Circular No. 148/2010/TT-BTC dated September 24, 2010 of the Ministry of Finance guiding the application of anti-money laundering measures in insurance, securities and prize-winning gaming sectors

THE MINISTRY OF FINANCE

Circular No. 148/2010/TT-BTC of September 24, 2010, guiding the application of anti-money laundering measures in insurance, securities and prize-winning gaming sectors

Pursuant to the December 9, 2000 Law on Insurance Business;

Pursuant to the June 29, 2006 Law on Securities;

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

Pursuant to the Government’s Decree No. 45/2007/ND-CP of March 27, 2007, detailing a number of articles of the Law on Insurance Business;

Pursuant to the Government’s Decree No. 14/2007/ND-CP of January 19, 2007, detailing a number of articles of the Law on Securities, and Decree No. 84/2010/ND-CP of August 2, 2010, amending and supplementing a number of articles of Decree No. 14/2007/ND-CP;

Pursuant to the Government’s Decree No. 30/2007/ND-CP of March 1, 2007, on lottery business;

Pursuant to the Prime Minister’s Decision No. 32/2003/QD-TTg of February 27, 2003, promulgating the Regulation on the business of providing prize-winning electronic games for foreigners;

Pursuant to the Government’s Decree No. 118/2008/ND-CP of November 27, 2008, defining functions, tasks, powers and organizational structure of the Ministry of Finance;

The Ministry of Finance guides the application of anti-money laundering measures as follows:

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation

This Circular guides the application of anti-money laundering measures in insurance, securities and prize-winning gaming sectors in the territory of the Socialist Republic of Vietnam.

Article 2. Subjects of application

This Circular applies to Vietnamese and foreign individuals, agencies and organizations that are engaged in insurance, securities and prize-winning gaming activities in Vietnam, including:

1. Insurance and insurance brokerage businesses which are established and operate in Vietnam under the Law on Insurance Business.

2. Individuals and organizations engaged in securities issuance, listing, trading, trading organization, depository, clearing settlement and payment under the Law on Securities.

3. Businesses licensed to conduct lottery, betting, casino and prize-winning electronic gaming business lines under law.

Article 3. Interpretation of terms

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

1. Suspicious transaction means a transaction defined in Article 9 of this Circular and Article 10 of the Government’s Decree No. 74/2005/ND-CP of June 7, 2005, on money laundering prevention and combat (below referred to as Decree No. 74/2005/ND-CP).

2. Reporting organization means an organization defined in Article 2 of this Circular which is responsible for making reports according to its competence and scope of operation as permitted by competent state agencies.

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

4. Transaction of large value means a transaction in cash of a value which must be reported under Article 8 of this Circular.

5. Customer information updating means modification or supplementation of identified information on a customer in order to assure adequate and accurate information throughout the course of establishing the relationship and conducting transactions with such customer.

6. Beneficiary means a person who ultimately owns or controls a monetary or another property transaction.

7. Non-performance of a transaction means that a reporting organization keeps the transaction or account status unchanged after deciding to apply provisional handling measures specified in Article 11 of this Circular.

8. Prize-winning gaming means lottery, betting, casino and prize-winning electronic game business activities.

9. Token means a chip, coin or card used in substitution for cash by participants in prize-winning games and valid only at casinos and places providing prize-winning electronic games.

10. Competent state agencies means state agencies with the function of managing, collecting, processing and storing information relating to transactions conducted by subjects defined in Article 2 of this Circular, including the Anti-Money Laundering Administration under the Banking Inspection and Supervision Authority of the State Bank of Vietnam and specialized state management agencies. Specialized state management agencies include:

a/ The Insurance Supervisory Authority of the Ministry of Finance, for the insurance sector;

b/ The State Securities Commission of the Ministry of Finance, for the securities sector;

c/ The Department of Banking and Financial Institutions of the Ministry of Finance, for prize-winning gaming.

Chapter II

ANTI-MONEY LAUNDERING MEASURES

Article 4. Internal regulations on anti-money laundering

1. Pursuant to Decree No. 74/2005/ND-CP, this Circular and relevant legal documents, reporting organizations shall elaborate and promulgate internal regulations on anti-money laundering, clearly defining their responsibilities and obligations for assuring the capability to detect and restrict organizations and individuals that conduct money-laundering acts through reporting organizations. Such an internal regulation covers the following major provisions, processes and procedures:

a/ Process and procedures for identifying and updating information on customers and beneficiaries, measures to verify customer and beneficiary information in case of a suspicious transaction;

b/ Process of reviewing, detecting, handling and reporting on a suspicious transaction to competent state agencies;

c/ Provisional anti-money laundering measures and handling principles in case of delay or non-performance of a transaction;

d/ Process of accepting and managing customers in the insurance, securities and prize-winning gaming sectors;

e/ Internal control and audit of observance of anti-money laundering regulations, processes and procedures;

f/ Functions, powers and responsibilities of persons or sections in charge of anti-money laundering work;

g/ Training courses for raising awareness about and professional expertise for anti-money laundering work;

h/ Information storage and confidentiality.

2. Internal regulations on anti-money laundering shall be disseminated to persons and sections in charge of anti-money laundering work in reporting organizations, including also persons employed by these organizations for 6 months or more to conduct financial and monetary transactions at their head offices, transaction bureaus and branches in Vietnam or abroad.

3. Reporting organizations shall send their internal regulations on anti-money laundering to the Anti-Money Laundering Department under the Banking Inspection and Supervision Authority of the State Bank of Vietnam and specialized state management agencies. They shall decide on the provision of their internal regulations on anti-money laundering to financial institutions at home and abroad acting as their agents when so requested.

Article 5. Persons or sections in charge of anti-money laundering work

1. Based on the scale, scope and characteristics of their operation, reporting organizations shall decide on appointment of their employees or setting up of specialized sections in charge of anti-money laundering work. Reporting organizations shall register with competent state agencies, including the Anti-Money Laundering Department under the Banking Inspection and Supervision Authority of the State Bank of Vietnam and specialized state management agencies, information on the names and addresses of their persons or sections in charge of anti-money laundering work, and their own addresses, telephone and fax numbers for contact when necessary. Any change in such information shall be notified in writing by reporting organizations to competent state agencies.

2. Persons or sections in charge of anti-money laundering work have the following main functions and tasks:

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

b/ To make and take responsibility for the contents of reports on suspicious transactions to be sent to competent state agencies;

c/ To preserve dossiers and update information on reports on suspicious transactions for provision to competent state agencies;

d/ To make and archive monthly reports on transactions of large value and provide them to competent state agencies upon request;

e/ To make reports on anti-money laundering work in their organizations at the request of competent state agencies;

f/ To formulate and implement anti-money laundering programs, policies and strategies for their organizations;

g/ To regularly evaluate and revise their internal regulations on anti-money laundering in order to make them compliant with laws and suitable to changes and developments in business operations of their organizations;

h/ To disseminate, popularize, guide and provide training in anti-money laundering activities and measures to their employees as well as individuals and organizations involved in business operations of their organizations.

Article 6. Process of customer identification

1. Cases of customer identification:

a/ Customers open first-time accounts with reporting organizations;

b/ Customers perform transactions specified in Article 8 of this Circular;

c/ Customers perform transactions specified in Article 9 of this Circular.

2. Customer identification information details:

A reporting organization may itself design a customer identification form which must contain the following principal details:

a/ Customer information:

- For an individual customer: Full name; date of birth; nationality; occupation; position; serial number of passport, visa and identity card; address (addresses of the registered place of permanent residence and the current place of residence, for Vietnamese; overseas registered address and registered address of temporary residence in Vietnam, for foreigners) and telephone number. In case an account is registered under names of many customers, all aforesaid details of each customer must be provided.

- For an institutional customer: Full and abbreviated transaction names; head office address; telephone and fax numbers; serial numbers and dates of issuance of establishment license, investment certificate or business registration certificate; establishing agency; information on business lines; summarized information on organizational structure and leadership apparatus; information on the organization’s at-law representative (including aforesaid information details required for an individual customer).

- For a customer being an insurance policy holder: Information details must be provided as for an individual customer, an authorized signatory or a beneficiary.

b/ Date of account opening or transaction performance;

c/ Initial cash balance of the account or transaction valued in the domestic currency or a foreign currency and exchange rate (when necessary);

d/ Purpose and value of the account or transaction, information on the beneficiary;

e/ For an e-money transfer, information details on name, address and account number of the person issuing the first money transfer order (if any);

f/ Name and signature of the reporting organization’s employee responsible for approving the account opening or conducting transactions with the customer.

3. Customer identification measures:

a/ Using reliable original documents and data to identify the customer and verify the customer identification, for example:

- For an individual customer: Valid identity card or passport or other valid personal identification papers issued by competent agencies bearing the customer’s photo and a certification seal appended to the photo.

- For an institutional customer: Establishment license or decision, decision on renaming, separation, split-up or merger, business registration certificate, tax registration certificate and decisions on appointment of the director (director general) and the chief accountant.

- For a customer being an insurance policy holder: Papers verifying identification of the individual or institutional customer, medical records of the insurance policy holder and beneficiary, papers evidencing incomes.

b/ A reporting organization may rely on a third party to verify the customer identification as follows:

- Through another individual or organization (including reporting organizations) which has had or currently has relationship with the customer and compare information available with that provided by the customer.

- Through a managing agency or another competent state agency.

- It may hire or cooperate with other organizations in verifying the customer identification.

c/ In case a reporting has many interrelated customers, it shall apply a measure to verify the identification of each customer.

d/ A reporting organization shall itself add other customer identification measures based on its operation and business characteristics and money laundering risk level of each type of customer. However, the ultimate responsibility for identifying customers and updating customer information rests with the reporting organization.

Article 7. Review of information on customers and transactions

1. Reporting organizations shall carefully check documents and records related to big and abnormal transactions so as to detect suspicious transactions.

2. Reporting organizations shall regularly review information on customers, especially those suspected of conducting money laundering activities or those on warning lists promulgated by the Ministry of Public Security and competent state agencies defined in this Circular.

3. Reporting organizations shall regularly update information on customers already reported in previous suspicious transactions.

Article 8. Transactions of large value

1. Value of transactions of large value:

a/ In the insurance sector: A customer that pays insurance premium in cash in lump sum or installments within a day for a personal insurance policy totaling VND 200,000,000 (two hundred million dong) or more in Vietnam dong or in a foreign currency convertible into Vietnam dong at the average inter-bank exchange rate at the time of transaction;

b/ In the securities sector:

- An individual customer that conducts one or more than one transaction of purchasing or selling securities within a day with a total cash amount of VND 200,000,000 (two hundred million dong) or more;

- An institutional customer that conducts one or more than one transaction of purchasing or selling securities within a day with a total cash amount of VND 500,000,000 (five hundred million dong) or more.

c/ For prize-wining gaming:

- An individual customer that conducts one or more than one transaction of buying lottery tickets, betting tickets or tokens within a day with a total cash amount of VND 200,000,000 (two hundred million dong) or more in Vietnam dong or in a foreign currency convertible into Vietnam dong at the average inter-bank exchange rate at the time of transaction.

- For a customer representing one or more than one individual customer in conducting transactions of buying lottery tickets, betting tickets or tokens, a transaction of large value means one or more than one transaction within a day with a total cash amount of VND 200,000,000 (two hundred million dong) or more per individual customer in Vietnam dong or in a foreign currency convertible into Vietnam dong at the average inter-bank exchange rate at the time of transaction.

2. Reporting organizations shall make and archive monthly reports (in print or computer file form) on transactions of large value according to a set form.

Reporting organizations shall send reports on transactions of large value to competent state agencies upon request.

3. Reporting organizations shall review and screen transactions of large value in order to detect suspicious transactions.

Article 9. Suspicious transactions

In addition to signs of a suspicious transaction specified in Clause 1, Article 10 of Decree No. 74/2005/ND-CP, the Ministry of Finance additionally specifies the following signs of a suspicious transaction:

1. It is impossible to identify the customer based on information provided by such customer or the transaction involves an unidentifiable party.

2. Transaction turnover on the account is unsuitable to information and normal business operations of the customer or there is a sudden change in the transaction turnover on the customer’s account.

3. The customer’s account is left dormant for more than one year or resumes for transactions without any justifiable reason.

4. The transaction is conducted by a customer involved in illegal activities already published in the mass media to the knowledge of the reporting organization or on a warning list provided by a competent state agency.

5. Other signs of a suspicious transaction in the insurance sector:

a/ The customer wishes to purchase an insurance policy of large value or to make a lump-sum payment (payment of the whole insurance premium in lump sum) for insurance products not subject to lump-sum payment, meanwhile his/her/its existing insurance policies are of small value and subject to installment premium payment;

b/ The customer wishes to enter into an insurance policy with premiums payable in installments not on a par with his/her/its current incomes or to purchase an insurance policy related to a business line other than his/her/its normal business lines;

c/ The customer wishes to purchase an insurance policy using checks drawn from an account other than his/her personal account or making payment with banking instruments in an anonymous transaction or using and paying cross-border bonds;

d/ The customer requests change of designated beneficiaries or replacement of the beneficiary with a person having no transparent relationship with the insurance policy purchaser;

e/ The customer wishes to borrow the maximum cash value of an insurance policy subject to lump-sum premium payment immediately after the premium payment or to use the insurance application to make a deposit or collateral (unless the credit institution so requests);

f/ The customer’s company experiences an abnormal change in operation of its staff members or agents (for example: the number of insurance policies of staff members markedly or abnormally increases) or the active level of the policy subject to lump-sum premium payment constantly exceeds the average level of the company;

g/ The customer is designated by an overseas agent, subsidiary or company based in an non-cooperative country or territory or the Financial Action Task Force on Money Laundering (FATF) or from a country in which corruption or illegal drug production or trafficking is possibly rampant.

6. Other signs of a suspicious transaction in the securities sector:

a/ The customer provides untruthful or fabricated information or refuses to provide necessary information on the value and origin of his/her/its assets in a securities company when requested;

b/ Securities purchase and sale transactions performed by an individual or organization within a day or several days show abnormal signs;

c/ The customer transfers securities outside the system without any justifiable reason;

d/ A securities trading account of large value of a non-resident in Vietnam is withdrawn from Vietnam and transferred to overseas financial centers;

e/ Securities purchase and sale transactions are paid for with money from investment funds opened in regions or territories classified by international organizations as having high risks of money laundering.

7. Other signs of a suspicious transaction in the prize-winning gaming sector:

a/ The customer constantly shows signs of intentionally losing games at a casino or a place providing prize-winning electronic games;

b/ The customer purchases tokens of a large value at a casino or a place providing prize-winning electronic games but does not play games or plays with very few tokens, and then changes these tokens into cash and requests the enterprise to pay in check or bank drafts or transfer money to another account;

c/ The customer requests the transfer of bet-winning or prize money to a third party that has no transparent relationship with him/her/it, especially when the third party does not reside in the same place of permanent residence with the customer;

d/ The customer adds cash amounts or checks to his/her/its bet-winning or prize money amount and requests the enterprise to incorporate these amounts into a common check of large value;

e/ The customer requests more than once a day the enterprise to change his/her/its quantity of tokens of unclear origin into a large cash amount;

f/ The customer requests more than once a day a third party to purchase a quantity of tokens of large value and make bets on his/her/its behalf;

g/ The customer purchases more than once a day lottery tickets, betting tickets and tokens in a quantity close to the level of large-value transactions.

8. Reporting organizations shall themselves add suspicious signs based on their operation and business characteristics.

Article 10. Process of handling suspicious transactions

1. An organization is regarded as having detected a suspicious transaction and shall report this transaction if its staff members report on the detection or there is a ground to believe that such a suspicious transaction is currently taking place or information in records and documents it keeps or has acquired shows that customers or transactions performed by customers apparently have abnormal or suspicious signs and these customers or transactions have been reported to its staff members or section in charge of anti-money laundering work or to its competent person.

2. Upon detecting suspicious transactions, a reporting organization shall report them in writing to a competent state agency according to a set form. When necessary, reporting organizations may report suspicious transactions to competent state agencies via fax or telephone but shall later send written reports.

3. Reporting organizations shall follow subsequent developments of reported transactions and update newly arising relevant information.

4. Reporting time limit:

a/ Except the cases specified in Article 11 of this Circular, a reporting organization shall report a suspicious transaction to a competent state agency within 48 working hours after it detects such transaction or has a ground to believe that such transaction has taken place or is taking place;

b/ In case a reporting organization detects or has a ground to believe that a transaction relating to the criminal offense of money laundering or terrorist financing has taken place or is taking place, it shall report such transaction to a competent state agency within 24 working hours after detecting such transaction.

c/ Before November 30 every year, a reporting organization shall make and send a general report on anti-money laundering activities performed in the year to a competent state management agency for summarization and reporting to the Government.

5. Information confidentiality:

a/ A reporting organization may not notify its customers and parties involved in a suspicious transaction of its reporting, reported contents or information already provided to a competent agency;

b/ Documents and dossiers relevant to transactions reported under this Circular are “confidential” ones and reporting organizations may only provide them to competent state agencies under law;

c/ Individuals and organizations that perform the responsibility to report or provide  customer information relating to transactions subject to compulsory reporting under Decree No. 74/2005/ND-CP and this Circular are not regarded as having violated regulations on assurance of confidentiality of information on customers and customer-related activities.

Article 11. Application of provisional handling measures

1. Reporting organizations shall apply provisional handling measures according to their competence and law.

2. A reporting organization may refuse to perform a transaction in the following cases and concurrently report such to a competent state agency:

a/ The transaction involves individuals and organizations on a list of those involved in criminal activities provided by the Ministry of Public Security or competent state agencies;

b/ There is a ground to believe that the transaction requested to be performed is related to criminal activities;

c/ The transaction of transferring money into or out of the customer account in any form is performed for purposes beyond the scope of operation and service provision of the reporting organization;

d/ An anonymous account is opened and maintained for transactions or is merely numbered or opened by a customer with a hidden name or an obviously false name;

e/ An account is opened and maintained for transactions by a customer whom the organization has not yet directly contacted for verifying customer information at least once.

3. Reporting organizations are not obliged to bear legal liability for damage caused by non-performance of transactions under law.

4. Sealing and temporary forfeiture of property and freezing of transaction accounts comply with current laws.

Article 12. Record-keeping duration

Reporting organizations shall preserve information and records for identifying customers and those related to reports on suspicious transactions and on transactions of large value specified in Decree No. 74/2005/ND-CP and this Circular for at least 5 years from the date of account closure or transaction conclusion.

Article 13. Training

1. Annually, reporting organizations shall formulate and implement programs on training and improvement of awareness about anti-money laundering measures for all their officers and employees involved in their monetary transactions and other property transactions. They shall adopt policies to prioritize training of employees who directly conduct transactions with customers and officers and employees in charge of anti-money laundering.

2. Reporting organizations shall select by themselves training modes appropriate to their organizational and operational characteristics and take the initiative in coordinating with competent state agencies in training their officers and employees in anti-money laundering expertise.

3. Training contents must be suitable to jobs currently performed by trained officers and employees, money laundering risks in connection to their jobs and their responsibility for following internal regulations on anti-money laundering, and principally include the following:

a/ Legal provisions and internal regulations on anti-money laundering, attaching importance to such issues as customer identification measures, methods of detecting and reporting on suspicious transactions and legal liability for failure to observe regulations on anti-money laundering.

b/ Updated information on money laundering trends, methods and tricks;

c/ Updated information on anti-money laundering internal processes and measures currently applied by reporting organizations.

Article 14. Internal control

1. Reporting organizations shall set up their internal control systems to assure the observance of legal provisions and internal regulations on anti-money laundering.

2. Annually, reporting organizations shall conduct an internal control of anti-money laundering work, assess the observance of established internal regulations and propose measures to raise effectiveness and efficiency of anti-money laundering work.

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

Article 15. Handling of violations

Violations of regulations on anti-money laundering in the insurance, securities and prize-winning gaming sectors which are not serious enough to be criminally handled shall be administratively handled under the Ordinance on Handling of Administrative Violations, the Government’s Decree No. 74/2005/ND-CP, and relevant legal documents.

Chapter III

IMPLEMENTATION PROVISIONS

Article 16. Effect

This Circular takes effect 45 days from the date of its signing.

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

Article 17. Organization of implementation

The director of the Department of Banking and Financial Institutions, the Chairman of the State Securities Commission, the director of the Insurance Supervisory Authority, the director of the Office of the Ministry of Finance, heads of concerned units, chairpersons of Boards of Directors and Members’ Councils, directors general (directors) of reporting organizations shall implement this Circular.-

For the Minister of Finance
Deputy Minister
TRAN XUAN HA