Circular No. 12/2011/TT-BXD dated September 01, 2011 of the Ministry of Construction guiding some provisions of the Government’s Decree No. 74/2005/ND-CP of June 7, 2005, on prevention and combat of money laundering in real estate business

THE MINISTRY OF CONSTRUCTION

Circular No. 12/2011/TT-BXD dated September 01, 2011 of the Ministry of Construction guiding some provisions of the Government’s Decree No. 74/2005/ND-CP of June 7, 2005, on prevention and combat of money laundering in real estate business

Pursuant to June 29, 2006 Law No. 63/2006/QH11 on Real Estate Business;

Pursuant to November 29, 2005 Housing Law No. 56/2005/QH11; Pursuant to the Law Amending and Supplementing Article 126 of the Housing Law and Article 121 of the Land Law;

Pursuant to the Government’s Decree No. 74/2005/ND-CP of June 7, 2005, on money laundering prevention and combat (Decree No. 74/2005/ND-CP);

Pursuant to the Government’s Decree No. 153/2007/ND-CP of October 15, 2007, detailing and guiding the Law on Real Estate Business;

Pursuant to the Government’s Decree No. 71/2010/ND-CP of June 23, 2010, detailing and guiding the Housing Law;

Pursuant to the Government’s Decree No. 17/2008/ND-CP of February 4, 2008, defining the functions, tasks, powers and organizational structure of the Ministry of Construction;

The Ministry of Construction guides the implementation of anti-money laundering measures in real estate business as follows:

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation

This Circular guides the implementation of anti-money laundering measures in real estate business.

Article 2. Subjects of application

This Circular applies to Vietnamese and foreign organizations and individuals engaged in real estate business, including:

1. Organizations and individuals trading in real estate or providing real estate services;

2. Organizations and individuals involved in real estate trading or real estate service provision.

Article 3. Interpretations of terms

In this Circular, the terms below are construed as follows:

1. Suspicious transaction means any abnormal transaction or incompatible transaction defined in Article 9 of this Circular and Article 10 of Decree No. 74/2005/ND-CP.

2. Reporting organization means a real estate trading floor; an organization or individual providing real estate brokerage services; or an organization or individual providing real estate management services.

3. Report on suspicious transactions means a report on suspicious transactions compiled and sent to competent state agencies by a reporting organization.

4. Great-value transaction subject to reporting means a transaction in cash (or in a foreign currency or gold of the same value) of a value subject to reporting under Clause 1, Article 9 of Decree No. 74/2005/ND-CP.

5. Beneficiary mean an organization or individual actually holding the control of or ownership rights to real estate; an organization or individual selling, buying or transferring, or contributing capital to, a real estate project; or a real estate project owner.

6. Competent state agencies include the Anti-Money Laundering Office under the Banking Inspection and Supervision Agency - the State Bank of Vietnam; the House and Real Estate Market Management Department – the Ministry of Construction; and provincial-level Construction Departments.

Chapter II

ANTI-MONEY LAUNDERING MEASURES

Article 4. Internal anti-money laundering regulations

In pursuance to Decree No. 74/2005/ND-CP, this Circular and relevant legal documents, reporting organizations shall elaborate and issue their own internal anti-money laundering regulations so as to detect and prevent organizations and individuals from conducting money laundering activities via their organizations.

1. Internal anti-money laundering regulations include:

a/ Processes and procedures for identifying and updating information on customers and beneficiaries, measures for verifying information on customers and beneficiaries in case of suspicious transactions;

b/ Processes for reviewing, detecting, handling and reporting on suspicious transactions to competent state agencies;

c/ Regulations on provisional measures to be applied in money laundering prevention and combat and principles of handling cases of delaying or rejecting transactions;

d/ Regulations on internal control and audit of the observance of anti- money laundering regulations, processes and procedures;

e/ Regulations on functions, powers and responsibilities of persons or sections in charge of money laundering prevention and combat;

f/ Regulations on training for raising of anti-money laundering awareness and professional knowledge;

g/ Regulations on information preservation and confidentiality.

2. Internal anti-money laundering regulations shall be disseminated to each person and section in charge of money laundering prevention and combat in reporting organizations, including also collaborators involved in real estate transactions.

3. Reporting organizations shall send their internal anti-money laundering regulations to the Anti-Money Laundering Office under the Banking Inspection and Supervision Agency - the State Bank of Vietnam; the House and Real Estate Market Management Department - the Ministry of Construction, and provincial-level Construction Departments of localities in which they are headquartered.

Article 5. Assignment of staff members or sections of reporting organizations to take charge of money laundering prevention and combat

1. Based on their operational scope, ambit and characteristics, reporting organizations shall decide to assign some staff members (or their leaders) or set up specialized sections to take charge of money laundering prevention and combat. Reporting organizations shall register their addresses, telephone and fax numbers; names, addresses and positions of staff members or sections in charge of money laundering prevention and combat with competent state agencies for contact in case of necessity and notify in writing competent state agencies of any changes in registered information.

2. Reporting organizations’ staff members or sections in charge of money laundering prevention and combat have the following major functions and tasks:

a/ To receive and verify information on suspicious transactions reported by related staffs, divisions or sections;

b/ To make, sign and take responsibility for the contents of reports on suspicious transactions;

c/ To make and sign reports on anti-money laundering activities of their organizations as required by law and competent state agencies;

d/ To elaborate and implement anti-money laundering programs, policies and strategies within their organizations;

e/ To regularly review, evaluate and modify their internal anti-money laundering regulations so as to assure their compliance with laws and suitability with changes in and developments of their organizations’ business operations.

Article 6. Customer identification and updating of customer information

1. Cases in which customer identification is required:

a/ A customer sets up the transactional relationship with a reporting organization for the first time;

b/ A customer carries out a great-value real estate transaction in cash specified in Clause 1, Article 8 of this Circular;

c/ A customer carries out a suspicious transaction specified in Clause 1, Article 9 of this Circular;

d/ A customer carries out two or more real estate transactions within a single day or a customer sells/buys two or more real estate in a single transaction (including cases in which a customer sells and buys real estate concurrently).

e/ Cases in which reporting organizations doubt the truthfulness of real estate dossiers, real estate project dossiers or customer dossiers.

2. Contents of customer identification information:

Reporting organizations shall themselves design customer identification forms which, however, must have at least the following information:

a/ Information on customers:

- For customers being Vietnamese: full name; date of birth; identity card or passport number; place of permanent residence registration; current place of residence; occupation, position and telephone number; working office and address of working office;

- For customers being foreigners (persons who hold foreign nationalities and overseas Vietnamese who still hold Vietnamese nationality): full name; nationality; date of birth; passport number; entry visa and entry purposes; address of temporary residence in Vietnam; place of residence in a foreign country within 6 months before entering Vietnam and address of permanent residence in a foreign country; occupation and position; telephone number; working office and address of working office.

In case an account or a real estate is registered under the ownership of many customers, it is required to supply all customer information for each customer;

- For institutional customers: full transaction name and abbreviated name; address of head office; telephone and fax numbers; number and date of issue of establishment license, investment certificate or business registration certificate; establishing agency; information on business and investment operations; brief information on organizational structure and leadership; information on at-law representative (covering the details required for individual customers);

b/ Date of account opening (if any); date of transaction;

c/ Initial balance of account and value of transaction calculated in Vietnam dong or a foreign currency and exchange rate (when necessary);

d/ Purposes and value of account or transaction:

e/ Information on beneficiaries:

- For beneficiaries being Vietnamese: full name; date of birth; identity card or passport number; place of permanent residence registration; current place of residence; occupation and position; telephone number; working office and address of working office;

- For beneficiaries being foreigners: (persons who hold foreign nationalities and overseas Vietnamese who still hold Vietnamese nationality): full name; nationality; date of birth; passport number; entry visa and entry purposes; address of temporary residence in Vietnam; place of residence in a foreign country within 6 months before entering Vietnam and address of permanent residence in a foreign country; occupation and position; telephone number; working office and address of working office;

- For institutional beneficiaries: full name and abbreviated name; address of head office; telephone and fax numbers; number and date of issue of establishment license, investment certificate or business registration certificate; establishing agency; information on business and investment operations; brief information on organizational structure and leadership; information on at-law representative (covering the details required for individual customers);

f/ Information on real estate projects and their investors;

g/ Names and signatures of reporting organizations’ staff members who are in charge of approving the account opening or handling transactions with customers.

3. Customer identification methods:

a/ Identifying customers and verifying customer identification by using reliable original documents and data, which are:

- Identity card; latest entry/exit visa; valid passport or other valid personal identification papers which are stuck with customers’ photos and appended with a seal on every photo by a competent authority, for individual customers;

- Establishment license or decision; decision on renaming, division, splitting up or merger, business registration certificate, tax registration certificate; audited financial statement; and decision on appointment of director general (director) or chief accountant, for institutional customers;

b/ Verifying customer identification through a third party being:

- Individuals and organizations (including other reporting organizations) which have established relations with customers. In this case, reporting organizations shall compare acquired information with information provided by customers;

- Management agencies or other competent state agencies (such as local house and land registration offices, tax offices and land administration agencies);

- Other organizations which reporting organizations hire or corporate with to verify customer identification.

c/ For transactions involving many customers, reporting organizations shall apply measures to verify the identification of each customer;

d/ Reporting organizations may apply other customer identification measures, based on the characteristics of their business operations and the degree of money-laundering risks depending on each type of customer.

However, reporting organizations shall take the final responsibility for the identification and updating of customer information.

Article 7. Review of information on customers and transactions

1. Reporting organizations shall regularly review information on customers, especially those who are suspected of conducting money- laundering activities or those named on the warning lists issued by the Ministry of Public Security and competent state agencies under this Circular.

2. Reporting organizations shall carefully examine dossiers and documents of great-value real estate transactions which show suspicious signs (examining the origin of real estate, number of times of changing owners and status of legal dossiers).

3. Reporting organizations shall regularly update customer information already provided in their previous reports on suspicious transactions.

Article 8. Great-value transactions in cash

1. Great-value transactions in cash (or in a foreign currency or gold of the same value) are transactions defined in Clause 1, Article 9 of Decree No. 74/2005/ND-CP.

2. Every month, reporting organizations shall make and archive reports on great-value transactions (in paper documents and computer files) under Article 12 of Decree No. 74/2005/ND-CP (according to the forms provided in Appendices 1a and 1b to this Circular, not printed herein).

Reporting organizations shall send reports on great-value transactions to competent state agencies when so requested in writing.

3. Reporting organizations shall review and screen great-value transactions so as to detect suspicious transactions.

Article 9. Suspicious transactions and reporting on suspicious transactions

1. Signs of suspicious transactions:

In addition to signs of suspicious transactions specified in Clause 1, Article 10 of Decree No. 74/2005/ND-CP, the following signs of suspicious transactions in the real estate sector are prescribed:

a/ It is impossible to identify a customer according to information provided by that customer or a transaction involves an anonymous party;

b/ The transaction turnover on a customer’s account does not conform with its/his/her financial status or normal business operations, or a big change is seen in the transaction turnover on a customer’s account;

c/ A transaction is carried out by a customer who, to the knowledge of reporting organizations, is related to illegal activities already published in the mass media or named on warning lists provided by the Ministry of Public Security and competent state agencies;

d/ A transaction dossier or real estate dossier shows signs of falsification (bearing forged seals, signatures, identify cards or passports or incorrect real estate address);

e/ A real estate transaction is unlawfully authorized;

f/ The address of any party to a transaction is incorrect (for example, an address is declared to be in district B, province A but in fact, province A does not have district B) or changes against that declared in previous transactions. Information on the same customer is declared differently in different transactions;

g/ A customer does not care about the real estate price or payable transaction charge;

h/ A customer who carries out transactions without authorization but fails to provide information on real estate or does not want to provide additional personal identification information;

i/ The price agreed between parties to a transaction does not match the market price.

Reporting organizations may report other suspicious signs in real estate transactions.

2. Reporting on suspicious transactions:

When detecting a suspicious transaction, reporting organizations shall report it in writing (according to the form provided in Appendix 2 to this Circular, not printed herein) to the Anti-Money Laundering Office under the Banking Inspection and Supervision Agency - the State Bank of Vietnam and the House and Real Estate Market Management Department - the Ministry of Construction. When necessary, reporting organizations may report it to these agencies via fax or telephone but they shall send a written report later.

Reporting organizations shall follow developments of reported transactions so as to update newly arisen information.

3. Reporting time limits:

Reporting organizations shall report suspicious transactions to the Anti- Money Laundering Office under the Banking Inspection and Supervision Agency - the State Bank of Vietnam and the House and Real Estate Market Management Department - the Ministry of Construction within 48 hours after the detection of suspicious signs.

In case of detecting transactions related to criminal activities, reporting organizations shall report them to competent state agencies within 24 hours after the detection of suspicious signs.

Article 10. Application of provisional measures

1. Principles on application of provisional measures: Provisional measures shall be applied by competent agencies and persons under law without affecting enterprises’ business operations and implementation of real estate projects.

2. Provisional measures: Not to perform transactions.

3. Reporting organizations may apply the provisional measure of non- performance of real estate transactions and shall report to competent state agencies when:

a/ Transactions involve organizations (including real estate trading organizations) and individuals on the warning list of those involved in criminal activities, which is provided by the Ministry of Public Security to serve money laundering prevention and combat according to Point b, Clause 1, Article 10 of Decree No. 74/2005/ND-CP;

b/ There are grounds to believe that transactions requested to be performed are related to criminal activities;

c/ Transactions are related to money laundering activities, if so requested by competent state agencies.

4. Reporting organizations shall bear no legal liability for damage caused by the non-performance of transactions under law.

5. The application of others provisional measures complies with law.

Article 11. Dossier preservation and information confidentiality

1. Reporting organizations shall preserve customer identification information and documents and information and documents related to transactions subject to reporting specified in Decree No. 74/2005/ND-CP and this Circular for at least 5 years from the date of closing accounts or terminating transactions.

2. Reporting organizations may not inform customers and related parties of the reporting on suspicious transactions, reported contents and information already provided to competent agencies.

3. Documents and dossiers related to transactions reported under this Circular are classified as “confidential”. Reporting organizations may only provide them to competent state agencies according to law. Competent state agencies shall manage these documents and dossiers according to regulations on management of confidential documents.

4. Individuals and organizations that report or provide information on customers related to transactions subject to reporting under Decree No. 74/2005/ND-CP and this Circular shall not be regarded as having committed violations of the law on assurance confidentiality of information on customers and activities related to customers.

Article 12. Training in money laundering prevention and combat in the real estate sector

1. Annually, reporting organizations shall elaborate and implement training programs so as to improve the awareness about anti-money laundering measures for all staff members doing jobs related to real estate transactions and, concurrently, adopt policies to prioritize the training and fostering of knowledge for those who directly contact customers and those who take charge of money laundering prevention and combat under Clause 3 of this Article.

2. Reporting organizations shall select training forms suitable to their organizational and operational characteristics and proactively coordinate with competent state agencies and related units in organizing training courses on money laundering prevention and combat in the real estate sector for their staff members.

3. Within 6 months after recruiting a new staff member to do jobs related to real estate transactions, reporting organizations must provide him/her with training in basic knowledge about money laundering prevention and combat in the real estate sector.

4. Institutions providing training in real estate brokerage, real estate valuation and real estate trading floor management and administration shall add to the basic knowledge part of their training programs a specialized subject on “money laundering prevention and combat in the real estate sector,” which will be provided in 4 periods with the following principal contents:

a/ Legal provisions and internal regulations on money laundering prevention and combat; responsibilities to implement the law on money laundering prevention and combat in the real estate sector;

b/ Money laundering techniques and tricks widely seen in the real estate sector;

c/ Anti-money laundering measures in the real estate sector;

d/ Suspicious transactions and methods of identifying suspicious transactions in the real estate sector;

f/ Guidance on methods of updating information, making reports and handling suspicious transactions.

Training institutions shall send documents compiled for the specialized subject of “money laundering prevention and combat in the real estate sector” and lists of lecturers to the House and Real Estate Market Management Department - the Ministry of Construction for checking and may only use these documents as teaching materials after the House and Real Estate Market Management Department gives its written reply that these documents satisfy prescribed requirements.

5. Persons who have been grated certificates of real estate brokerage, real estate valuation or real estate transaction floor management and administration before the effective date of this Circular are not required to attend “money laundering prevention and combat in the real estate sector” classes at training institutions. Within 3 months after the effective date of this Circular, reporting organizations shall coordinate with training institutions or competent state agencies in organizing in-service training courses on money laundering prevention and combat for their staff members who have been granted certificates of real estate brokerage, real estate valuation or real estate trading floor management and administration but not yet attend “money laundering prevention and combat in the real estate sector” courses.

Article 13. Control of and reporting on anti-money laundering work

1. Reporting organizations shall regularly conduct internal control so as to assure the observance of law and internal regulations on anti-money laundering in real estate business. All detected violations must be promptly reported to the person in charge of anti-money laundering work for handling.

2. All violations detected in the course of control must be reported to persons in charge of anti-money laundering work and heads of reporting organizations for handling.

3. Annually, reporting organizations shall conduct internal control of their anti-money laundering work and evaluate and observance of internal regulations already established and propose measures to improve the effectiveness of anti-money laundering work.

4. Before November 30 every year, reporting organizations shall send sum-up reports on anti-money laundering activities carried out in the year (made according to the form provided in Appendix 3 to this Circular, not printed herein) to provincial-level Construction Departments and the House and Real Estate Market Management Department - the Ministry of Construction for summarization.

Article 14. Responsibilities of provincial-level Construction Departments

1. To guide and inspect organizations and individuals trading in real estate or providing real estate services and reporting organizations in strictly complying with this Circular;

2. To comply with Article 18 of Decree No. 74/2005/ND-CP and coordinate with competent state agencies in processing reports on suspicious transactions;

3. To urge and inspect institutions training in real estate brokerage and valuation and real estate trading floor management and administration to supplement training programs on money laundering prevention and combat in the real estate sector;

4. Before December 31 every year, to send sum-up reports on anti-money laundering activities carried out in the year (made according to the form provided in Appendix 4 to this Circular, not printed herein) to the House and Real Estate Market Management Department - the Ministry of Construction for summarization and reporting to the Government.

Article 15. International cooperation in money laundering prevention and combat in the real estate sector

Reporting organizations shall enter into international cooperation in money laundering prevention and combat in the real estate sector when so requested by competent state agencies.

Article 16. Handling of violations

Organizations and individuals in charge of money laundering prevention and combat in real estate business that violate Decree No. 74/2005/ND-CP and this Circular not seriously enough for penal liability examination shall be administratively handled under Clauses 2 and 3, Article 24 of Decree No. 74/2005/ND-CP and other relevant legal documents.

Chapter IV

IMPLEMENTATION PROVISIONS

Article 17. Effect

This Circular takes effect 45 days after its signing.

Any difficulties and problems arising in the course of implementation should be reported to the Ministry of Construction for settlement.

Article 18. Organization of implementation

Provincial-level People’s Committees shall direct provincial-level Construction Departments to implement this Circular in their respective localities.

The House and Real Estate Market Management Department, the Inspectorate of the Ministry of Construction and reporting organizations shall implement this Circular.-

For the Minister of Construction
Deputy Minister
NGUYEN TRAN NAM