Vietnam: How to identify individuals and organizations customers through third parties in anti-money laundering?
What is customer awareness in anti-money laundering in Vietnam?
Pursuant to Clause 1, Article 9 of the Vietnam Law on Prevention and Combat of Money Laundering 2022, there are the following provisions on customer identification:
Article 9. Identifying customers
1. Customer identification shall cover the range of activities, such as collecting, updating and verifying information specified in Article 10, 11, 12, 13 and 14 herein.
Accordingly, identifying customers in anti-money laundering measures includes the following step:
Step 1: Collect customer identification information - Article 10 of the Vietnam Law on Anti-Money Laundering 2022.
Step 2: Update customer identification information - Article 11 of the Vietnam Law on Prevention and Combat of Money Laundering 2022.
Step 3: Verify customer identification:
- Verification of customer identification information - Article 12 of the Vietnam Law on Prevention and Combat of Money Laundering 2022.
- Verifying customer identification information through hiring other organizations - Article 13 of the Vietnam Law on Prevention and Combat of Money Laundering 2022.
In addition, entities can also identify customers through third parties as prescribed in Article 14 of the Vietnam Law on Prevention and Combat of Money Laundering 2022.
Vietnam: How to identify individuals and organizations' customers through third parties in anti-money laundering?
When to recognize customers in anti-money laundering in Vietnam?
Pursuant to Clause 2, Article 9 of the Vietnam Law on Prevention and Combat of Money Laundering 2022, financial institutions must identify customers in the following cases:
- that customer first opens an account or establishes a business relation with the financial institution;
- that customer conducts occasional transactions that equal or exceed the designated threshold; that are wire transfers that do not contain information, such as the name, address, account number of the originator, or the transaction reference number required in the absence of the originator's account;
- there is a suspicion that a transaction or interested parties to a transaction involves/are involved in any money laundering offence;
- the financial institution has doubts about the veracity or adequacy of previously obtained customer identification data.
At the same time, pursuant to Clause 3, Article 9 of the Vietnam Law on Prevention and Combat of Money Laundering 2022, organizations and individuals doing business in relevant non-financial lines and trades must identify customers in the following cases:
- Organizations and individuals doing business in the lines and trades specified at Point a, Clause 2, Article 4 of the Vietnam Law on Prevention and Combat of Money Laundering 2022 must identify customers when customers have transactions with a value equal to or exceeding the prescribed level;
- Organizations and individuals doing business in the lines and trades specified at Point b, Clause 2, Article 4 of the Vietnam Law on Prevention and Combat of Money Laundering 2022 must identify customers when providing real estate business services;
- Organizations and individuals doing business in the lines and trades specified at Point c, Clause 2, Article 4 of the Vietnam Law on Prevention and Combat of Money Laundering 2022 must identify customers when customers have transactions of buying and selling precious metals and gemstones in cash or foreign currencies with a value equal to or exceeding the prescribed level;
- Organizations and individuals doing business in the lines and trades specified at Point d, Clause 2, Article 4 of the Vietnam Law on Prevention and Combat of Money Laundering 2022 must identify customers when providing accounting services; carry out notarization procedures, prepare conditions on behalf of customers to carry out transactions or carry out land use right transfer transactions on behalf of customers, ownership of houses and other property attached to land; manage the client's money, securities or other assets; managing customers' accounts at banks, securities companies; operating and managing the company; participate in the purchase and sale of enterprises;
- Organizations and individuals doing business in the lines and trades specified at Point dd, Clause 2, Article 4 of the Vietnam Law on Prevention and Combat of Money Laundering 2022 must identify customers when providing services for establishment, management and administration of enterprises; provide services of directors and company secretaries to third parties; provide legal agreement services.
How can entities identify customers through third parties in anti-money laundering in Vietnam?
Pursuant to Article 14 of the Vietnam Law on Prevention and Combat of Money Laundering 2022, the identification of customers through third parties in anti-money laundering is regulated as follows:
- Reporting entities may identify customers with the help of third parties provided that these third parties satisfy the following requirements:
+ They must be financial institutions or relevant non-financial businesses or professions engaged into relationships with customers. This requirement does not apply to outsourcing or agency relationships;
+ They must identify customers under the provisions of this Vietnam Law or FATF’s recommendations if the third party is a foreign legal person;
+ They must deposit customer identification data and provide them on time and in full to reporting entities as requested; execute privacy and information security practices in accordance with Vietnam Law;
+ They are supervised or monitored by competent authorities.
- Where both the third party and its parent company are financial institutions, the reporting entity shall ensure that the third party satisfies the requirements specified in clause 1 of this Article, and the third party's parent company satisfies the requirements concerning identification of customers, politically exposed persons, storage or depositing of information, documents, records and reports as specified in Article 9, 17, 38 and 40 herein or FATF’s relevant recommendations that are applicable to parent companies of financial institutions that are foreign entities, and need to be put to use, as well as monitored in the entire systems of these entities; shall apply risk mitigation policies to sectors at high risks of money laundering.
- Reporting entities shall take responsibility for third parties’ performance toward customer identification.
The Vietnam Law on Prevention and Combat of Money Laundering 2022 takes effect from March 01, 2023.
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