BizCLIR

Currently Vietnam is not regarded as a country of major concern in the fight against money laundering and terrorist financing primarily because its financial sector is immature and ill-equipped to manage significant money flows. It is suspected, however, that funds related to international crime may be entering into Vietnam for investment in property and other assets, representing a problem that could grow in the absence of adequate attention. As part of its membership of the WTO and its desire to develop a stronger banking system (including a desire to establish bank branches in the United States), Vietnam is focusing its attention on certain financial crime-related policy and legislation, and has established one key institution.

With the 7 June 2005 Decree 74 on anti-money laundering that took effect 1 August 2005, Vietnam has begun to strengthen its policy regime on combating financial crimes. The new decree was developed with some technical assistance from the Asian Development (ADB) and is generally well-known and well-regarded by the private sector. However, the transaction amount that triggers automatic reporting is considered low and creates significant reporting burdens for financial institutions and investigatory burdens for government agencies. While other laws that are relevant to financial crimes do exist, such as a law on fraudulent activities and the 1999 Criminal Code that make money laundering an offense, Vietnam lacks a comprehensive approach to and legal framework for combating financial crimes. While the current system may be sufficient for now, Vietnam will need a more fully developed legal framework in order to encourage additional investment capital from established financial institutions. Decree 74 establishes the Anti-Money Laundering Information Centre (AMLIC) under the State Bank of Vietnam (SBV) as the primary government agency responsible for implementing the anti-money laundering decree. The AMLIC was not yet fully operational during the Diagnostic period. As of July 2006, it had been established its Director had been appointed. At the time of the Diagnostic, the ADB was preparing a technical assistance program to support the implementation of the Decree and build the capacity of the AMLIC.

Vietnam’s long and relatively unprotected coastline make it attractive to drug traffickers, and its burgeoning commercial sector with inexperienced businessmen is a target for unscrupulous foreign and expatriate money launders, and others with similar interests. Though the financial sector is currently weak, expected increases in trade mean that Vietnam’s financial system must rapidly develop a sound foundation that includes a more comprehensive policy approach to preventing and combating a broader range of financial crimes. Without such an approach, Vietnam’s financial sector remains vulnerable to becoming a haven for illicit criminal financial activity. Therefore, USAID and Vietnam should take additional steps in the medium and long term to strengthen and broaden the legal framework concerning financial crimes, strengthen the capacity of implementing institutions to enforce existing rules, continue developing modern policy as necessary, and make supporting institutions feel that they are part of the first line of defense.