Circular No. 41/2011/TT-NHNN dated December 15, 2011 of the State Bank of Vietnam on guiding risk-based identification and updating of customer information in service of money laundering prevention and control

THE STATE BANK OF VIETNAM

Circular No. 41/2011/TT-NHNN of December 15, 2011, guiding risk-based identification and updating of customer information in service of money laundering prevention and control

Pursuant to June 16, 2010 Law No. 46/2010/QH12 on the State Bank of Vietnam;

Pursuant to June 16, 2010 Law No. 47/2010/QH12 on Credit Institutions;

Pursuant to the Government’s Decree No. 96/2008/ND-CP of August 26, 2008, defining the functions, tasks, powers and organizational structure of the State Bank of Vietnam;

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

In furtherance of the Prime Minister’s Decision No. 287/QD-TTg of February 24, 2011, amending and supplementing the Prime Minister’s Decision No. 1451/QD-TTg of August 12, 2010, promulgating the national action plan on money laundering and terrorism financing combat;

The State Bank of Vietnam guides risk-based identification and updating of customer information in service of money laundering prevention and control as follows:

Section 1

GENERAL PROVISIONS

Article 1. Scope of regulation

This Circular guides risk-based identification and updating of customer information in service of money laundering prevention and control.

Article 2. Subjects of application

This Circular applies to:

1. Credit institutions and foreign bank branches established and operating under the Law on Credit Institutions.

2. Foreign exchange agents, registered gold trading enterprises, and organizations providing intermediary payment or payment services licensed by the State Bank.

Article 3. Interpretation of terms

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

1. Agent banking operation means the provision of banking, payment services and other services by a bank in a country or territory (below referred to as an agent bank) for another bank in another country or territory (below referred to as a partner bank).

2. Reporting organizations are organizations defined in Article 2 of this Circular.

3. Services of money or value transfer means services of transferring money or value (checks, bills of exchange, payment cards or other valuable papers) from a place to another provided by individuals or organizations that are not yet licensed or managed by competent state agencies.

4. Politically exposed persons are those who are entrusted with senior positions in the state apparatus in foreign countries, including heads of state or government, senior governmental, judicial or military officials; or senior executive officers of foreign state-owned corporations, senior political party officials; or family members and close associates of such persons.

5. Shell bank means a bank without any tangible head office and not subject to management and supervision of any competent state agency in a country or territory.

6. Introduced business means business of reporting organizations with customers introduced by intermediaries that are members of their group, corporation, or financial institution or organizations providing intermediary services.

7. The Financial Action Task Force is an intergovernmental body which studies, issues and supervises the implementation of international standards of money laundering and terrorism financing combat.

Section 2

SPECIFIC PROVISIONS

Article 4. Bases for determining the risk degree

1. The degree of money laundering risks may be determined on the following bases:

a/ The types of customers: residents or non-residents; organizations or individuals; customers on warning lists; customers engaged in real estate, pawnshop or casino business, business lines with turnover largely in cash or  doing business on the Internet;

b/ The types of products or services regularly used by customers: cash deposit, bank transfer, online money transfer, card transaction and currency changing;

c/ Localities in which customers reside or are headquartered: countries on the list of countries under embargo stated in the United Nations Security Council’s resolutions; countries on the list of countries which do not or insufficiently apply recommendations on money laundering and terrorism financing combat periodically announced by the Financial Action Task Force (below referred to as public list); and areas considered highly prone to drug-related activities;

d/ Other bases according to reporting organizations’ regulations.

2. Reporting organizations may determine the degree of money laundering risks on the bases stated in Clause 1 of this Article, but shall pay attention to transactions and business relationships between customers and organizations and individuals from countries on the public list. When necessary, reporting organizations shall check the bases and purposes of those transactions. If suspecting that those transactions are related to money laundering, reporting organizations shall report suspicious transactions to the Anti-Money Laundering Department.

Article 5. Classification and identification of customers by the degree of risks

1. Depending on the scale and scope of operations and transactions of customers, reporting organizations shall review and classify customers according to the degree of risks, including high, medium or low degree.

2. For customers with a high degree of risk, reporting organizations shall take enhanced and strict measures of customer identification.

Article 6. Beneficiary owners

1. Reporting organizations shall identify and update information on beneficiary owners, and preserve dossiers and documents.

2. Beneficiary owner information shall include individual customer identification information specified at Point a, Clause 2, Article 6 of the State Bank of Vietnam’s Circular No. 22/2009/TT-NHNN of November 17, 2009, guiding the implementation of anti-money laundering measures and information on ownership rate or control right of beneficiary owners in their organizations.

Article 7. Politically exposed persons

1. Reporting organizations shall determine whether the customer is a politically exposed person.

2. For a customer who is a politically exposed person, reporting organizations shall take the following enhanced measures:

a/ Obtaining the approval of director general (director) or authorized deputy director general (deputy director) before establishing business relationship or right after determining that the current customer is politically exposed person;

b/ Taking measures to know the source of the customer’s money and property.

Article 8. Agent banking operation

1. Reporting organizations may neither enter into agent contracts nor transact with shell banks.

2. In agent banking operations, reporting organizations that are agent banks shall:

a/ Obtain the approval of directors general (directors) or authorized deputy directors general (deputy directors) before establishing banking relationship with partner banks;

b/ Collect information to understand operation of partner banks and ensure that these banks are managed and supervised by competent agencies;

c/ Annually, assess the implementation of anti-money laundering measures of partner banks;

d/ Take measures to avoid abuse of agent banking relationships for money laundering;

e/ If customers of partner banks pay through these banks’ accounts at reporting organizations, ensure that partner banks have verified customer identification information, constantly supervised customers, and  are able to provide customer information upon request.

Article 9. Electronic transactions and non-face-to-face transactions

1. Reporting organizations shall determine the degree of money laundering risks when conducting electronic banking and payment transactions with customers, such as internet banking, mobile banking, banking cards.

2. Reporting organizations shall ensure that updating information of customers mentioned in Clause 1 of this Article, through procedures as requiring certification, adding documents and independently meet with customers, are not less effective than updating information of customers that they meet face to face.

Article 10. Introduced business

1. When conducting introduced business, reporting organizations may identify customers through intermediaries but shall ensure that:

a/ Intermediaries collect, preserve and promptly and adequately provide reporting organizations with customer identification information upon request;

b/ Intermediaries take measures to comply with requirements for customer information identification and updating according to the Financial Action Task Force’s recommendations and submit to management and supervision of competent state agencies.

2. Customer identification through intermediaries does not preclude reporting organizations’ responsibilities for customer information identification and updating.

Article 11. Services of money or value transfer

1. Reporting organizations shall take measures to determine whether customers are providers of money or value transfer services.

2. Upon detection of customers providing money or value transfer services, reporting organizations shall take enhanced customer identification measures and report them to the Anti-Money Laundering Department for handling under law.

Section 3

ORGANIZATION OF IMPLEMENTATION

Article 12. Effect

This Circular takes effect on February 1, 2012.

Article 13. Handling of violations

1. Those who commit money laundering-related offenses shall be handled under the Penal Code of the Socialist Republic of Vietnam.

2. Individuals or organizations that violate the provisions of this Circular not seriously enough for penal liability examination shall be administratively sanctioned under law and the Government’s Decree No. 74/2005/ND-CP of June 7, 2005, on the prevention and control of money laundering.

Article 14. Organization of implementation

The Chief of the Office, the Chief Banking Inspector and Supervisor, heads of units of the State Bank, directors of provincial-level branches of the State Bank, chairpersons of boards of directors or member councils, and directors general (directors) of reporting organizations shall implement this Circular.-

For the State Bank Governor
Deputy Governor
TRAN MINH TUAN