Anti-Money Laundering in Vietnam

March 2nd, 2023
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CENTRAL AUTHORITY FOR REPORTING

The Law to Prevent and to Combat Money Laundering No. 07/2012/QH13 (“Law on AML”) came into effect on January 1, 2013, and it has gone through several changes since then. Certain entities are responsible to report, prevent, and fight against money laundering:

  • The State Bank of Vietnam (“SBVN”) is primarily responsible for enforcement. The Anti-Money Laundering Department (“AMLD”) is under the Banking Inspectorate and the Supervision Department. The AMLD assists the Chief Inspector of the SBVN to implement anti-money laundering (“AML”) regulations and Vietnam’s international AML commitments. The AMLD’s duties and powers are set out in Decision No. 1367/QD-NHNN of the SBVN dated June 26, 2019 (as amended under Decision No. 2393/QD-NHNN dated November 14, 2019);
  • The Ministry of Public Security (“MPS”) is responsible for the discovery and investigation of money laundering crimes;
  • The Ministry of Finance is responsible to implement AML measures in insurance, business, securities, and prize-winning games and casinos;
  • The Ministry of Construction is responsible to implement AML measures in the real estate business; and
  • The Ministry of Justice is responsible to implement AML measures which apply to lawyers, legal practice groups, notaries and notary public offices.

On April 30, 2019, the Prime Minister issued Decision No. 474/QD-TTg. It is an action plan to resolve risks of money laundering and terrorist financing. (“Decision 474”). It includes five sections: (i) legal framework, (ii) measures involving the rights and responsibilities of the authorities, (iii) domestic cooperation, (iv) financial products, and (v) international cooperation.  Under Decision 474, the SBVN is assigned to review and propose adjustments to money laundering legislation. The immediate purpose is to minimize risks of money laundering by credit institutions and financial organizations. The Ministry of Public Security is in charge of organizing training courses to improve criminal investigation. The Ministry of Finance, the Ministry of Construction, the Ministry of Industry and Trade, the Ministry of Justice are all responsible to assess risks involving money laundering and terrorist financing.

OTHER ANTI-MONEY LAUNDERING REGULATORS

On April 13, 2009, the Prime Minister issued Decision 470/QD-TTg to establish the National Steering Committee on Anti-Money Laundering (“NSC”). The NSC is headed by the Deputy Prime Minister. Members of NSC are leaders of 15 ministries and the SBVN is the NSC’s standing agency. The NSC promulgated four AML/CFT (Combating the Financing of Terrorism) national action plans to deal with deficiencies in Vietnam’s AML/CFT regime. It currently operates under rules later provided in Decision 121/QD-BCDPCRT dated October 17, 2012.

The People’s Procuracy and the People’s Court coordinate with other agencies in the investigation, prosecution, and resolution of money laundering crimes.
The People’s Committees are responsible to promulgate information and to educate the public on the prevention of money laundering at the People’s Committees locations; coordinate with authorities to implement the guidelines, policies, plans for the prevention of money laundering; and detect and handle violations of the Law on AML.

ARE LAWYERS COVERED BY MONEY LAUNDERING LEGISLATION?

Yes. Lawyers, law offices and law firms (“law firms”), are responsible to report to the AMLD any transaction of a kind specified in Articles 21, 22 and 30 of the Law on AML.

If a person (including a lawyer) fails to comply with the reporting requirements, she may be subject to a monetary fine and sanctions pursuant to Decree No. 88/2019/ND-CP of the Government dated November 14, 2019 on sanctions against administrative violations of regulations on monetary and banking activities (“Decree 88”) (as amended by Decree No. 143/2021/ND-CP dated December 31, 2021 (“Decree 143”).  If, upon investigation, the AMLD or other regulators conclude that a failure to report is a concealment of information, a lawyer may be criminally examined and charged under the Penal Code No. 100/2015/QH13 (as amended by Law No. 12/2017/QH14 in 2017) (“Penal Code”).

LIST THE LAWS REGARDING ANTI-MONEY LAUNDERING, INDICATING WHICH LAWS ARE APPLICABLE TO LAWYERS.

There are no AML regulations which apply specifically to lawyers. However, lawyers are referenced by the AML provisions in the following legislation:

The Law on AML and Decree 116 have special provisions that apply to lawyers.

ARE VISITING LAWYERS SUBJECT TO LOCAL LAWS REGARDING ANTI-MONEY LAUNDERING, AND, IF SO, TO WHAT EXTENT?

Yes, they are when they provide legal services to clients in Vietnam.  A visiting lawyer would probably be seen to be covered by general AML provisions such as the Law on AML and Decree 116.  The AML rule which specifies a lawyer’s duty is the rule which obligates a lawyer to report to the AMLD, any transaction of a kind specified in Articles 21, 22 and 30 of the Law on AML. For example, during a due diligence investigation involving a merger and acquisition, a lawyer, whether or not visiting, must report her reasonable basis to suspect that assets in the transaction have originated from a crime or are money laundered.

LIST ANY MONEY LAUNDERING GUIDANCE FOR LAWYERS (FOR EXAMPLE, LAW SOCIETY OR BAR ASSOCIATION GUIDELINES) CURRENTLY IN PLACE.

None, apart from the language of the Law on AML and Decree 116.

IS THE LAW SOCIETY/BAR ASSOCIATION INVOLVED IN SUPERVISING OR ENFORCING COMPLIANCE WITH ANTI-MONEY LAUNDERING REGULATIONS?

Neither the Vietnam Bar Federation nor local bar associations areLaw Society/ Bar Association under any legal obligation to supervise or enforce compliance with AML regulations, nor, to our knowledge do they do so voluntarily.

DESCRIBE CLIENT DUE DILIGENCE REQUIREMENTS, INCLUDING WHEN THEY MUST BE UNDERTAKEN BY LAWYERS.

Article 20 of the Law on AML and Article 13 of Decree 116 require law firms to produce internal rules on AML with the following particulars:

  • policy on accepting clients;
  • procedures for client identification, verification and update of client information;
  • clients’ transactions which must be reported;
  • processes to check, detect, handle and report suspicious transactions; methods to contact clients who carry out suspicious transactions;
  • storage and confidentiality of information;
  • implementation of temporary measures, principles to deal with a situation in which a client’s transaction must be delayed, eg. the related parties to the transaction are blacklisted by the MPS;
  • regimes on reporting and provision of information to the SBVN and competent state authorities;
  • staff training to prevent and combat money laundering;
  • internal control and compliance audit of policies, provisions, procedures on AML activities; responsibilities on implementation of AML rules by each individual and department.

Subject to internal rules on AML, law firms need to implement measures involving client identification when assisting or representing a client in a transaction involving:

  • transfer of land use rights, house ownership; or
  • merger and acquisition of a business entity.

DOES VIETNAM FOLLOW A RISK-BASED APPROACH TO CLIENT DUE DILIGENCE BY LAWYERS?

The Law on AML generally provides that client classification is based on risk exposure by: type of client, goods/services involved, and the place of residence/head-office.

In light of the Law on AML, a law firm should take into account certain high-risk clients and transactions and incorporate such clients and transactions into its internal rules on AML:

The ability to do a proper due diligence investigation of a suspected AML transaction to understand the risk is limited. Access to private investigative services that might reveal issues is generally legally restricted.

ARE THERE ENHANCED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, POLITICALLY EXPOSED PERSONS?

There are no such enhanced due diligence measures which lawyers must follow for certain types of clients or parties. A law firm may, of course, create its own enhanced AML due diligence measures for particular types of clients. To repeat, the ability to investigate privately is limited.

ARE THERE SIMPLIFIED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, LISTED COMPANIES?

No. Again, a law firm may create its own simplified AML due diligence measures for particular types of clients.

ARE LAWYERS PERMITTED TO RELY ON THIRD PARTY DUE DILIGENCE? IF YES, PLEASE DESCRIBE.

Vietnamese law does not address the matter. However, as we mention above, there are very few public sources of such information, private sources are restricted, and use of private investigators is equally limited.

WHEN IS A LAWYER UNDER AN OBLIGATION TO REPORT SUSPICIOUS TRANSACTIONS?

Article 21 of the Law on AML and Decision No. 20/2013/QD-TTg of the Prime Minister dated April 18, 2013 require a lawyer, or law firm to report to the AMLD when providing legal services to a client and the transaction involves a value of at least VND 300 million (single sum or accrued) in cash (approximately US$ 13,000) (“large-sum transaction”) which is conducted within a day.  A report on a large-sum transaction must be sent to the AMLD pursuant to SBVN’s Letter No. 818/TTGSNH11 dated March 26, 2015 (“Letter 818”):

  • in writing on standard forms No.01 and No. 02 of Letter 818, within two working days from the date on which the transaction is established; or
  • in the form of an electronic file to the AMLD’s email (kythuat_pcrt@sbv.gov.vn), by the end of every working day, but no later than 4 p.m of the working day following the date on which the transaction arises. If the following day is a public holiday, Tet holiday (Vietnamese New Year) or weekend, the report must be sent on the working day immediately following such public holiday, Tet holiday or weekend.

A reporting organization, including a law firm, must register in writing with the AMLD information about the person in charge of reporting through electronic files, including his full name, employment position, telephone number, address of her/his workplace, and email. Any changes to the responsible person’s information or her replacement must be notified in writing to the AMLD. In the case of a late submission of a report or a failure to report for at least two days, the reporting organization must give an explanation to the AMLD. If any mistake is identified in the reports, it must promptly send an official letter or an email to explain the mistake to the AMLD.

This appears to be an enormous obligation for lawyers and at the very least raises issues of confidentiality.

In addition, a lawyer or law firm must report a suspicious transaction to the AMLD when:

  • she assists or represents a client to conduct a land use rights transaction, a house ownership transaction, or merger and acquisition of a business entity, or entrustment or delegation of authority to manage and use money and assets; and
  • there is suspicion or a reasonable basis to suspect that assets in such a client’s transaction originate from a crime or that they relate to money laundering (which can be either the assets to be acquired or the assets used to pay for an acquisition).

Below are basic signs of suspicion in accordance with Article 22.2 of the Law on AML:

  • A client provides inaccurate, incomplete, and/or inconsistent identification information;
  • A client tries to persuade the lawyer, or law firm not to report a suspicious transaction to competent state authorities;
  • A client is unidentifiable on the basis of information provided by the client, or the transaction involves an unidentifiable party;
  • After an account has been opened or a transaction has been conducted, the personal or office telephone number provided by a client is not contactable or does not exist;
  • A transaction is conducted according to an order of, or as authorized by, an individual/organization named on the warning list;
  • Based on the collected client identification information or the economic and legal grounds of a transaction, there may be a link between the parties involved in the transaction and criminal activity, or a relationship between such parties and an individual/organization named on the warning list;
  • An organization/individual has participated in a transaction involving a large amount of money which does not correspond to either the income or business activities of the organization/individual; and
  • A client’s transaction is conducted through a reporting entity not in compliance with procedures stipulated by law.

A report of a suspicious transaction must be made within 48 hours from the time of the transaction.  If a transaction that raises suspicion has been completed before the reporting period expires, a report must immediately be sent during the day of the suspicious signal. The date of detection of a suspicious signal means the date on which she detected or should have detected suspicious signals based on the circumstances. The AMLD has regularly updated and circulated a software report on suspicious transactions to financial institutions (the software is known as TRAML CLIENT).  Meanwhile, lawyers and law firms must report requirements in writing and by email to the AMLD as described above.

A lawyer, or law firm is also obliged to report to the MPS and AMLD the discovery of a transaction in which (i) the related parties have been blacklisted by the MPS and that blacklist is officially available on the MPS’s website at: http://bocongan.gov.vn/khung-bo/to-chuc-khung-bo.html, or (ii) there is evidence that the related parties have committed or are committing acts related to money laundering for the purpose of financing terrorism (“terrorism financing transaction”). A report on a terrorism financing transaction must be made in writing or in an electronic file. It is similar to a large-sum transaction report. The time limit to send the report is calculated from the working day on which one detects or should have detected suspicious signals.

In case any signal of criminal activity is detected in a transaction, the transaction must be immediately reported to the SBVN, and the provincial police department or the provincial People’s Procuracy in which the transaction is discovered.

DOES ATTORNEY/CLIENT PRIVILEGE AND/OR DUTIES OF CONFIDENTIALITY PROVIDE A DEFENCE OR PARTIAL/TOTAL EXCEPTION TO THE REQUIREMENT TO REPORT SUSPICIOUS TRANSACTIONS?

Because it extends to both legal and non-legal communications, Vietnam’s attorney/client privilege is in theory larger than that of many other countries. However, in practice the Court’s power to compel disclosure is immense, and often renders the attorney/client privilege meaningless. For example, the Penal Code sets out criminal sanctions for persons who are aware of certain types of criminality but fail to denounce it. This rule applies                 to lawyers (with some exceptions) as well as to the general population. For a money laundering crime, for example, under the Penal Code, a person may be imprisoned from one to 15 years if:

  • she conceals information on the origin, nature, location, or process of movement or ownership of money or property which she clearly knows has been gained from (i) the commission of a crime, or (ii) the movement, transfer or conversion of money or property gained from the commission of a crime; or
  • she obstructs the verification of such information.

DOES LOCAL LAW PROVIDE ANY CRIMINAL AND/OR CIVIL INDEMNITY TO A LAWYER WHO HAS REPORTED A SUSPICIOUS TRANSACTION?

Yes. In light of Article 28.2 of the Law on AML, a lawyer who reports or provides information on a suspicious transaction is deemed not to have breached the provisions of law on confidentiality of client information. This is to protect lawyers from the violation of her duty to keep information confidential as stipulated by the Law on Lawyers.

Under the Law on Lawyers, a lawyer must not disclose information about cases, matters, or her clients which she learns during the course of practice, except where a client provides written consent or where the law stipulates otherwise. The Law on AML provides a defence for lawyers who are said to breach this duty of confidentiality when they provide information to the authorities of a suspicious transaction or a transaction valued at VND 300 million (approximately US$13,000) or greater.

ONCE A SUSPICIOUS TRANSACTION REPORT HAS BEEN FILED, IS A LAWYER ALLOWED TO PROCEED WITH THE LEGAL ADVICE/TRANSACTION, AND, IF SO, MUST CONSENT FROM AUTHORITIES BE OBTAINED FIRST?

A lawyer must suspend a transaction in which:

  • the related parties (eg. the client) are designated in the blacklist of the MPS or the United Nations Security Council consolidated list;
  • the client or the client’s transaction is suspected to be related to terrorism financing; or
  • at least one of the following reasons to believe that such a transaction is related to a crime exists:
  • a transaction is managed by a convicted criminal, and assets in the transaction originate from (i) those owned/managed by the convicted criminal, or (ii) those of an organization which the convicted criminal owns or controls during or after she has committed the crime; or
  • there is evidence that the related parties have committed or are committing acts that relate to a money laundering crime for the purpose of terrorism financing.

A lawyer must immediately report either of the above situations in writing to the SBVN (AMLD) and to the Counter-terrorism task force of the MPS. Postponement of the transaction may not exceed three working days from the date of application.  If the lawyer does not receive a written response from the relevant authorities following such three working days, the lawyer can continue to work on the transaction.

If, upon investigation, the AMLD and/or the relevant authorities determine the transaction to be suspicious, or relates to a crime, it can request that the lawyer discontinue providing consultancy on the transaction.

IS THERE A TIPPING-OFF PROHIBITION? IF YES, PLEASE DESCRIBE.

A lawyer is not allowed to inform a person involved in a suspicious transaction that she has reported or will report the transaction to the SBVN.

DESCRIBE ANY RESTRICTIONS ON ACCEPTING A NEW CLIENT.

There are no restrictions other than the need to perform a due diligence investigation of suspicious circumstances, as specified in Article 22.2 of the Law on AML.

ARE THERE ONGOING MONITORING REQUIREMENTS FOR EXISTING CLIENTS? IF YES, PLEASE DESCRIBE.

Yes, there are. A lawyer, or law firm must (i) regularly update client identification information during the period in which a relationship with a client exists, and (ii) ensure that information on current transactions that are instructed by the client are consistent with the information that was known by the lawyer/law firm about the client and the client’s business activities, risks, and origin of assets.

If a lawyer assists a client to draft an authorization agreement/entrustment arrangement (ie. an agreement to authorize an organization/individual to (i) perform, on the client’s behalf, a transaction that relates to assets owned/managed by the client, or (ii) manage and use money/assets of the client), the lawyer/law firm must store, maintain, and update information on such an agreement and its beneficiaries.

DESCRIBE ANY OTHER WAYS IN WHICH LAWYERS ARE AFFECTED BY ANTI-MONEY LAUNDERING LEGISLATION.

According to the Law on AML, a person who violates the AML, including a lawyer, and depending on the nature and seriousness of the violation, may be disciplined, or administratively sanctioned, or criminally examined. If she violates the Law on AML and causes damage, she must compensate the injured party.

As we mention above, Decree 88 (as amended by Decree 143) covers money laundering offences, such as:

  • Failure to take steps regarding client identification, verification and update of client information;
  • Failure to establish a risk management process with respect to transactions with customers by using new technologies;
  • Failure to classify clients based on risk exposure;
  • Failure to issue internal rules on anti-money laundering, anti-terrorism financing, and the combating of financing and proliferation of weapons of mass destruction;
  • Failure to establish a risk management system to identify politically exposed foreigners;
  • Failure to report suspicious transactions, or a high-value transaction, or electronic transfer transactions, or money laundering acts related to terrorism financing, or actual terrorism financing, and proliferation of weapons of mass destruction;
  • Failure to postpone a client transaction as specified in the Law on AML, or failure to freeze accounts, or to seal/seize assets as required by the appropriate state authorities;
  • Performance of prohibited acts as specified in Article 7 of the Law on AML;
  • Violation of information provision; and
  • Violation of risk assessment.

Lawyers may also be examined under Article 324 of the Penal Code, like other offenders, for involvement in money laundering activities. A prison term of one to 15 years may be imposed. In addition, an offender may be subject to the following penalties:

  • Confiscation of all or part of her property;
  • A fine from VND20,000,000 to VND100,000,000; or
  • Prohibition from holding certain positions or engaging in certain professional practice areas or jobs for one to five years.

In this connection, a law firm that commits any of the offences specified in Article 324 of the Penal Code may be liable to a fine from VND1,000,000,000 to VND20,000,000,000, or its operation may be suspended for one to three years, or it may be permanently closed.

HAVE LAWYERS IN YOUR JURISDICTION BEEN IMPLICATED IN MONEY LAUNDERING, INCLUDING ANY TYPE OF COMPLAINT, ARREST OR PROSECUTION?

According to AMLD data from January 1, 2010 to September 30, 2016, no suspicious transaction has been reported by lawyers. Neither has there been any high cash value transaction related to legal services identified by the Ministry of Justice through examinations, supervision on the operation and performance of lawyers.[1]  Consequently, there are no reports of a lawyer in Vietnam being involved in any cases/lawsuits/prosecutions in connection with money laundering.

HAS THE FINANCIAL ACTION TASK FORCE (FATF) CONDUCTED A MUTUAL EVALUATION OF VIETNAM, AND, IF SO, WHAT WERE THE FINDINGS CONCERNING LAWYERS’ COMPLIANCE WITH THE FATF 40+9 RECOMMENDATIONS?

Vietnam is not a member of the FATF. However, Vietnam became the 33rd member of the Asia Pacific Group on Money Laundering (APG) in May 2007[2]. The APG conducted the second round of a mutual evaluation of Vietnam in November 2008.  Mutual evaluation reports were released on July 8, 2009 and again in January 2022.

From 2007 to the present, the AMLD acts as a focal point to help fulfil Vietnam’s membership obligations in APG. Particularly, the AMLD has prepared regular and irregular reports; entered into international agreements on the prevention and fight against money laundering; instructed relevant agencies, within the SBVN’s authority, to implement the international agreements and treaties on anti-money laundering to which Vietnam is a signatory, etc. In 2012, Vietnam successfully hosted the Conference on Anti-money Laundering and Combating Terrorism Financing by APG. In January 2014, Vietnam also held meetings as part of the Regional Review Team of the International Cooperation Review Group for review of some countries.  From October 2010 to February 2014, Vietnam was reviewed by the International Cooperation Review Group for compliance with the AML/CFT standards.  According to the FATF, Vietnam has established the legal and regulatory framework to meet its commitments in its action plan to overcome strategic deficiencies.  Vietnam was, therefore, removed from FATF’s monitoring process. Vietnam continues to respond to the full range of AML/CFT issues which were raised in the mutual evaluation reports.

Vietnam has implemented the national action plan to address and mitigate AML/CFT risks identified in the national risk assessment report. The SBVN has worked with ministries and agencies to consolidate reports to the APG in its multilateral assessment of Vietnam’s anti-money laundering practices and progress. According to the mutual evaluation report issued by APG in January 2022, Vietnam has about 4,100 law practising organizations and around 11,800 lawyers. No money laundering cases involving lawyers have been detected. The threat of money laundering in the legal profession is rated as low.  Lawyers are involved in real estate transactions and setting up companies, which are considered to be high-risk activities; however, lawyers appear to have a limited understanding of money laundering and terrorism financing risks. Neither have AML/CFT training programs exclusively for lawyers been recorded, at least from 2014 to date.

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An earlier version of this article appeared on International Bar Association Anti-Money Laundering.  Last updated in May 2022 and it also appeared on Mondaq in June 2022.

[1] Report on National Risk Assessment on Money Laundering and Terrorism for the period of 2012-2017

[2] The link to APG Members: http://www.apgml.org/members-and-observers/members/default.aspx

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