Qualitative criteria, rather than quantitative criteria, will be used to define 'suspicious signs' of a transaction, according to the Governor of the State Bank of Vietnam (SBV) Nguyen Thi Hong.

Hong was speaking at the National Assembly's session last week in response to questions about the Draft on Prevention of Money Laundering.

She said the draft had been drawn up with due consideration for international norms and the nature of the Vietnamese financial systems.

In fact, the use of qualitative criteria for the definition of suspicious signs of a transaction is a common practice in many countries.   

"The draft does not establish quantitative criteria for fear that parties involved in transactions would seek ways to bypass the criteria," she said.

Procedurally, suspicious signs, once detected, will be reported to SBV for examination. If the suspicion is well-founded, the State Bank will transfer the case to the authorities for further investigation. 

For 'transaction delay', it is a measure to temporarily freeze the assets of parties involved in a transaction when the parties are on the blacklist or there are reasonable grounds to suspect that the transaction is associated with criminal activities, according to the governor. 

The blacklist, in that regard, is a list of organisations and individuals that have a connection with terrorism, terrorism financing or proliferation financing. 

"For the good of national security, the draft stipulates that such a measure be implemented without delay on grounds of reasonable suspicion," she said.   

Transaction delay duration will not exceed three working days from the day of its implementation. Further clarification on 'reasonable suspicion' will be included in the governmental guidelines.

Under the draft, 'reporting entities' include organisations and individuals doing business in non-financial sectors. Some deputies of the National Assembly had doubts about the practicality of such inclusion.

In response, the governor said those organisations and individuals had been included in the Law on Prevention of Money Laundering 2012 and the draft just inherited these specific reporting entities from the law.       

Other deputies suggested the inclusion of virtual asset service providers and online peer-to-peer (P2P) lending platforms into reporting entities.

The governor said the above-mentioned notions were new in Vietnam and had not been regulated by any legal document. It would be better to not include the notions in the draft this time.

Regarding information security, she asserted that the confidentiality of client information had been well-regulated in the draft and any non-compliance to the regulation would face severe penalties.

The draft stipulates that SBV and relevant ministries co-operate in assessing the national money laundering risks every five years.

Some NA deputies opined that five years was too long a period and called for more frequent assessments to better monitor the risks.

In response, the governor said each assessment would go with a risk management plan that would be implemented annually in the next five years. That meant risks would be monitored regularly, not in a five-year period.

One of the new points of the draft Anti-Money Laundering Law (revised) is the reporting of suspicious transactions and the addition of several suspicious signs in the banking, securities, life insurance and real estate business.

It adds regulations on the responsibility of organisations involved in cryptocurrency transactions to have risk management policies and procedures to control or report suspicious transactions with incorrect electronic money transfers.

The draft also adds regulations on the responsibility of organisations involved in cryptocurrency transactions to have risk management policies and procedures to control or report suspicious transactions with incorrect electronic money transfers.

The Governor said that the amendment of the Anti-Money Laundering Law demonstrated the country's efforts in overcoming the shortcomings of the legal basis compared to the recommendations of the Financial Action Task Force (FATF). 

Source: Vietnam News