Can act of usury be subject to administrative sanctions or criminal prosecution in Vietnam?
Please ask: Can act of usury be subject to administrative sanctions or criminal prosecution in Vietnam? Question from Mr. Luong (Tien Giang)
At what interest rate for a loan is considered usury in Vietnam?
Pursuant to Article 2 of Resolution 01/2021/NQ-HDTP stipulates as follows:
About some words
1. "Usury" is the case where the lender lends money to the borrower at an interest rate 5 times or more than the highest interest rate specified in Clause 1, Article 468 of the Civil Code.
In case of loan using other assets (not money), when settling, the value of that asset must be converted into money at the time of transferring the loan asset.
2. "Illegal profits" are the amount of interest that exceeds the highest loan interest rate according to the provisions of the Civil Code and other illegal income of the borrower.
In case the illegal profits are other assets (not money), they must be converted into money at the time of transferring the loan assets.
Pursuant to Article 468 of the 2015 Civil Code stipulates interest rates:
Interest rates
1. The rate of interest for a loan shall be as agreed by the parties.
The rate of interest for a loan agreed by the parties may not exceed 20% per year, unless otherwise prescribed by law. According to actual conditions and at the proposal of the Government, the Standing Committee of National Assembly shall adjust the above interest and send report to the National Assembly at the latest session.
If the agreed interest exceeds the maximum interest prescribed in this Clause, the agreed interest shall become invalid.
2. Where parties agree that interest will be payable but fail to specify the interest rate, or where there is a dispute as to the interest rate, the interest rate for the duration of the loan shall equal 50% of the maximum interest prescribed in Clause 1 of this Article at the repayment time.
According to this Article, the loan interest rate is agreed upon by the parties but must not exceed 20%/year of the loan amount in Vietnam. However, if a loan is given at an interest rate 5 times or more than the highest interest rate, it is determined to be a high interest loan, equivalent to 100%/year.
Can act of usury be subject to administrative sanctions or criminal prosecution in Vietnam? (Image from the Internet)
Can act of usury be subject to administrative sanctions or criminal prosecution in Vietnam?
Pursuant to Article 468 of the 2015 Civil Code stipulates interest rates:
Interest rates
1. The rate of interest for a loan shall be as agreed by the parties.
The rate of interest for a loan agreed by the parties may not exceed 20% per year, unless otherwise prescribed by law. According to actual conditions and at the proposal of the Government, the Standing Committee of National Assembly shall adjust the above interest and send report to the National Assembly at the latest session.
If the agreed interest exceeds the maximum interest prescribed in this Clause, the agreed interest shall become invalid.
2. Where parties agree that interest will be payable but fail to specify the interest rate, or where there is a dispute as to the interest rate, the interest rate for the duration of the loan shall equal 50% of the maximum interest prescribed in Clause 1 of this Article at the repayment time.
Pursuant to Point dd, Clause 4, Article 12 of Decree 144/2021/ND-CP stipulating violations against regulations on management of business lines subject to security and order conditions:
Violations against regulations on management of business lines subject to security and order conditions
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4. A fine ranging from 10.000.000 VND to 20.000.000 VND shall be imposed for any of the following violations:
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d) Running a pawn business with the interest rate exceeds that specified in the Civil Code;
dd) Failure to apply for registration of the business line subject to security and order conditions that involves grant of secured loans with interest rate exceeds that specified in the Civil Code;
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Pursuant to Article 201 of the 2015 Criminal Code amended by Point i, Clause 2, Article 2 of the Law Amending the 2017 Criminal Code, which stipulates usury in civil transactions:
Usury in civil transactions
1. Any person who offers loans at an interest rate that is at least five times higher than the maximum interest rate specified in the Civil Code and earns an illegal profit of from VND 30,000,000 to under VND 100,000,000 or recommits this offence despite the fact that he/she has incurred an administrative penalty or has an unspent conviction for the same offence shall be liable to a fine of from VND 50,000,000 to VND 200,000,000 or face a penalty of up to 03 years' community sentence.
2. If the illegal profit earned is ≥ VND 100,000,000, the offender shall be liable to a fine of from VND 200,000,000 to VND 1,000,000,000 or face a penalty of 06 - 36 months' imprisonment.
3. The offender might also be liable to a fine of from VND 30,000,000 to VND 100,000,000, be prohibited from holding certain positions or doing certain works for 01 - 05 years.
According to this Article, the act of usury in civil transactions may be subject to administrative sanctions or criminal prosecution depending on the nature, severity and violation in Vietnam. Specifically:
Regarding penalties for administrative violations: If there is an act of not registering a business or investment industry with conditions on security and order, lending money with mortgage of assets or without mortgage of assets but loan interest rate exceeding the interest rate as prescribed by the 2015 Civil Code will result in a fine from 10,000,000 VND to 20,000,000 VND.
Regarding criminal prosecution: Offenders may be prosecuted for criminal liability for usury in civil transactions. Offenders can be sentenced to up to 3 years in prison. In addition, the offender may also be fined from 30,000,000 VND to 100,000,000 VND, banned from holding certain positions, practicing certain occupations or doing certain jobs for 01 to 05 years.
What is handling for assets obtained from usury in Vietnam?
Pursuant to Article 5 of Resolution 01/2021/NQ-HDTP regulating the handling of objects and money directly related to the criminal crime of usury in civil transactions as follows:
Handling objects and money directly related to crime
1. Confiscation for state funds for:
a) Amount of money or other assets used by the offender for lending;
b) Interest corresponding to the highest interest rate according to the provisions of the Civil Code that the offender has collected from the borrower.
c) Money and other assets that the offender gains from using interest and other illegal revenues.
2. Return to the borrower the illegal profits that the offender actually collected, except in cases where the borrower used the loan for illegal purposes (such as gambling, illegal drug trading, fraud appropriation, etc.), then the illegal profits will be confiscated and put into the state fund.
According to this Article, assets obtained from usury in Vietnam will be handled as follows:
(1) Confiscation for state funds of the following assets:
- Amount of money or other assets used by the offender for lending;
- Interest corresponding to the highest interest rate according to regulations that the offender collected from the borrower.
- Money and other assets that the offender gains from using interest and other illegal revenues.
- The amount of money the borrower uses for illegal purposes (such as gambling, illegal drug trading, fraud appropriation of property, ...)
(2) Return to the borrower the illegal profits that the offender actually collected.
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