Amendments to many regulations on penalties for administrative violations in monetary and banking sector in Vietnam

On May 12, 2023, the Government issued Decree 23/2023/ND-CP amending Decree 89/2016/ND-CP on eligibility requirements to be satisfied by business entities for acting as foreign exchange agents or providing foreign currency receipt and payment services, and Decree 88/2019/ND-CP on penalties for administrative violations in monetary and banking sector.

Amendments to many regulations on penalties for administrative violations in monetary and banking sector in Vietnam

Specifically, Clause 3, Article 2 of Decree 23/2023/ND-CP has amended a number of points, Clause of Article 23 of Decree 88/2019/NĐ-CP providing for penalties for administrative violations in monetary and banking sector as follows:

- A fine ranging from VND 10.000.000 to VND 20.000.000 shall be imposed for failing to comply with law regulations on registration and notification of the relevant provincial branch of SBV in case of changes relating to a foreign exchange agent or an agent for exchange of bordering countries’ currencies

(Currently, sanctions are only imposed on acts of failing to comply with law regulations on registration and notification of the relevant provincial branch of SBV in case of changes relating to a currency exchange agent)

- A fine ranging from VND 20.000.000 to VND 30.000.000 shall be imposed for

+ Entering into an agreement on foreign exchange agent or agent for exchange of bordering countries’ currencies with an ineligible entity; failing to provide instructions for or to inspect the foreign exchange agent or agent for exchange of bordering countries’ currencies as prescribed by law;

(Currently, penalties are imposed for entering into a currency exchange agent contract with an ineligible entity; failing to provide instructions for or inspect the currency exchange agent as prescribed by law)

+ Failing to fulfill responsibilities of a foreign exchange agent or agent for exchange of bordering countries’ currencies as prescribed by law; concurrently acting as a foreign exchange agent or agent for exchange of bordering countries’ currencies for two or more credit institutions;

(Currently, penalties are imposed for failing to fulfill responsibilities of a currency exchange agent as prescribed by law; concurrently acting as a currency exchange agent for two or more credit institutions)

- A fine from 80,000,000 VND to 100,000,000 VND shall be imposed for failing to fulfill responsibilities of a foreign exchange agent or agent for exchange of bordering countries’ currencies as prescribed by law in case of a recommitted violation;

Concurrently acting as a foreign exchange agent or agent for exchange of bordering countries’ currencies for two or more credit institutions in case of a recommitted violation;

(Currently, penalties are imposed for for failing to fulfill responsibilities of a currency exchange agent as prescribed by law; concurrently acting as a currency exchange agent for two or more credit institutions)

In addition to amending and supplementing violations of foreign exchange activities that impose fines, Decree 23/2023/ND-CP also amends and supplements regulations on additional penalties and Remedial measures for this violation, specifically as follows:

- For additional penalties:

 The certificate of registration of foreign exchange agent or certificate of registration of agent for exchange of bordering countries’ currencies shall be suspended for 01 - 03 months if the violation in Point b Clause 4 of Article 23 of Decree 88/2019/NĐ-CP is committed;

(Current regulations, the license for an individual currency exchange agent shall be suspended for 01 - 06 months if the violation prescribed in Point o Clause 4 of Article 23 of Decree 88/2019/NĐ-CP is committed;)

- For remedial measure:

Proposed revocation of certificate of registration of foreign exchange agent or certificate of registration of agent for exchange of bordering countries’ currencies or license to open and use an offshore foreign-currency account if the violation prescribed in Point i Clause 5 or Point c Clause 6 of Article 23 of Decree 88/2019/NĐ-CP is committed

(Currently, proposed revocation of certificate of currency exchange agent, license to open and use an offshore foreign-currency account, or license for individual currency exchange counter if the violation prescribed in Point b Clause 4 or Point a Clause 5 of Article 23 of Decree 88/2019/NĐ-CP is repeated.)

What is foreign exchange?

According to Clause 1, Article 4 of the Ordinance on foreign exchange activities 2005, foreign exchanges comprises:

- Currencies of other nations or the common European currency and other common currencies used in international and regional payments (hereinafter referred to as foreign currency);

- Foreign currency payment instruments, cheques, credit cards, bills of exchange, promissory notes and other payment instruments;

- All types of valuable papers denominated in foreign currencies including Government bonds, corporate bonds, term bonds, shares and other valuable papers;

- Gold belonging to the foreign exchange reserves of the State, gold in overseas' accounts of residents, and gold in the form of bullion, bars, granules and plate which is brought into or taken out of the territory of Vietnam;

- The currency of the Socialist Republic of Vietnam in cases where it is remitted into or out of the territory of Vietnam or used as an instrument for international payments.

Decree 23/2023/ND-CP takes effect on July 1, 2033.

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