Response to FATF blacklisting
Following years of pressure, the Socialist Republic of Vietnam has implemented anti-money laundering legislation which took effect on Friday. The move was in response to the blacklisting of Vietnam in June by the Financial Action Task Force (“FATF“) for lax anti-money laundering (“AML“) and counter terrorist financing (“CTF“) controls. 14 countries were blacklisted, including Ethiopia and Syria.
According to Vietnamese news services, the new AML decree will require that businesses report transactions over a certain threshold and suspicious transactions, to Vietnam’s financial intelligence unit (“FIU“). In addition:
- Jewellery sellers will have to ascertain the identity of, and report, transactions of US$14,000 or more.;
- Securities brokers, dealers and real estate vendors will have to report all transactions to the FIU regardless of the amount of the transaction;
- Banks will have to ascertain the identity of businesses and persons undertaking transactions equal to or greater than VND300 million per day if the person or entity has not undertaken transactions in six months;
- Casinos will have to ascertain the identity of persons gambling when the bets or the wins are equal to or exceed VND60 million per day;
- Charities will have to report the names and addresses of organizations and persons who make donations and will have to report how the funds were used; and
- All obliged or reporting, entities will have to undertake AML risk assessments in respect of their business and implement compliance plans to mitigate those risks.
No AML review undertaken by Vietnam
The State Bank of Vietnam has said that Vietnam has never undertaken an assessment of the country’s exposure to money laundering or terrorist financing and last year, the Bank detected only 165 suspicious transactions in the whole country. Although like China, Vietnam is a country where the a large percentage of citizens opt out of the modern banking system (by literally keeping cash under their mattresses), with a population of 88.8 million, the number of suspicious transactions reported is equivalent to the number typically reported daily by some banks in other countries. By any measure, it is woefully inadequate.
In June, the FATF blacklisted Vietnam because it posed a threat to the financial system, particularly in respect of its lack of legal procedures for dealing with terrorist assets and failure to impose criminal liability for financial crimes on companies, firms and individuals.
The finding by the FATF with respect to Vietnam’s failure to implement legal measures to address terrorist funds and assets must also mean that there is no sanctions regime in place in Vietnam to detect and freeze the assets of listed and designated persons and entities.
Liberty Reserve connection to Vietnam
Also in June, the U.S. Department of Justice announced the indictment of a company called Liberty Reserve, believed to be the largest global money laundering operation, which allegedly involved virtual currency transactions made by a Vietnamese entity, the Thinh Vu Joint Stock Company, allegedly controlled by Vu Van Lang, a Vietnamese citizen. According to the indictment, funds were laundered primarily in Vietnam, Malaysia, Russia and Nigeria. The Social Order Crime Investigation Police Department of Vietnam has stated that the Joint Stock Company was licensed by the government of Vietnam to act as a sub-agent for Hai Phong branch of the Bank for Investment and Development of Vietnam to pay remittances from Western Union. The indictment says that Mr. Lang is also alleged to have incorporated a company in Hong Kong called Instant Exchange Limited, to process Liberty Reserve transactions.