The Government of Vietnam issued Decree No.19/2023/ND-CP dated 28 April 2023 (“Decree 19”) to provide guidance for the Law on Anti-Money Laundering.
Decree 19, effective as of its issuance date, includes the following:
Details on Know Your Client (“KYC”)
Decree 19 sets out the specific situations in which financial institutions must carry out KYC procedures. These include cases where clients open digital wallets for the first time, clients who do not have any accounts, or clients who have accounts but have not performed any transactions in the previous six consecutive months, and then deposit, withdraw, or transfer funds with a total value of VND 400,000,000 (approximately USD 17,000) or it’s equivalent in foreign currency within a day. In parallel with the broadening of the KYC required circumstances, Decree 19 has eliminated the previous obligation for financial institutions to conduct KYC in situations where there is a lack of information about the originator’s name, address, or account number when carrying out electronic money transfers.
Criteria for the Determination of Beneficial Owners
A beneficial owner refers to an individual who possesses actual ownership of one or multiple assets and has the authority to influence a client’s decisions regarding transactions associated with such assets; additionally, a beneficial owner is an individual who holds power to govern a legal entity or a legal agreement. Under the old regulations, criteria for identifying beneficial owners were only provided for individual clients. However, Decree 19 outlines criteria for determining beneficial owners for two groups of clients: individual clients and organizational clients. Furthermore, to identify the beneficial owner of a legal agreement, the reporting entity must collect identifying information regarding the trustee, beneficiary, related parties (if applicable), and any individual who holds ultimate control over the trust. The reporting entity identifies the beneficial owner of a life insurance policy as the individual who actually receives the benefits of the policy.
Details on Unusually High-Value and Complicated Transactions
Decree 19 provides more comprehensive regulations than the former decree regarding unusually high-value transactions and complicated transactions. According to Decree 19, an unusually high-value transaction is a transaction that is noticeably disproportionate to the client’s regular transaction amounts or income in comparison to their past transactions with the reporting entity. A complicated transaction, as defined by Decree 19, is a transaction that is not in line with the client’s size, type, or business operations or is inconsistent with the frequency, method, and scale of similar transactions in the same industry or field.
The Basis for Suspecting or Identifying Transaction-Related Parties that are Blacklisted, and the Competent State Agencies Responsible for Receiving Reports of Delayed Transactions
Transaction delay is one of the temporary measures implemented by reporting entities to prevent money laundering. Decree 19 lists out specific grounds for suspecting or identifying transaction-related parties on a “Blacklist”, in which reporting entities may delay transactions, as follows:
- When individuals and organizations involved in the transaction have information that matches exactly with the information of individuals and organizations on the Blacklist;
- When individuals or organizations involved in the transaction have information that partially matches the information of an individual or organization on the Blacklist, and based on the collected information, there is reason to believe that such individuals or organizations are involved in terrorism or terrorist financing, proliferation or funding of weapons of mass destruction.
Reporting entities must promptly report to competent State agencies when implementing transaction delay measures as mentioned under Article 12.2 of Decree 19.
In light of the new Decree 19, which is directly related to entities relevant to anti-money laundering, businesses, particularly financial and non-financial institutions which are considered reporting entities, must update themselves on the latest regulations to fulfil their obligations when conducting business activities and transactions.