Vietnam: What is an agent banking relationship? What are the requirements satisfied by reporting entities of anti-money laundering in agent banking relationships?
What is an agent banking relationship in Vietnam?
Currently, the law does not provide for a definition of agent bank. However, it can be understood that an agent bank is a bank operating as an agent of another bank in another country or territory. In particular, the parties shall agree that the agent on behalf of the principal performs part or all of the supply of products and services of the principal to clients to receive fees.
As foragent banking relationship, pursuant to Clause 8, Article 3 of the Law on Anti-Money Laundering 2022, agent banking relationship is a relationship formed from a bank in a country or territory providing banking, payment and other services to a partner bank in other countries, territories.
What are the requirements satisfied by reporting entities of anti-money laundering in agent banking relationships in Vietnam?
Pursuant to Clause 1, Article 18 of the Law on Anti-Money Laundering 2022 as follows:
Agent banking relationships
1. When establishing a relationship with a partner bank to provide banking, payment and other services to a partner bank, the following requirements must be satisfied:
a) Collect information about the partner bank in order to fully master the nature of business and reputation of the partner bank and information about whether the partner bank is investigated for money laundering or other violations of the law on anti-money laundering;
b) Evaluate the implementation of measures of anti- money laundering of the partner bank;
c) Master the responsibilities in anti- money laundering of the partner bank in the agent banking relationship.
Accordingly, the requirements satisfied by reporting entities of anti-money laundering in agent banking relationships in Vietnam are:
- Collect information about the partner bank in order to fully master the nature of business and reputation of the partner bank and information about whether the partner bank is investigated for money laundering or other violations of the law on anti-money laundering;
- Evaluate the implementation of measures of anti- money laundering of the partner bank;
- Master the responsibilities in anti- money laundering of the partner bank in the agent banking relationship.
What are the doubtful signs in anti-money laundering under the banking sector of Vietnam?
Pursuant to Article 28 of the Law on Anti-Money Laundering 2022, there are regulations on doubtful signs in anti-money laundering under the banking sector of Vietnam as follows:
- There are sudden changes in the transaction turnover on the account; money deposited into and withdrawn quickly from accounts; high transaction turnover but account balance is very small or zero.
- The transfer of money of small value from many different accounts to an account or vice versa in a short time; money is transferred through multiple accounts; the parties concerned are not interested in trading fees; doing multiple transactions, each transaction is near the large value rate that must be reported.
- Using letters of credit and other trade financing methods of unusually great value, the discount rate with the higher value than normal;
- Clients who open multiple accounts at foreign credit organization, bank branches in other geographical areas different from the place where clients are residing, working or doing business activities;
- Client’s account without any transaction suddenly gets a cash deposit or money transfer of unusually great value;
- Transfer of money from account of enterprise overseas after receiving a lot of small amounts of money transferred by electronic money transfer, checks or drafts
- Foreign-invested economic organizations transfer money overseas immediately after receiving the investment capital or transfer money overseas not in accordance with the business activities; Foreign-invested economic organizations transfer money overseas immediately after receiving money from abroad transferred into accounts opened at foreign credit organization, bank branches operating in Vietnam;
- The clients often change money with small denominations into larger denominations;
- Transaction of deposit, withdrawal or transfer of money made by organizations or individuals associated with the crimes creating illegal property published on mass media;
- The client requests to borrow the maximum amount allowed based on the life insurance contracts of single-premium right after the premium payment;
- Information about the origin of property used for financing, investment, loan or investment trust of clients is not clear and transparent;
- Information about the origin of the collateral of the clients applying for loans is not clear and transparent.
- There are doubtful signs that clients use personal accounts to perform transactions related to the activities of organizations or transactions on behalf of other individuals.
- Online transactions through accounts constantly change in terms of login devices or Internet protocol addresses (hereinafter referred to as IP addresses) abroad.
The Law on Anti-Money Laundering 2022 will take effect from March 1, 2023.
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