vao w88Anti-money laundering via in banking transactions regulations: Shortcomings and Solutions

ABSTRACT:

In Vietnam,bankingtransactions account for 90% of vao w88 total number of suspicious reports submitted to vao w88 National Anti-Money Laundering Department. Money laundering via bank transactions can affect vao w88 stability of currency, vao w88 safety and vao w88 development of bank system. Therefore, preventing and fighting against vao w88 money laundering via bank transactions is an urgent need. vao w88 current legal framework of Vietnam for anti-money laundering has some shortcomings which weaken vao w88 effectiveness of anti-money laundering regulations. This paper focuses on two following issues: (1) vao w88 analysis of vao w88 money laundering and anti-money laundering via inbanking transactionsand (2) vao w88 analysis of vao w88 current regulations ofanti-money launderingvia banking transactions in Vietnam. Based on vao w88 paper’s findings, some recommendations are proposed to improve vao w88 effectiveness of anti-money laundering via in banking transactions regulations.

Keywords:banking, banking transactions, anti-money laundering

1. Overview of money laundering and anti-money laundering in vao w88 banking sector

vao w88 Cambridge Dictionary defines money laundering as follows: “vao w88 crime of moving money that has been obtained illegally through banks and other businesses to make it seem as if vao w88 money has been obtained legally” or “vao w88 action of moving money which has been earned illegally through banks and other business, to make it seem to have been earned legally”.[1]

According to vao w88 law of Vietnam, money laundering is understood as vao w88 actions of organizations and individuals in order to legalize vao w88 origin of property due to crime in Clause 1, Article 4 of vao w88 Law on vao w88 prevention of money laundering in 2012, including vao w88 acts are defined in vao w88 Criminal Code; assisting criminal organizations and individuals in escaping legal liability; possession of property if it is suspected that such property is due to crime at vao w88 time of receipt of vao w88 property to legalize vao w88 origin of vao w88 property.

Money laundering has a major negative impact on vao w88 banking sector, as follows:Firstly, money laundering undermines vao w88 stability of vao w88 value of money.If vao w88 sum of illicit money is put into circulation, vao w88 stability of vao w88 value of money as well as vao w88 stable and sustainable growth of vao w88 money market may also be jeopardized by strange things.Second, money laundering threatens vao w88 stability and development of banks.Illegal money often used objects to buy banks' shares to turn them into personal property and make them up to vao w88 bank’s shareholders. Meanwhile, risks in vao w88 banking sector are systematic should one branch bank can threaten vao w88 stability of entire credit institutions.

Money laundering types of financial transactions are done conveniently because vao w88 existing regulation does not mandate that persons who deposit money into banks to disclose vao w88 source principal of vao w88 deposit, whether to deposit, pay or deposit money into an account. Thus, subjects take advantage of laundering money from banking transfers as follows:Firstly, in vao w88 deposit receipt transactions. Treasury bills, bonds, illicit money will be deposited in banks in deposit transactions by deposits and kept responsible for a certain period of time between months and years. vao w88 illegal money and vao w88 interest resulting from it will be removed at vao w88 end of this time and become legal money.Secondly, in bank loan transactions. vao w88 owner of vao w88 illegal money can use this to pay for vao w88 borrowed money at vao w88 banks. In addition, there are also types of peer-to-peer loans, peer-to-peer (P2P) loans to individuals to receive loans directly from other individuals through vao w88 influence of science and technology, cutting out vao w88 financial institution as vao w88 middleman[2]. With this type, this money will be passed by vao w88 illegal money holder to vao w88 person who wants to borrow, or vao w88 illegal money will be used to fund vao w88 loan.Thirdly, in vao w88 casual communication mode of payment. Illicit money is deposited in vao w88 accounts, then holder can use card, payment order, collection order, credit mail. In particular, payment of vao w88 card is vao w88 second simply with a sweeping motion code, scan vao w88 card...; Even with vao w88 type of payment necessary documents incubated medical liability, expenses, collection mandate or letter of credit, documents may be false documents. It is also not difficult for individuals to use payment transfers for money laundering purposes. In addition, with vao w88 effects of vao w88 4.0 revolution, vao w88 advent of virtual money and vao w88 use of virtual money in payment transactions, money laundering is simpler and more difficult to detect since virtual money transactions are highly anonymous.

Measures to prevent money laundering in banking transactions:Firstly, perfecting vao w88 legal system on prevention and combating money laundering.vao w88 making law procedure should ensure: Recommendations of vao w88 Financial Action Task Force on Anti-Money Laundering (FATF) should be considered as vao w88 standard for vao w88 development of a regulatory structure to deter money laundering; Money Laundering offenses should be fully identified; Defining customer standards for banks; Setting transaction reporting quotas; Pre-Laundering offenses should be fully identified[3]. Secondly, establishment of specialized agencies for vao w88 prevention and control of money laundering with vao w88 purpose of monitoring vao w88 enforcement of vao w88 Law on vao w88 prevention and combating money laundering.vao w88 specialized agency in charge of vao w88 prevention of money laundering is structured with two models: a central bank model and an autonomous body with vao w88 government.Thirdly, Banks should set up procedures to deter and fight money laundering on their own. In vao w88 process of prevention of money laundering by banks, they should ensure following contents:First, monitoring customers' data on vao w88 basis of vao w88 evaluation and classification of customers, towards vao w88 level of examination equal to vao w88 level of risk of vao w88 customer;Second, regulating vao w88 identification of suspicious transactions in order to take effective handling steps in case a suspicious transaction[4].  Third, record keeping, and customer information must be completely enforced.

2. Preventing and fighting against money laundering via banking transactions in Vietnam

2.1. Successes in vao w88 prevention of money laundering in banking transactions in Vietnam

- First, Vietnam has built a comprehensive legal system for vao w88 prevention of money laundering.This is accepted by vao w88 Financial Task Force on Anti-Money Laundering (FATF) at vao w88 FATF plenary meeting in February 2014 [8]. This is expressed in a series of texts which are as follows: vao w88 2015 Criminal Code amended and supplemented in 2017, money laundering is recorded in Art. 324. By 2012, vao w88 National Assembly XIII adopted vao w88 Law on Anti-Money Laundering, marking a significant improvement in vao w88 legal system of money laundering prevention and combat. Based on this law, vao w88 Government issued Decree No. 116/2013/ND-CP detailing vao w88 implementation of a number of articles of vao w88 Law on prevention of money laundering on October 4, 2013. In vao w88 banking sector, vao w88 State Bank of Vietnam has issued three Circulars: Circular No. 35/2013/TT-NHNN dated December 31, 2013 of vao w88 State Bank of Vietnam implemented regulations on prevention of money laundering; Circular No. 31/2014/TTNHNN dated November 18, 2014 of vao w88 State Bank amending and supplementing a number of articles of Circular No. 35/2013/TT-NHNN and Circular No. 20/2019/TT-NHNN dated 11/14/2019 of vao w88 State Bank of Vietnam amending and supplementing a number of articles of Circular No. 35/2013/TT-NHNN. Besides, vao w88 Government also provides sanctions for violations of regulations on vao w88 prevention and combating of money laundering in Article 39, paragraph 3, Article 46 of Decree No. 96/2014 / ND-CP treated himself administrative violations in vao w88 monetary and banking sector. In addition, in view of vao w88 high risk of money laundering, which is difficult to control due to vao w88 advent of electronic money, on 21 August 2017, vao w88 Prime Minister also signed Decision No 1255/QDTTg on vao w88 approval of vao w88 completed project. These above provisions are making a legal framework for vao w88 prevention and combating money laundering in Vietnam's banking transactions.

- Second, vao w88 agency in charge of prevention of money laundering was established.vao w88 Department of Anti- Money Laundering was established under Decision No. 1003/2005/QD-NHNN dated July 8, 2005 of vao w88 State Bank of Vietnam, is a unit under vao w88 structure of vao w88 Banking Inspection and Supervision Department of vao w88 State Bank. Department of prevention and combating money laundering functions to help chief inspector, bank supervisor, Governor of State Bank; perform duties of agencies, prevention of money laundering under vao w88 provisions of vao w88 law on prevention of money laundering, vao w88 task of preventing and combating terrorist financing prescribed in law on vao w88 prevention of terrorism and other vao w88 assignment issue, authorized by vao w88 Governor of vao w88 State Bank[5]. With a position in vao w88 State Bank of Vietnam-State Management Agency for Currency and Banking, vao w88 Anti-Money Laundering Department will actively cooperate in vao w88 reporting and processing of information. In comparison to vao w88 organizational structure of vao w88 banking inspection and supervision agency, vao w88 Anti-Money Laundering Department would be more conductive to vao w88 sharing of information and take higher responsibility with and convenience of vao w88 inspection and supervision agency.

- Third, engaging in international cooperation on anti-money laundering.Vietnam was recognized as vao w88 33rd member of vao w88 Asia-Pacific Community on vao w88 Prevention of Money Laundering on 4 May 2007. Money laundering (APG) continues to strictly enforce international standards for vao w88 prevention and control of money laundering while fully participating and receiving APG's multilateral evaluations of Vietnam. Vietnam is also an observer of vao w88 Financial Intelligence Units (FIUs) -vao w88 Egmont Group and is working on vao w88 application process for membership of vao w88 Group. vao w88 sharing of information on anti-money laundering with FIUs or international agencies to deter money laundering has also been improved, as can be seen by 9 Records Remember (MOU) to exchange information on money laundering and terrorist funding with countries and are in vao w88 process of negotiating vao w88 signing of MOUs with other countries in vao w88 region and around vao w88 world. In addition, Vietnam has also signed and acceded to a variety of international and regional anti-corruption and anti-money laundering treaties, such as vao w88 2000 Transnational Organized Crime Convention (Palermo Convention).

2.2. Drawbacks of anti-money laundering in Vietnamese banking transactions

- Firstly, insufficiencies in vao w88 legal framework on anti-money laundering in banking transactions,namely:

i, There are still deficiencies in vao w88 framework of vao w88 law on prevention laundering, leading to vao w88 negligence of infringements and crimes which can be referred to as vao w88 guidance on indications of suspicious transactions in vao w88 banking sector listed in Clause 3, Article 22, Law on prevention of money laundering 2012. As vao w88 above provisions refer mainly to vao w88 typical banking transactions of banks in accepting deposits, loans, opening accounts and payment accounts, not to mention transactions such as issuing valuable papers for capital mobilization, credit extension, card issuance. There is also a legal void for virtual currencies, genetics, and fiat money or genetics. This creates a wide field of money laundering, since cyberspace transactions, in particular virtual currency transactions, have a high degree of privacy, making it difficult to classify violators to handle;

ii, Improper regulations on vao w88 blockade of money laundering, creating difficulties in vao w88 prevention of money laundering. Since vao w88 State Bank of Vietnam Inspection and Supervision Agency is not permitted to block and keep money laundering items temporarily under vao w88 current rules, this makes it complicated and limits involvement in anti-money laundering activities of vao w88 State Bank of Vietnam.

- Second, vao w88 organization and activity of vao w88 Department for vao w88 Prevention and Control of Money Laundering is not quite reasonable.This is seen in detail as follows:

i,vao w88 operations: according to vao w88 existing legislation, vao w88 Anti-Money Laundering Department has no role of investigating and blocking accounts, which leads to delays and difficulties to prevent and fight against money laundering in general and vao w88 activities of vao w88 Department of Money Laundering in particular.

ii,vao w88 position: with vao w88 tasks and powers of obtaining, synthesizing, analysing, processing, storing, providing information, documentation and records of questionable transactions; alert or suggests to relevant individuals, organizations and state agencies on issues arising from vao w88 transactions reported; (Paragraph a, Clause 2, Article 2 of Decision No. 1654/QD- vao w88 State Bank stipulates vao w88 functions, duties, powers and organizational structure of vao w88 Anti-Money Laundering Department), vao w88 Anti-Money Laundering Department is considered as a Financial Intelligence Unit. However, vao w88 operation of vao w88 Department of Anti-Money Laundering is not independent enough because vao w88 Department is currently a unit in vao w88 Bank Supervision and Inspection Agency of vao w88 State Bank of Vietnam.

Inadequacies in vao w88 organization and operation of vao w88 Anti-Money Laundering Department as mentioned above lead to a series of difficulties such as being vao w88 national center and vao w88 assisting vao w88 Permanent Board of money laundering prevention Committee, but being placed as a unit of vao w88 banking supervision and inspection agency, has led to vao w88 difficulties in cooperation in prevention and combating money laundry, terrorism financing in accordance with vao w88 law. In addition, as a Financial Intelligence Unit (FIU), vao w88 Anti-Money Laundering Department is also recommended to sign a Memorandum of Understanding (MOU) to exchange information on money laundering prevention and combat terrorist aid. Accordingly, information exchange activities will be carried out based on vao w88 signed MOU. vao w88 Head of FIU has authority to sign MOU. However, since Anti-Money Laundering Department is an administrative unit under vao w88 control of vao w88 State Bank, so it has no authority to sign MOUs with FIUs. This poses many problems for vao w88 Department of Anti-Money Laundering in vao w88 negotiation and signing of vao w88 MOU with partners, as well as directly influencing vao w88 sharing of information with international partners due to lack of authority. Many FIUs around vao w88 world only recognize information sharing after vao w88 MOU has been signed. Vietnam's responsibilities in vao w88 APG are also not yet fulfilled. In addition, despite vao w88 application to join, FIU Vietnam has not been accepted as a member of vao w88 Egmont Group and has been recognized as an observer of vao w88 Egmont Group since 2010 on vao w88 grounds that vao w88 Anti-Money Laundering Department does not comply with vao w88 international requirements of vao w88 FIU which is "independence and autonomy".

3. Some solutions to improve vao w88 effectiveness of anti-money laundering in vao w88 banking sector

3.1. vao w88 legal remedy

As mentioned above, there are still some shortcomings in vao w88 existing regulations on vao w88 prevention of money laundering in banking transactions. Therefore, to avoid money laundering in banking transactions, it is important to minimize and remove these deficiencies as follows:

- Completion of vao w88 legislation on vao w88 prevention of money laundering, it’s necessary to revise and supplement new legal rules in compliance with vao w88 guidelines of vao w88 FATF and vao w88 specifications of vao w88 Basel Committee on Risk Management and Prevention of Money Laundering in Banking Operations. Among these above, vao w88 bank needs to focus on transactions of issuing bonds, supporting payment mechanisms, and financial leasing to reduce suspicious transactions;

- Completion of legal framework for virtual money and Fintechs.As mentioned in Section 2, due to vao w88 specific anonymity in virtual currency transactions and peer-to-peer lending transactions via Fintechs, subjects take advantage of virtual currencies and peer-to-peer lending transactions via Fintechs to launder money. Moreover, vao w88 legal framework is in vao w88 process of experimenting to build money laundering prevention and combat in transactions with virtual money, Fintech becomes even more worrying. Currently, transactions using electronic money with a value of VND 500 million or more (or in other foreign currencies of equivalent value) for domestic electronic money transfers ; US $ 1,000 or more (or other foreign currency equivalent value) for money transfers International Electronic place in Vietnam , vao w88 banks have vao w88 responsibility to report vao w88 State Bank of Vietnam[6]. Therefore, vao w88 trading of virtual money and lending to peer through Fintechs also need to be controlled in order to prevent money laundering in vao w88 direction of having to report to vao w88 Anti-Laundering Department on suspicious transactions with value similar to transactions that use cryptocurrencies.

3.2. Enhancing vao w88 performance of vao w88 Anti-Money Laundering Department's operations

vao w88 Department of Anti-Money Laundering can only encourage productivity in compliance with international standards if it operates independently and through more than one owner. To do this vao w88 Department's independent authority must be formed and empowered to investigate a range of actions related to money laundering crimes in vao w88 banking sector. In addition, vao w88 Department needs to have its own budget and operate independently without intervention. vao w88 Department also needs to be complemented by study and training functions of vao w88 law and vao w88 prevention of money laundering in vao w88 banking sector in order to establish a coordination of vao w88 professional qualifications and skills of workers in vao w88 banking sector when suspicious transactions are identified. In addition, vao w88 Department of Money Laundering Prevention and Fight should collaborate with vao w88 police, vao w88 Department of Anti-Money Laundering, to periodically update vao w88 Ministry of Public Security's blacklist and provide information to banks. At vao w88 same time, suspicious transactions transferred to vao w88 Ministry of Public Security for investigation by vao w88 Anti-Money Laundering Department require input on vao w88 findings of vao w88 investigation. More significantly, towards a genuinely autonomous Money Laundering Prevention Department, vao w88 Department of Anti-Money Laundering itself, vao w88 Police Investigation Agency of vao w88 Ministry of Public Security, needs to work together to research on different types of money laundering, thereby strengthening and sharing vao w88 investigation process.

3.3. Strengthen vao w88 propaganda on prevention of money laundering

vao w88 State Bank of Vietnam needs to promote propaganda on vao w88 prevention of money laundering for banks, since it is only when they understand vao w88 prevention of money laundering that every person can feel safe and vao w88 banks can fulfil their obligations. vao w88 goal of its report is to identify suspicious transactions, thereby enhancing vao w88 effectiveness of vao w88 prevention and control of money laundering. vao w88 State Bank of Vietnam will do this by conducting seminars on vao w88 prevention of money laundering. Since vao w88 seminars will create opportunities for vao w88 Department of Anti-Money Laundering to collect information on vao w88 implementation of anti-money laundering initiatives by banks; at vao w88 same time, it will create opportunities for banks to share experiences in order to restrict vao w88 use of vao w88 banking system to money laundering.

3.4. Strengthen international cooperation

In addition to vao w88 advancement of trade relations, vao w88 pattern of international economic integration, money laundering activities are now being carried out on an international scale, from one country to another in vao w88 region and around vao w88 world. vao w88 prevention of money laundering can therefore only be more successful if there is cooperation from countries not only in vao w88 sharing of expertise and intelligence, but also on cooperation to identify, prevent and combat money laundering in banking transactions.

3.5. Other solutions:

- Improve vao w88 efficacy of prevention and monitoring of source crimes.It is important to prevent and tackle vao w88 source of crimes such as cocaine, smuggling, tax evasion... corruption, in particular. Since of course, when there is no illicit money, there is no involvement or nature of money laundering;

- Develop a national system of information.It is therefore important to establish a public open, up-to-date and convenient national information system to search for legislation, understand vao w88 related rights and obligations of banks and individuals relating to money transfers and banking transactions to prevent money laundering.

To put in a nutshell, as vao w88 legal structure is reasonably completed, with vao w88 emphasis on anti-money laundering as vao w88 achievements in prevention, anti-money laundering in banking services in Vietnam has reached an all-encompassing level. However, vao w88 inadequacy of vao w88 organization and activity of vao w88 Anti-Money Laundering Department and vao w88 regulatory discrepancies in cryptocurrencies and Fintech about suspicious banking transactions are points that need to be added. In order to facilitate these achievements and address vao w88 above deficiencies, efforts must be made by state agencies and in particular, by vao w88 State Bank of Vietnam to enhance work performance of preventing and combating money laundering in Vietnamese banking transactions.

BIBLIOGRAPHY:

[1] Cambridge Dictionary, <https://dictionary.cambridge.org/dictionary/english/money-laundering, accessed 25 October 2020

[2] Julia Kagan, Peer-to-Peer (P2P) Lending (2020),https://www.investopedia.com/terms/p/peer-to-peer-lending.asp, accessed 21 October 2020

[3] Le Xuan Hien, Preventing and combating money laundery through banking system (2010), Master dissertation, University of Economics Ho Chi Minh City.

[4] Para 6, Art. 5, Law of preventing and combating money laundery 2012.

[5] Article 1 of vao w88 Governor's Decision No. 1367 / QD-NHNN dated June 26, 2019 defining vao w88 functions, tasks, authority and organizational structure of vao w88 Department of Anti-Money Laundering under vao w88 Banking Inspection and Supervision Agency

[6] Clause 3 Article 1 of Circular No. 31/2014 / TT-NHNN amending and supplementing a number of articles of Circular No. 35/2013/TT-NHNN guiding vao w88 implementation of a number of regulations on prevention of money laundering.

REFERENCES:

1. National Assembly, Law on prevention of money laundering 2012.
2. Lam Giang, Anti-money laundering and terrorism financing: 90% of suspicious transactions go through banks (2019),

<https://vneconomy.vn/chong-rua-tien-va-tai-tro-khung-bo-90-giao-dich-dang-ngo-di-qua-ngan-hang-20190816053313864.htm

3. Le Xuan Hien, Prevention and control of money laundering through vao w88 Vietnamese banking system (2010), Master's thesis in economics at University of Economics, Ho Chi Minh City.
4. Phuong Lan, Vietnam actively cooperates with other countries in vao w88 "war" against money laundering and terrorism financing (2019), <http://tapchitaichinh.vn/viet-nam-chong-rua-tien-va-tai-tro-khung-bo/viet-nam-chu-dong-hop-tac-quoc-te-trong-cuoc-chien-chong-rua-tien-tai-tro-khung-bo-317161.html ;
5. State Bank of Vietnam, Circular No. 31/2014 / TT-NHNN amending and supplementing a number of articles of Circular No. 35/2013 / TT-NHNN guiding vao w88 implementation of some regulations on prevention of money laundering;
6. vao w88 State Bank of Vietnam, Decision No. 1367 / QD-NHNN dated June 26, 2019 of vao w88 Governor regulating vao w88 functions, tasks, powers and organizational structure of vao w88 Department of Anti-Money Laundering under Thanh banking inspection and supervision.

Pháp luật về phòng, chống rửa tiền trong các giao dịch ngân hàng ở Việt Nam: Thực trạng và một số giải pháp

Phạm Thị Hồng Nghĩa

Giảng viên, Khoa Luật - Học viện An ninh Nhân dân

Nghiên cứu sinh, Khoa Luật - Đại học Quốc gia Hà Nội

Đỗ Thị Hà

Giảng viên, Thạc sỹ, Khoa Luật - Học viện An ninh Nhân dân

TÓM TẮT:

Thực tế ở Việt Nam cho thấy, các giao dịch ngân hàng chiếm 90% tổng số báo cáo giao dịch đáng ngờ gửi đến Cục Phòng, chống rửa tiền. Hoạt động rửa tiền trong các giao dịch ngân hàng có thể ảnh hưởng đến sự ổn định của đồng tiền quốc gia, sự an toàn và phát triển của hệ thống ngân hàng, do đó, phòng, chống rửa tiền trong các giao dịch ngân hàng là yêu cầu bức thiết. Khung pháp lý về phòng, chống rửa tiền ở Việt Nam vẫn còn một số bất cập nên hoạt động phòng, chống rửa tiền chưa thực sự đạt được hiệu quả như mong đợi. Vì vậy bài viết sẽ tập trung vào 2 nội dung: phân tích chung về rửa tiền, và phòng, chống rửa tiền; Phân tích thực trạng công tác phòng, chống rửa tiền trong các giao dịch ngân hàng ở Việt Nam. Từ đó, đưa ra một số đề xuất nhằm nâng cao hiệu quả công tác phòng, chống rửa tiền trong các giao dịch ngân hàng ở Việt Nam.

Từ khóa:ngân hàng; giao dịch ngân hàng; phòng, chống rửa tiền

[Tạp chí Công Thương - Các kết quả nghiên cứu khoa học và ứng dụng công nghệ, Số 11, tháng 5 năm 2021]