Regulatory Update – Vietnamese Regulatory Authority Provides Comprehensive Guidelines for Implementation of Anti-Money Laundering Law

The Vietnamese regulatory authority has just published legal frameworks applicable to international firms focused on AML Compliance. The key pillars for the program include the following:

Criteria for Assessing Money Laundering Risks:

• Consider the business sector and the location (country or territory) of the transaction.
• Evaluate the type of customer and the products or services being offered.
• Assess the manner in which services are provided.
• For example, a cryptocurrency transaction with limited information poses higher risk compared to a credit card transaction.

Score-Based Methodology for Risk Evaluation:

• Implement a scoring system from 1 to 5 to gauge the money laundering risk associated with transactions.
• Use the scoring system for both client AML assessments and internal protocols.
• Lower scores indicate reduced likelihood of money laundering risk.
• Design your own scoring criteria based on your organization’s scale and context.

AML Risk Management Procedures:

Develop AML procedures tailored to your firm’s operational scale and scope. Include the following components in the firms procedures:

• Clearly define objectives and scope of the procedures. Identify and evaluate the firm’s AML risks.
• Assign customer risk ratings based on established criteria. Outline how customers with varying risk ratings will be handled to ensure AML compliance.
• Establish procedures for identifying money laundering risks in new products before their launch.
• Define actions for responding to suspicious electronic fund transfers containing inaccurate information, including suspension or cancellation of the transaction.

Due Diligence for Different Risk Levels:

• Low-Risk Customers: Simplified due diligence may be applicable. Certain information collection and supervision requirements might be reduced.
• High-Risk Customers: Enhanced due diligence is necessary.
• Management approval is needed for the transaction.
• Additional personal and organizational information must be collected.
• Increased monitoring of transactions is required, and customer identification information should be updated frequently.

Other AML Compliance Requirements:

• Conduct AML training for leaders and employees annually.
• Regularly update internal regulations in accordance with AML laws and policies.
• Send updated AML regulations to relevant authorities within 30 days.
• Provide internal audit reports on AML to authorities within 60 days of the financial year’s end.
• Register AML compliance officers’ details with relevant authorities and notify them of any changes within 15 days.

Reporting on Electronic Funds Transfers:

Reporting Thresholds:

• All parties within Vietnam: Transfer value of 500,000,000 VND (approx. US$21,000).
• At least one party outside Vietnam: Transfer value of US$1,000 or more.
• Required Information: Financial institution details (business name, head office address, codes).
• Individual transfer: Full name, date of birth, identification details, nationality.
• Organization transfer: Full business name, address, identification numbers.
• Transaction specifics: Amount, currency, purpose, date, and more if requested by AML authority.

Effective Dates:

Most provisions in the Circular are effective from July 28, 2023. Specific regulations related to risk management, reporting large transactions, electronic funds transfers, and suspicious transactions come into force from December 1, 2023.

By Siddharth Sabu