Circular 17/2023/TT-NHNN inspection of compliance with laws on monetary and banking operations

CIRCULAR

Providing regulations on inspection of compliance with the laws and policies on monetary and banking operations

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Pursuant to the Law on the State Bank of Vietnam dated June 16, 2010;

Pursuant to the Law on Credit Institutions dated June 16, 2010, and the Law Amending and Supplementing a Number of Articles of the Law on Credit Institutions dated November 20, 2017;

Pursuant to the Law on Inspection dated November 14, 2022;

Pursuant to the Government’s Decree No. 102/2022/ND-CP dated December 12, 2022, defining the functions, tasks, powers and organizational structure of the State Bank of Vietnam;

At the proposal of the Chief Inspector of the Banking Supervision Agency;

The Governor of the State Bank of Vietnam hereby promulgates the Circular providing regulations on inspection of compliance with the laws and policies on monetary and banking operations.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation

This Circular prescribes the inspection of compliance with the laws and policies on monetary, banking operations, foreign exchange and anti-money laundering (hereinafter referred to as monetary and banking operations) for inspected entities.

Article 2. Subjects of application

This Circular applies to:

1. The Banking Supervision Agency and units affiliated to the Banking Supervision Agency.

2. State Bank branches in provinces and centrally-run cities (hereinafter referred to as State Bank branches), Inspection and Supervision Departments of State Bank branches.

3. Other administrative units under the State Bank of Vietnam.

4. Credit institutions and foreign bank branches, Vietnam-based representative offices of foreign credit institutions, and other foreign organizations engaged in banking activities. 

5. Organizations engaged in foreign exchange and gold trading activities; organizations engaged in credit information activities; non-bank intermediary payment service providers.

6. Other organizations and individuals involved in the inspection of compliance with the laws and policies on monetary and banking operations.

Article 3. Interpretation of terms

1. Inspection means a regular activity of the inspection unit with respect to inspected entities to review and evaluate inspected entities' compliance with monetary and banking policies and laws in order to ensure the effectiveness and efficiency of the state management of the State Bank of Vietnam (hereinafter referred to as the State Bank).

2. Inspection units mean those specified in Clauses 1, 2 and 3 Article 2 of this Circular.

3. Inspected entities mean those under the state management of the State Bank, including those specified in Clauses 4 and 5 Article 2 of this Circular.

4. Inspection decision makers include:

a) Heads of inspection units specified in Clauses 1 and 2 Article 2 of this Circular;

b) For units specified in Clause 3 Article 2 of this Circular, the Governor of the State Bank shall assign heads of the inspection units to issue inspection decisions; heads of the inspection units shall sign per procurationem the Governor of the State Bank on documents of the inspection decision makers in accordance with this Circular.

Article 4. Inspection objectives

1. To review and evaluate information, data and compliance with monetary and banking laws and policies by the inspected entities in order to ensure completeness and accuracy in accordance with the law on monetary and banking.

2. To strengthen the effectiveness and efficiency of state management in the monetary and banking sector.

3. To detect, prevent and handle violations of the law in the monetary and banking sector.

4. To propose amendment, supplementation and completion of mechanisms, policies, and regulations of law on monetary and banking if necessary.

5. To contribute to ensuring the safe and healthy development of the system of credit institutions and the financial system; to protect the legitimate rights and interests of depositors and customers of credit institutions.

Article 5. Inspection principles

1. The inspection shall be carried out within the competence according to law provisions.

2. The inspection shall be carried out periodically according to plans or irregularly.

3. Assurance of accuracy, objectivity, honesty, democracy, timeliness, and effective coordination.

4. Assurance of neither overlap nor duplication of content, time, or inspected entities between inspection activities of inspection units, between inspection activities and supervision activities.

When conducting inspection, in case of detecting any overlap or duplication between inspection activities and supervision activities, supervision activities shall be carried out. In case of detecting overlap or duplication in inspection activities, heads of inspection units shall reach an agreement to conduct an inspection.

Article 6. Annual inspection plans

1. The Banking Supervision Agency and State Bank branches shall, based on the assigned functions, tasks and powers, issue annual inspection plans. The Governor of the State Bank shall assign heads of other administrative units under the State Bank to sign per procurationem annual inspection plans. Inspection plans shall be issued as follows:

a) The Banking Supervision Agency shall develop and issue an inspection plan for the following year before December 15 every year, and send the issued inspection plan to other administrative units under the State Bank;

b) Other administrative units under the State Bank shall develop and issue inspection plans for the following year before December 25 every year, ensuring no duplication with the inspection plan of the Inspection and Supervision Departments in banking sector and inspection plan of the Banking Supervision Agency for that year.

2. Annual inspection plans may be amended and supplemented when necessary.

3. An annual inspection plan shall be developed based on the following information:

a) Results of the inspection carried out by inspection units in the previous years;

b) Inspection plan of the Inspection and Supervision Department in banking sector for the expected year of inspection (for inspection plans of the Banking Supervision Agency); inspection plan of Inspection and Supervision Department of such State Bank branch for the expected year of inspection (for inspection plans of the State Bank branches); inspection plan of the Inspection and Supervision Department in banking sector, inspection plan of Inspection and Supervision Department of the State Bank branch in the locality where the inspection is expected to be conducted for the expected year of inspection (for inspection plans of other administrative units under the State Bank);

c) The compliance with monetary and banking policies and laws by inspected entities;

d) Directions and requirements from competent authorities;

dd) Requirements for state management in sectors and fields within the management;

e) Socio-economic development requirements.

4. An annual inspection plan must contain at least the following information:

a) Grounds for issuance of the inspection plan;

b) Inspection objectives and requirements;

c) Inspected entities;

d) Contents of inspection;

dd) Inspection time.

5. Annual inspection plans and documents amending and supplementing annual inspection plans shall be sent to the inspected entities at least 5 working days from the date of issuance.

Article 7. Irregular inspection

Inspection units shall carry out irregular inspections according to the management requirements and actual situation, or according to requests, proposals or reports from competent state agencies, organizations and individuals, or at requests and directions of the Governor of the State Bank.

Chapter II

SPECIFIC PROVISIONS

Section 1

INSPECTION ACTIVITIES

Article 8. Entities subject to inspection carried out by inspection units

1. The Banking Supervision Agency shall inspect the compliance with monetary and banking policies and laws by the inspected entities, including:

a) Credit institutions, other than those specified at Points a and c Clause 3 of this Article;

b) Foreign bank branches as assigned by the Governor of the State Bank;

c) Organizations carrying out credit information activities;

d) Entities subject to inspection carried out by the State Bank branches, Inspection and Supervision Department of the State Bank branch, in case of necessity.

2. Units under the Banking Supervision Agency shall inspect entities specified in Clause 1 of this Article, which are their inspection and supervision subjects, according to the assigned functions and tasks.

3. State Bank branches, Inspection and Supervision Departments of State Bank branches shall inspect the compliance with monetary and banking policies and laws by inspected entities in their respective provinces and centrally-run cities where the State Bank branches are headquartered, including:

a) People’s credit funds;

b) Foreign bank branches, other than those specified at Point b Clause 1 of this Article;

c) Branches and transaction offices of credit institutions;

d) Vietnam-based representative offices of foreign credit institutions or other foreign institutions engaged in banking activities;

dd) Organizations engaged in foreign exchange and gold trading activities; non-bank intermediary payment service providers.

4. Other administrative units under the State Bank shall inspect the compliance with policies and legal documents under their competence of advising and assisting the Governor of the State Bank in the state management by inspected entities, including:

a) Credit institutions, other than those specified at Point a Clause 3 of this Article;

b) Foreign bank branches;

c) Organizations engaged in foreign exchange and gold trading activities; non-bank intermediary payment service providers.

5. In case of necessity, inspection units shall inspect other entities as assigned by the Governor of the State Bank.

Article 9. Inspection decisions, inspection plans and establishment of inspection teams

1. The inspection shall be carried out at the head offices of the inspected entities or inspection units. Inspection units shall issue inspection decisions, inspection plans and establish inspection teams.

2. Inspection decisions shall be signed and issued by the persons issuing decisions and shall be sent to inspected entities at least 5 working days before the expected inspection date, except for the cases of irregular inspection.

An inspection decision must contain at least the following information:

a) Grounds for issuing the inspection decision;

b) Inspected entities and contents;

c) Inspection team components;

d) Inspection location;

dd) Inspection duration; expected inspection start date;

e) Information, documents to be reported and submitted to the inspection unit by the inspected entity (if necessary).

An inspection decision shall be made using Form No. 01 to this Circular.

3. The inspection plan shall be developed and submitted by the inspection team to the inspection decision maker for approval on the basis of the inspection decision. Such plan must contain at least the following information:

a) Inspection objectives and requirements;

b) Inspected entities and contents;

c) Inspection duration and location; expected inspection start date;

d) Inspection methods;

dd) Implementation organization (responsibility assignment; communication and reporting regime).

An inspection plan shall be made using Form No. 02 to this Circular.

4. An inspection team must have at least 2 members, including:

a) The inspection team leader who is a leader at the department level or higher, or a major specialist and equivalent or higher, or a specialist and equivalent with a minimum rank of 5 years;

c) Inspection team member;

The inspection team leader and inspection team members must be those with good moral qualities and expertise consistent with the requirements and tasks of the inspection.

5. Inspection decision makers may change the inspection team leader or inspection team members if they fail to satisfy inspection requirements and tasks, or if they commit acts of violation of laws, or due to any objective reasons leading to failure to perform inspection tasks.

Article 10. Conducting an inspection

The inspection team shall, based on the approved and issued inspection decision and plan, conduct an inspection as follows:

1. The inspection team announces the inspection decision.

2. The inspection team requests the inspected entity to make reports and provide information and contents at the request of the inspection team.

3. The inspection team directly discusses and exchange with the inspected entity about the inspection contents. In case of necessity, the inspection team shall decide to directly work with persons involved in the inspection contents, and request the inspected entity to make written explanation on unclear issues relating to the inspection contents, organize the verification relating to the inspection contents.

4. The inspection team shall, based on information, dossiers and documents provided by the inspected entity to review and evaluate the inspected entity according to the inspection contents, objectives and requirements. In case of necessity, the inspection team shall request the inspected entity to additionally provide information, dossiers and documents relating to the inspection contents.

5. The results of working with the inspected entity must be recorded in a written record between the inspection team and the inspected entity according to Form No. 03 to this Circular.

6. During the inspection, in case of detecting any administrative violations in the monetary and banking sector committed by the inspected entity, the inspection team leader shall make a written record of administrative violations and send it to the person with administrative sanctioning competence for handling in accordance with laws.  In case the administrative violation is not related to the monetary and banking sector, the inspection team leader must make a written record of such violation and transfer it to the competent person for handling in accordance with laws.

In case of detecting signs of a crime, the inspection team leader must report to the inspection decision maker to immediately transfer the case file and related documents to the investigation agency for review and decision in accordance with law.

Article 11. Inspection duration and extension of inspection deadline

1. The inspection duration is 10 working days maximum, from the date of announcement of the inspection decision. The inspection deadline may be extended for no more than 5 working days.

2. Cases where the inspection deadline is extended:

a) When verification of information and documents is required for clarification of issues relating to the inspection contents;

b) The inspection contents are complicated, related to responsibilities of many agencies, organizations and individuals;

c) When the inspected entity, concerned organization or individual refuses to coordinate, obstruct or oppose, causing difficulties for inspection activities and affecting the inspection deadline.

3. The extension of inspection deadline shall be considered and decided by the inspection decision maker.

The inspection team leader shall issue a written request to the inspection decision maker to extend the inspection deadline, enclosed with the draft decision on extension of the inspection deadline. The written request must clearly state the extension reason and duration.

4. The decision on extension of the inspection deadline must be sent to the inspected entity before the inspection deadline as stated in the inspection decision and must contain at least the following information:

a) The inspection decision;

b) Reason for extension of the inspection deadline;

c) Extension duration.

A decision on extension of the inspection deadline shall be made using Form No. 04 to this Circular.

Article 12. Suspension of inspection, resumption of inspection

1. An inspection shall be suspended in the following cases:

a) There is a force majeure event as prescribed by law that affects the progress of the inspection;

b) The inspected entity shall request to suspend the inspection with legitimate reason and with the consent of the inspection decision maker. In such case, the period of temporary suspension of inspection shall not exceed 10 working days.

2. The inspection decision maker shall decide to resume the inspection when there are no more force majeure events or the expiration of the inspection suspension period specified in Point b Clause 1 of this Article.

3. The suspension of inspection and resumption of inspection must be decided in writing and signed by the inspection decision maker.

4. The decision on inspection suspension must contain at least the following information:

a) The inspection decision;

b) Inspection start time and inspection location;

c) Reason for inspection suspension;

d) Inspection suspension period and the first day of inspection suspension.

An inspection suspension decision shall be made using Form No. 05 to this Circular.

5. The decision on inspection resumption must contain at least the following information:

a) The inspection decision;

b) Decision on inspection suspension;

c) Reason for resumption of inspection and the date of inspection resumption.

An inspection resumption decision shall be made using Form No. 06 to this Circular.

6. Inspection suspension decisions or inspection resumption decisions must be sent to the inspected entities before the time of suspending or resuming the inspection.

7. The inspection suspension period shall not be included in the inspection duration.

Article 13. Cancellation of an inspection

1. The inspection decision maker shall issue a decision on cancellation of an inspection or one or more than one inspection content in the following cases:

a) The inspection contents have been concluded by the functional agency;

b) A decision to prosecute a criminal case regarding the content of the inspection has been issued by a competent state agency;

c) The Governor of the State Bank issues a written request for inspection cancellation;

d) The inspected entity is no longer exit;

dd) In cases of overlap or duplication that have been handled in accordance with Clause 4 Article 5 of this Circular.

2. The inspection cancellation decisions must be signed by the inspection decision makers and sent to the inspected entities at least 1 day before the first date of inspection cancellation, and must contain at least the following information:

a) The contents specified at Points a, b Clause 4 Article 12 of this Circular;

b) Reason for cancellation of an inspection;

c) Starting time of inspection cancellation.

The inspection cancellation decision shall be made using Form No. 07 to this Circular.

3. When canceling an inspection, the inspection team must cancel all measures taken according to the competence during the inspection; return the provided dossiers and documents to the inspected entities.

Article 14. Reporting inspection results and inspection conclusions

1. Within 5 working days from the end of the inspection, each inspection team member shall make a written report on the inspection result for the assigned content, and send proposals or recommendations to the inspection team leader.

2. Within 5 working days from the date of receiving the written reports from the inspection team members, the inspection team leader shall submit a report on the inspection results and draft inspection conclusions, relevant inspection dossiers, proposals and recommendations to the inspection decision maker.

3. Within 5 working days from the date of receiving the report on inspection results, and draft inspection conclusions from the inspection team leader, the inspection decision maker shall review and sign to issue the inspection conclusions.

4. Within 5 working days from the date of issuance, the inspection conclusions shall be sent to:

a) The inspected entity and relevant agencies, organizations, and individuals to implement recommendations stated in the inspection conclusions;

b) Relevant units under the State Bank to implement recommendations stated in the inspection conclusions according to the assigned functions and tasks.

5. The report on inspection results, inspection results conclusions must contain at least the following information:

a) Inspected entities;

b) Inspection contents;

c) Inspection results;

d) Inspection conclusions (on the compliance with monetary and banking policies and laws; clearly determining violations: nature, extent, consequences, reasons, responsibilities of organizations and individuals for each violation (if any), etc.);

dd) Measures taken under the competence (if any);

e) Proposal and recommendations on measures to handle the inspection results;

g) Reporting regime on results of remedy and handling as recommended (if any).

The report on inspection results and inspection conclusions shall be made according to Form No. 08 and Form No. 09 to this Circular.

Section 2

HANDLING OF INSPECTION RESULTS AND POST-INSPECTION RECOMMENDATIONS

Article 15. Measures to handle the inspection results

1. The inspection unit shall issue a written recommendation, warning, rectification or request the inspected entity to rectify shortcomings and violations discovered through inspection, and implementation deadline (if any).

2. The inspection unit shall take, or propose the competent state agency to take measures as prescribed by law to handle violations in case of detecting violations.

3. The inspection unit shall submit to the competent authority to consider conducting a supervision of the inspected entity in case of detecting violations of laws with many complicated details and not falling under the handling competence of the inspection unit.

4. The inspection decision maker shall transfer the case file and relevant documents to the investigation agency for consideration and decision in accordance with law, in case of detecting signs of crime.

5. Other measures as prescribed by laws.

Article 16. Monitoring and urging the implementation of post-inspection recommendations

1. The head of an inspection unit shall organize to monitor and urge the implementation of recommendations stated in the inspection conclusions of the inspected entity.

2. The head of an inspection unit shall, based on the results of monitoring and urging the implementation of recommendations stated in the inspection conclusions of the inspected entity, decide to:

a) End the monitoring and urging of the implementation of recommendations stated in the inspection conclusions, and archive dossiers, if the implementation of recommendations stated in the inspection conclusions is completed;

b) Take handling measures in accordance with laws, if the inspected entity fails to implement or fails to fully implement the recommendations stated in the inspection conclusions.

Section 3

RIGHTS AND RESPONSIBILITIES OF INSPECTION UNITS, INSPECTION DECISION MAKERS, INSPECTION TEAM LEADERS AND MEMBERS, INSPECTED ENTITIES

Article 17. Rights and responsibilities of inspection units

1. To develop and promulgate annual inspection plans in accordance with Article 6 of this Circular.

2. To organize the inspection in accordance with this Circular.

3. To monitor and urge the implementation of the recommendations stated in the inspection conclusions.

4. To perform and exercise other rights and responsibilities in accordance with this Circular and relevant laws.

Article 18. Rights and responsibilities of inspection decision makers, inspection team leaders and members

1. Rights and responsibilities of inspection decision makers

a) To organize and establish an inspection team; select and decide the inspection team leader and members, sign to issue the inspection decision, approve the inspection plans;

b) To direct the inspection team to organize and conduct an inspection under the inspection decision and plans;

c) To request the inspection team leader and members to report on issues relating to the inspection contents;

d) To request the inspected entity to make report and explanation to clarify issues expected to be concluded (if necessary);

dd) To sign to issue inspection conclusions;

e) To perform and exercise other rights and responsibilities in accordance with this Circular and relevant laws.

2. Rights and responsibilities of inspection team leaders

a) To organize and conduct an inspection under the inspection decision and plans;

b) To assume the prime responsibility for developing the inspection plan, and submit it to the inspection decision maker for approval; to disseminate the inspection plan to the inspection team members;

c) To assign the inspection team members to implement inspection contents;

d) To request the inspected entity to make reports, provide information, dossiers, documents, and explain issues relating to inspection contents;

dd) To collect, inspect, compare and verify information relating to inspection contents;

e) To report and request directions from the inspection decision maker regarding issues and contents beyond the competence when conducting an inspection;

g) To report to the inspection decision maker on the inspection results, draft inspection conclusions, and take responsibility for the accuracy, honesty and objectivity of such report and draft conclusions;

h) To hand over the inspection dossiers to the inspection unit within 15 days from the date the inspection decision maker signs to promulgate the inspection conclusions;

i) To perform and exercise other rights and responsibilities in accordance with this Circular and relevant laws.

3. Rights and responsibilities of inspection team members

a) To perform inspection tasks assigned by inspection team leaders;

b) To request the inspected entity to provide information, dossiers, documents, and explain issues relating to the assigned inspection contents;

c) To collect, inspect, compare and verify information relating to the assigned inspection contents;

d) To propose the inspection team leader to take necessary measures to ensure the inspection’s effectiveness in accordance with laws;

dd) To report to the inspection team leader of the implementation of the assigned tasks, take responsibility for the accuracy, honesty and objectivity of the reported contents;

e) To perform and exercise other rights and responsibilities in accordance with this Circular and relevant laws.

Article 19. Rights and responsibilities of inspected entities

1. Rights of inspected entities

a) To give explanations relating to inspection contents;

b) To exercise other rights in accordance with this Circular and relevant laws.

2. Responsibilities of inspected entities

a) To abide by the inspection decisions of the inspection unit;

b) To appoint persons with the right positions, responsibilities and tasks to attend the working session with the inspection team;

c) To coordinate with, and create favorable conditions for the inspection team to perform its tasks during the inspection;

d) To make reports, explanations, and timely and accurately provide sufficient information, dossiers and documents relating to the inspection contents at request of the inspection team, and take responsibility before the law for the accuracy and truthfulness of the provided information, dossiers and documents;

dd) To timely and fully implement recommendations stated in the inspection conclusions, and report such implementation according to the required deadline;

e) To provide dossiers, information and documents relating to the contents expected to be inspected for use as a basis for issuance of the inspection decision as requested by the inspection unit;

g) To perform other responsibilities in accordance with this Circular and relevant laws.

Chapter III

IMPLEMENTATION PROVISIONS

Article 20. Responsibilities of implementation

The Chief of the Office, the Chief Inspector of the Banking Supervision Agency, heads of units under the State Bank, inspected entities specified in this Circular shall organize the implementation of this Circular.

Article 21. Effect

This Circular takes effect from February 8, 2024./.

* All Appendices are not translated herein.