The State Bank of Vietnam (SBV) is seeking public feedback on a draft circular setting out procedures for supervising anti-money laundering activities in the monetary and banking sectors.

However, the central bank said some information circulating publicly has misrepresented the legal nature and certain provisions of the draft.

According to the SBV, some interpretations have confused supervision of credit institutions with the monitoring of individuals such as VIP customers, bank executives or managers at credit institutions.

Some reports have suggested that the draft introduces “anti-money laundering measures for VIP customers and bank executives,” places “VIP customers and bank executives under anti-money laundering supervision,” or requires special customer groups, VIP clients and priority customers to be separately recorded and monitored.

The SBV said, however, that under Clause 2, Article 1 and Clause 2, Article 2 of the draft circular, the entities subject to supervision are reporting entities such as credit institutions, foreign bank branches and payment intermediary service providers.

These are legal entities, rather than individual customers or bank executives.

Regarding the collection of information on organizational structures and governance, management and control models at supervised entities - including information on boards of directors, management boards, ownership ratios, supervisory boards, major shareholders and capital size - the SBV said banks are already required to report such information under existing microprudential supervision regulations.

“This is basic, general information used for supervision and assessment of credit institutions from the perspective of their management and leadership structures, size and organizational structure,” the SBV said.

Customer data used as input for overall risk assessments

The central bank also addressed concerns surrounding the collection of data used as inputs for assessing the overall risks of reporting entities, stressing that the draft does not involve separately supervising or creating monitoring lists of VIP customers, politically exposed persons (PEPs), priority customers or corporate customers operating in higher-risk sectors.

Some opinions have suggested that the draft would require special customer groups, including VIP and priority customers, to be separately recorded and monitored.

Concerns have also been raised over requirements to compile data on the number of corporate customers operating in sectors considered particularly relevant to money laundering risks, including crypto-asset services, real estate, precious metals, gemstones and jewelry, casinos and prize-winning games.

The SBV explained that under the draft circular, credit institutions would only be required to report their total number of customers and classify them into certain categories, such as individual customers, corporate customers, VIP customers or companies operating in sectors classified for the purposes of anti-money laundering supervision.

These sectors include money transfer services, foreign exchange trading, casinos, real estate, precious metals, gemstones and jewelry.

The required information and classification methods are based on the methodologies and recommendations of the Financial Action Task Force (FATF) and the International Monetary Fund (IMF), according to the SBV.

The data is intended to help assess the risk level of credit institutions based on the characteristics of their business operations and customer bases.

Information on customers, shareholders, managers and other related parties is collected as input for analyzing and assessing the overall risk profile of a reporting entity.

This does not mean that those individuals or entities become separate subjects of supervision or are automatically considered at risk of violating anti-money laundering regulations, the central bank stressed.

Some opinions have argued that expanding scrutiny from bank executives to VIP customers and organizations operating in sectors associated with heightened money laundering risks would strengthen controls.

The SBV, however, said the draft circular does not add any new “reporting entities” or “supervised entities” beyond those already stipulated under Vietnam’s 2022 Anti-Money Laundering Law.

According to the central bank, the draft only sets out professional procedures for supervising organizations that already fall within the SBV’s regulatory remit.

The SBV also warned that describing the proposal as an “expansion of supervision from bank executives to VIP customers” could create the false impression that these individuals are considered inherently risky or suspected of violating anti-money laundering rules.

That is not what the draft provides, the central bank said.

Tuan Nguyen