of foreign currencies out of the country, use of credit cards, etc. Combating money laundering becomes one of the top concerns not only for the State Bank of Vietnam but also other relevant authorities in Vietnam. According to a report of the State Bank of Vietnam, in 2012, suspicious transactions have a total value of VND51,000 billion, while in 2013 is VND79,000 billion and in 2014, the value goes up to VND119,000 billion. This shows an increasing and alarming number of transactions suspicious of money laundering. We note that the Law on Anti-money Laundering took effect on 01 January 2013. However, it seems that the anti-money laundering legal framework is still not sufficient, guiding implementation remains unclear, awareness of credit institutions of money laundering is low, ability to detect money laundering activities is weak, information technology in anti-money laundering activities is not sufficient, and especially punishment regime for violating acts of the AML is only formalistic. The Government, especially the State Bank of Vietnam is strongly recommended to tighten their regulations in this sector.

Key Directives / Legislative framework

Law on Prevention of and Anti Money Laundering No. 07/2012/QH13, issued by the National Assembly on 18 June 2012 ("AML");

Decree No. 116/2013/ND-CP on detailing the implementation of certain provisions of the AML ("Decree 116");

Circular No. 35/2013/TT-NHNN on guiding the implementation of certain regulations on anti- money laundering, issued by the State Bank of Vietnam on 31 December 2013 and amended by Circular No. 31/2014/TT-NHNN; and

Penal Code No. 15/1999/QH10 issued by the National Assembly on 21 December 1999, as amended by Law No. 37/2009/QH12.

Who are the regulators / monitoring authorities

Who are affected / reporting entities?

According to the AML, the following state authorities are responsible for reporting, preventing, and fighting against money laundering activities:

SBV is mainly responsible to the Government for state administering the implementation of AML regulations;

Ministry of Public Security is responsible for collecting, receiving and investigating information of money laundering related crimes;

Ministry of Finance is responsible for implementing AML measures in insurance business, securities sector, prize-winning games and casinos;

Ministry of Construction is responsible for implementing AML measures in real estate business sector;

Ministry of Justice is responsible for implementing AML measures applicable to lawyers, legal practice organizations, notaries and notary public offices;

The People's Procuracy and the People's Court coordinate with other agencies in the investigation, prosecution, and resolution of money laundering crimes;

People's Committees at all levels are responsible for conducting legal training on anti-money laundering in the province, co-ordinating with state authorities to implement policies, strategies, and plans to prevent and fight money laundering; and

The Anti-Money Laundering Steering Committee is responsible for assisting the Prime Minister in preparing strategy, plans, policies and programs in the process of preventing and fighting against money laundering.

Legal requirements for KYC

Customer Due diligence

According to the AML, in which cases application of measures to identify clients are required depend on the types of entities and which business activities they are conducting. In particular:

- For financial institutions:

ü The clients open accounts or set up transactions with the financial institutions for the first time;

ü The clients who make infrequent transactions of high value or carry out the transaction of electronic money transfer but lack the information about the name, address, account number of the originator;

ü There are doubts about transaction or the parties concerned in transactions are related to the money laundering;

ü There are doubts about the accuracy or completeness of the clients identification information previously collected.

- For relevant non-financial institutions or individuals:

ü Doing business in prize-winning games, casinos: clients implementing high value transactions (i.e.¸ over VND60 million per day);

ü Doing real estate management services, brokerage; real estate transaction floor: when providing these services to the buyer, purchaser and asset owner;

ü Trading in precious metals and stones: when clients performing the sale and purchase transaction of precious metals and stones with value of over VND300 million per day;

ü Providing notary and accounting services, the lawyer's legal service and lawyer practice organizations: when preparing the conditions for conducting the transactions to transfer the land use right, house ownership, management of money and securities or other assets of the clients; managing the clients' accounts at banks, securities companies; administrating and managing the operation of the clients' companies, and participating in the activities of purchase and sale of business organizations on behalf of clients;

ü Providing investment trust services: due diligence for the entrusting party;

ü Providing services of establishment, management and executive of enterprise; supplying registration office, address or place of business; supplying services of company representative : clients requesting such services;

ü Providing services of director and secretary provision of the enterprise to a third party: third party and director / secretary to such director;

ü Providing services of representative supply for shareholders: shareholders and representatives of such shareholder.

The abovementioned services providers/ entities must update the client identification information on a regular basis during the period of having relations with the clients.

In addition, clients must also be classified into different groups, product and services used, their place of residence or headquarter based on different risk exposure levels.

Reporting requirements / Obligations

Record keeping

Records of clients' transactions must be kept for at least 5 years from the date of the transaction. Records of customer identification, accounting documents and reports of high value transactions, suspicious transactions and transactions of electronic money transfer exceeding VND500 million or equivalent amount in foreign currency (for domestic transfer) or USD1,000 (for inbound or outbound transfer), must be kept for at least 5 years from the closing date of the transaction or the date of account closure or the reporting date.