SBV Issues Guidance on Anti-Money Laundering Law
The State Bank of Vietnam (SBV) has issued Circular 09/2023/TT-NHNN guiding the implementation of the Anti-Money Laundering Law. Here’s what foreign firms may need to know.
What is Circular 09/2023/TT-NHNN?
Circular 09/2023/TT-NHNN was issued by the SBV to guide the implementation of the Law on Anti-Money Laundering (AML) on July 28 of this year. It outlines a number of criteria for assessing money laundering risks, how suspicious transactions should be managed, how to classify clients in terms of the money laundering risk they present, and how these transactions should be reported.
Criteria for assessing money laundering risks in Vietnam
There are several key criteria that firms should use, according to the Circular, to assess the money laundering risks in any given transaction. These include the business sector and the country or territory in which the transaction is taking place.
They should also consider the type of customer as well as the products or services they are providing and how those services are being provided.
For example, a cryptocurrency transaction whereby the information provided is limited would likely be higher risk than a credit card transaction.
The Circular also outlines assessment criteria for a firm’s internal policies and regulations with respect to AML and compliance with relevant legislation. Alongside compliance, it says the level of understanding and compliance with respect to professional rules and standards among employees working in AML risk-sectors should also be assessed.
Score-based methodology for evaluating money-laundering risks
To evaluate the money-laundering risk associated with a given transaction, the Circular advocates for a scoring system ranging from one to five. A lower score indicates a reduced likelihood of money laundering risk in relation to client AML assessments. Similarly, a parallel one-to-five system is proposed for evaluating internal protocols and regulations, with a score of one denoting stronger internal policies and regulations.
The Circular, however, does not specify specific weightage assigned to each criterion but rather directs firms to develop their own system as relevant to their scale and organization.
Developing AML procedures: Onus on firms
According to the Circular, AML risk management procedures must be a step-based process appropriate to the firm’s operational scale and scope. The outlined criteria that a firm’s AML risk management procedures should include are:
- Objectives and scope of the procedures;
- Identification and evaluation of the firm’s AML risks;
- Customer risk ratings according to the criteria outlined above;
- How a customer should be handled with respect to their risk rating to ensure AML compliance, if necessary;
- Procedures for identifying the money laundering risks of a new product before it is made available; and
- A means of responding to suspicious electronic fund transfers that contain inaccurate or inappropriate required information in terms of suspending or cancelling the transaction.
AML assessment of customers
In certain circumstances, firms may be able to complete a simplified due diligence process for low-risk customers. This may include:
- Not collecting the nature of a business relationship if the purpose and nature of the business relationship has been identified via the transaction or another established business relationship;
- Reducing the frequency at which a customer’s identification information is updated; or
- Reducing the level of supervision that a customer’s transactions receives.
Whereas a simplified due diligence process may be used for low-risk customers, high-risk customers should be subjected to enhanced due diligence. In practice, this means:
- The transaction should be approved by a management level higher than the management level that initiates enhanced due diligence measures.
- Additional personal information should be collected including:
- Average monthly income in the six months prior to the evaluation date;
- The contact information of the customer’s main employer (if any); and
- Details of the origins of the money or assets in the transaction.
- Additional information with respect to an organization’s customers should be collected, including:
- The main key industry in which the organization operates;
- Its core revenue-earning services;
- The firm’s total revenue for the two years prior to the evaluation date; and
- Information relating to the origin of money or assets in customers’ transactions.
- Implement enhanced monitoring of the customer’s transactions, business relationships, and by applying control measures and selecting random transactions to inspect.
- Increase the frequency at which a customer’s identification information is updated.
Additional AML compliance requirements
Aside from the above, the Circular stipulates several other requirements that firms must adhere to. These include.
- Providing AML training for leaders and employees on an annual basis;
- Updating regulations in line with AML laws and policies and reviewing internal processes and procedures and adjusting where necessary, annually;
- Sending internal regulations on AML to the relevant authorities within 30 days of the date on which the regulations are updated, edited, or replaced;
- Sending internal audit reports on AML to the relevant authorities within 60 days of the end of the firm’s financial year; and
- Registering the full name, work address, phone number, and email address of the firm’s AML compliance officers to the relevant authorities and if this information changes, notifying the relevant authority within 15 days.
Reporting on electronic funds transfers
When do firms in Vietnam need to report an electronic funds transfer?
A firm in Vietnam needs to report an electronic funds transfer when:
- All parties to a transaction are located in Vietnam and the transfer value is 500,000,000 VND (US$21,000); or
- Where at least one party in the transaction is outside of Vietnam and the transfer value is US$1,000 or more.
What is included in the reports on electronic funds transfers?
Reports on electronic funds transfers should include:
- The financial institutions’ business names; the addresses of their head offices (or their bank identification code for domestic transfers or their swift code for international transfers).
- In the case of a transfer involving an individual, the information collected should include their: full name, date of birth; ID Card, Citizen ID Card, Personal Identification, or passport number; visa number (if any); and permanent resident registration or current residence (if any); nationality.
- In the case of a transfer between organizations, the information collected should include their full business name and abbreviations (if any); head office addresses; establishment licenses or enterprise identification, or tax identification numbers.
- Transaction information including account numbers (if any): amount; type of currency; amount converted into VND; purpose of the transaction; transaction code; and the date of the transaction.
- Any other information requested by the AML authority.
When is such reporting not required?
There are several circumstances in which reporting an electronic transfer is not required. This includes:
- Transactions made by debit card, credit card, or prepaid card;
- Transactions in which both parties are financial institutions.
When do Vietnam’s AML reporting obligations come into effect?
Most clauses outlined in this Circular come into force from July 28, 2023. However,
regulations on money laundering risk management, regulations on reporting of large transactions, regulations on reporting of electronic funds transfer, and suspicious transaction report forms come into force from December 1, 2023.
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