Granting licenses to open and use foreign currency accounts abroad

Licensing to open and use foreign currency accounts abroad is an important issue that businesses need to pay attention to in the field of international investment. This is considered a condition for businesses to take steps to expand their markets abroad, for example after establishing a branch/representative office of the business abroad. This licensing process requires compliance and compliance with legal procedures established by both the country and the country where the account is opened. In the following article, Viet An Law will present current regulations in Vietnam related to Granting licenses to open and use foreign currency accounts abroad.

Legal basis

• Law on the State Bank of Vietnam 2010, amended and supplemented in 2022;
• Law on Credit Institutions 2010, amended and supplemented in 2017;
• Foreign Exchange Ordinance 2005, amended and supplemented in 2013;
• Decree 102/2022/ND-CP stipulates the functions, tasks, powers, and organizational structure of the State Bank of Vietnam;
• Decree 70/2014/ND-CP guiding the Foreign Exchange Ordinance and the amended Foreign Exchange Ordinance;
• Circular 20/2015/TT-NHNN regulating the opening and use of foreign currency accounts abroad by residents who are organizations was issued by the Governor of the State Bank.

Cases where it is allowed to open and use foreign currency accounts abroad

According to the provisions of Article 12 of Decree 70/2014/ND-CP, the State Bank of Vietnam regulates procedures for granting and revoking licenses to open and use foreign currency accounts abroad of residents who are organizations in the following cases:

• Economic organizations have branches or representative offices abroad or need to open foreign currency accounts abroad to receive loans and implement commitments and contracts with foreign parties.
• State agencies, armed forces units, political organizations, socio-political organizations, socio-political-professional organizations, social organizations, socio-professional organizations, and social funds Vietnamese charities and associations operating in Vietnam need to open foreign currency accounts abroad to receive foreign aid and sponsorship or other cases approved by competent Vietnamese agencies.

According to the guidance in Articles 2, 3, 4 of Circular 20/2015/TT-NHNN, cases of opening and using foreign currency accounts abroad are regulated for different groups of subjects within the scope of micro-adjustment, including:

• Credit institutions and foreign bank branches licensed to operate foreign exchange (hereinafter referred to as licensed credit institutions).
• Economic organizations (excluding credit institutions).
• Other organizations include state agencies, armed forces units, political organizations, socio-political organizations, socio-political-professional organizations, social organizations, social organizations – professions, social funds, and charity funds operating in Vietnam.

Accordingly, Article 3 of the Circular has specific provisions on cases of opening and using foreign currency accounts abroad by residents who are economic organizations as follows:

• Economic organizations open and use foreign currency accounts abroad to meet the conditions for applying for a license to establish and operate branches and representative offices under the laws of the host country.
• Economic organizations open and use foreign currency accounts abroad to serve the operations of branches and representative offices abroad.
• Enterprises, cooperatives, and cooperative unions (hereinafter referred to as foreign borrowers) open and use foreign currency accounts abroad to make foreign loans according to agreements with foreign lenders.
• Enterprises subject to particularly important investment under the Government’s program; Enterprises investing in the form of public-private partnerships (PPP) open and use accounts abroad to fulfill commitments with foreign parties.
• Economic organizations open and use foreign currency accounts abroad to implement commitments, agreements, and contracts with foreign parties, including construction contracts abroad; ship purchase and sale contracts with foreign parties; Other commitments, agreements, and contracts with foreign parties, excluding the opening and use of foreign currency accounts abroad to make foreign loans at the request of foreign lenders.

Thus, according to regulations, an enterprise applying for a license after establishing a branch/representative office in a foreign country is one of the cases that needs to apply for a license to open and use foreign currency accounts abroad for residents as economic organizations. Additionally, the subjects applying for licenses are businesses and organizations, so individuals do not have the right to request the State Bank for a license to open and use foreign currency accounts abroad.

Licensing authority

• The Governor of the State Bank decides to grant and revoke Licenses.
• The Governor of the State Bank assigned the Director of the Foreign Exchange Management Department to issue a Decision to amend and supplement the License in cases of adjusting contents related to the opening and use of foreign currency accounts abroad of organizations.

Procedures for granting licenses to open and use foreign currency accounts abroad

Step 1 (Submit application): When organizations need to open foreign currency accounts abroad, prepare 01 (one) set of documents to send to the State Bank (Foreign Exchange Management Department);

Form of submission: in person or via postal service.

Step 2 (Consider the request): Based on the organization’s application for a License, the State Bank considers the organization’s request;

Step 3 (Document processing): The State Bank issues the license within 15 working days from the date of receipt of complete and valid documents. In case the dossier is not complete and valid, within 7 (seven) working days from the date of receiving the dossier, the State Bank shall issue a written request to organize an additional dossier;

In case of refusal to issue a License, the State Bank shall notify the organization in writing, clearly stating the reason.

Dossier for granting licenses to open and use foreign currency accounts abroad

Dossier components

According to the guidance in Article 12 (Dossier to request a License to serve the operation of branches and representative offices abroad of economic organizations) Circular 20/2015/TT-NHNN, application components License to open and use foreign currency accounts abroad to serve the operations of branches and representative offices abroad of economic organizations

• Application for License according to the form specified in Appendix No. 01 of Circular 20/2015/TT-NHNN.
• Copy of Enterprise Registration Certificate, Investment Registration Certificate, Establishment and Operation License, or other equivalent documents as prescribed by law.
• Copy of document from a competent authority in Vietnam permitting or confirming the registration of the establishment of a branch or representative office abroad.
• Copy with Vietnamese translation of the document of a foreign competent authority permitting the establishment of a branch or representative office abroad.
• The decision on the establishment of a branch or representative office abroad is signed by the legal representative of the organization.
• The decision to approve annual expenses for the operation of branches and representative offices abroad is signed by the legal representative of the organization.
• Regulations on the organization and operation of branches and representative offices abroad signed by the legal representative of the organization (if any).

Regulations on document format

• Language: Vietnamese, Vietnamese translations from foreign language documents must be consular legalized according to current law provisions for documents from the competent authority of the foreign party allowing the organization to Open branches and representative offices abroad.
• The dossier components are copies, the organization submitting the copy has the organization’s certification of the accuracy of the copy compared to the original.

The term of License to open and use foreign currency accounts abroad

The term of the License is the term of using a foreign currency account abroad. According to the provisions of Article 5 of Circular 20/2015/TT-NHNN, this deadline can be determined based on the following term:

• Validity period of a document issued by a competent authority abroad allowing an organization to establish and operate a branch or representative office abroad. In cases where the document issued by a competent authority in a foreign country allowing an organization to establish and operate a branch or representative office abroad does not specify a validity period, the maximum license term is not specified. more than 03 (three) years from the date of issuance of the License; or
• Validity period of the foreign loan contract between the foreign borrower and the foreign lender; or
• Duration of implementation of commitments, agreements, or validity period of contracts with foreign parties; or
• Time limit for receiving foreign aid; or
• Time limit in the document of the competent authority of the host country allowing the establishment and temporary operation of an organization opening a foreign currency account abroad to meet the conditions for applying for a license to establish and operate expenses. Branches, representative offices, and banks with 100% capital in foreign countries. In case the competent authority abroad does not issue a temporary License of Establishment and Operation, the validity of the License is 01 (one) year from the date of issuance of the License.

Above are some regulations on granting licenses to open and use foreign currency accounts abroad for Vietnamese enterprises after establishing a branch/representative office of the enterprise abroad. If you need to apply for a business license to serve domestic and foreign investment activities, please contact Viet An Law for the most effective support.