Criteria and method for assessing money laundering risks of reporting entities in Vietnam

 Criteria and method for assessing money laundering risks of reporting entities in Vietnam (Internet image)

Criteria and method for assessing money laundering risks of reporting entities in Vietnam

This content is stipulated in Circular 09/2023/TT-NHNN guiding implementation of the Law on Anti-Money Laundering. promulgated by the Governor of the State Bank of Vietnam.

Criteria and method for assessing money laundering risks of reporting entities in Vietnam include:

1. Assessment criteria of money laundering risks of reporting entities include money laundering probability criteria and viability of internal policies, regulations regarding AML in reporting entities.

2. Money laundering probability criteria include probability criteria in business environment of reporting entities and risk criteria from business activities of reporting entities, to be specific:

- Probability criteria in business environment of reporting entities include money laundering probability in business sectors; countries, territories where reporting entities are operating according to results of national risk assessment on money laundering and are determined by reporting entities;

- Probability criteria in business activities of reporting entities include probability of customers; risks of products and services provided to customers; probability from distribution of products and services.

3. Viability of internal policies and regulations on AML in reporting entities include coverage of internal policies, regulations on AML and effectiveness of those internal policies and regulations, to be specific:

- Coverage of internal policies and regulations on AML in reporting entities includes adequacy of internal policies and regulations on AML; level of compliance with regulations and law on AML; level of compliance with money laundering risk levels of reporting entities; periodic review of internal policies and regulations to adhere to amendments of regulations of the law and practical operation situation;

- Effectiveness of internal policies and regulations on AML in reporting entities include effectiveness of AML measures; level of understanding and compliance with professional rules, standards of leaders and employees whose responsibilities are related to AML; effectiveness of AML management.

4. Assessment method for money laundering risks shall be score-based method. Score-based method is a method where each criterion under Clause 2 and Clause 3 of Article 3 of Circular 09/2023/TT-NHNN is given a score, to be specific:

- Score of each criterion under Clause 2 of Article 3 of Circular 09/2023/TT-NHNN shall be determined on a scale from 1 to 5 where a lower score translates to a lower probability of money laundering;

- Score of each criterion under Clause 3 of Article 3 of Circular 09/2023/TT-NHNN shall be determined on a scale from 1 to 5 where a lower score translates to a higher viability of internal policies and regulations on AML;

- Weighting factor of each criterion under Clause 2 and Clause 3 of this Article shall be percentage (%) determined by importance of each criterion in AML. Reporting entities shall determine weighting factor based on operational scale, scope, and characteristics;

- Score of money laundering probability shall be determined by calculating total score of criteria under Point a of this Clause multiplied by weighting factor under Point c of this Clause.

Money laundering probability is low if final score is equal to or less than 1; moderate-low if final score is greater than 1 and equal to or less than 2; moderate if final score is greater than 2 and equal to or less than 3; moderate-high if final score is greater than 3 and equal to or less than 4; high if final score is greater than 4 and equal to or less than 5;

- Score of viability of internal policies and regulations on AML shall be determined by calculating total score of each criterion relating to viability of internal policies and regulations on AML under Point b of Clause 4 of Article 3 of Circular 09/2023/TT-NHNN multiplied by weighting factor under Point c of Clause 4 of Article 3 of Circular 09/2023/TT-NHNN.

Level of viability of internal policies and regulations on AML is high if final score is equal to or less than 1; moderate-high if final score is greater than 1 and equal to or less than 2; moderate if final score is greater than 2 and equal to or less than 3; moderate-low if final score is greater than 3 and equal to or less than 4; low if final score is greater than 4 and equal to or less than 5;

- Score of to money laundering risks shall be calculated by determining arithmetic mean of score of money laundering probability and score of viability of internal policies and regulations on AML.

A lower score translates to a lower risk of money laundering: money laundering risk is low if final score is equal to or less than 1; moderate-low if final score is greater than 1 and equal to or less than 2; moderate if final score is greater than 2 and equal to or less than 3; moderate-high if final score is greater than 3 and equal to or less than 4; high if final score is greater than 4 and equal to or less than 5.

5. Information and data shall be collected for the purpose of assessing and updating money laundering risks of reporting entities from January 1 to December 31 inclusive of assessing, updating year.

Reporting entities must complete reports on assessment and update on money laundering risks by March 31 of the following year.

Duong Chau Thanh

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