Venture North Law Firm

It is not clear from the Anti Money Laundering Law 2012 and its implementing regulations if the term “licenced” refers to the finance organisations licensed by an authority of Vietnam or also includes foreign finance organisation licensed by a foreign authority.

Under the AML Law 2012, an entity will be subject to the requirement to conduct KYC or submit AML reports to the SBV if it is, among others, a finance organisation which is “licensed” to conduct one or more financial services or activities. It is not clear from the AML Law 2012 and its implementing regulations if the term “licenced” above refers to the finance organisations licensed by an authority of Vietnam or also includes foreign finance organisation licensed by a foreign authority. However, it should be reasonable to take the first interpretation because:

  • under Vietnamese laws, an organisation can only provide financial service mentioned in AML Law 2012 in Vietnam if it can obtain a license from an appropriate authority of Vietnam (e.g. the SBV, State Securities Commission, the Ministry of Finance);

  • it is impractical and impossible to require a foreign finance organisation to comply with the AML/KYC requirements of Vietnam if they are not under the management of any authority of Vietnam (especially reporting obligations); and

  • This interpretation is also supported by “Vietnam – National Risk Assessment On Money Laundering And Terrorism Financing For The Period 2012 – 2017” of the SBV which assessed the risk and compliance with the AML laws and regulations of the finance and non-finance organisations licensed to operate in Vietnam only.

Accordingly, an offshore financial institution should not be required to comply with the AML/KYC requirements of Vietnam unless it is licensed by the SBV to conduct business activities in Vietnam. This post is written by Hoang Thi Thanh Thuy and edited by Nguyen Quang Vu.

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