Decree 19/2023/ND-CP guiding the Law on Anti-money Laundering

On November 15, 2022, the National Assembly promulgated the Law on Anti-money Laundering 2022 to replace the Law on Prevention of Money Laundering in 2012 to improve the effectiveness of the fight against money laundering crimes, while also focusing on Focus on crime prevention in general. This law takes effect from March 1, 2023. To effectively implement the Law on Anti-money Laundering, on April 28, 2023, the Government issued Decree 19/2023/ND-CP guiding the Law on Anti-money Laundering.

Basic information of Decree 19/2023/ND-CP guiding the Law on Anti-money Laundering

Basic information of Decree 19/2023 guiding the Law on Anti-money Laundering includes:

Date of issue: April 28, 2023

Effective date: April 28, 2023

Document type: Decree

Issuing agency: Government

Signed by: Le Minh Khai

The content of guidance on the Law on Anti-money Laundering according to the provisions of Decree 19/2023/ND-CP is as follows:

Decree 19/2023/ND-CP includes 4 chapters and 14 articles, significantly reducing the number of provisions detailing several articles of the Law on Anti-money Laundering compared to Decree 116/2013/ND-CP as amended and supplemented by Decree 87/2019/ND-CP with more general content and specific information data, risk assessment data, comprehensiveness, effectiveness, and consequences of money laundering by the accompanying appendices.

Scope of Decree

Decree 19/2023/ND-CP focuses on adjusting several articles of the Law on Anti-money Laundering on principles, criteria, and methods of assessing national risks of money laundering; customer identification; criteria for determining beneficial owners; Transactions of unusually large value or complexity; State agencies have the authority to receive information, records, documents, reports, etc.

Applicable subjects

The content of Decree 19/2023/ND-CP applies to 4 main groups of subjects: financial institutions; Organizations and individuals doing business in relevant non-financial industries and professions; Vietnamese organizations and individuals, foreign organizations, foreigners, international organizations that have transactions with financial institutions, organizations and individuals doing business in relevant non-financial industries and professions; Other organizations, individuals and agencies related to money laundering prevention and combat.

Add a separate chapter on money risk assessment

Assessment principles

Decree 19/2023/ND-CP stipulates the principles for assessing national risks of money as follows:

• The national risk assessment of money laundering is carried out by a competent state agency. The criteria and methods applied must comply with the provisions of the law and international standards along with Vietnam’s practical conditions.
• The national money laundering risk assessment process must determine the country’s level of money laundering risk.
• The assessment of national money risks is the main basis for building implementation plans and updating money laundering prevention policies and strategies under the actual situation and developments of money laundering crimes. This helps relevant agencies have a scientific and accurate basis to propose flexible and effective anti-money laundering measures.
• Information, documents, and data necessary for risk assessment are collected from competent agencies and domestic and foreign research documents. The collection of this information must comply with the principles of openness, and transparency and ensure compliance with regulations on protecting state secrets. This helps ensure the accuracy and reliability of information used to assess risk and propose anti-money laundering measures.

Thus, according to the provisions of Decree 19/2023/ND-CP, the assessment of national risks of money laundering must comply with the four basic principles mentioned above, to ensure effectiveness as well as ensure transparency in preventing and combating money laundering.

National risk assessment criteria for money laundering

National risk assessment criteria for money laundering are specified in Decree 19/2023/ND-CP including three main parts, money laundering risk criteria, appropriateness criteria of policies, measures of anti-money laundering, and criteria for the consequences of money laundering for countries, and industries.

Money laundering risk criteria include assessing the risk of money laundering from the predicate crime of money laundering and the risk of money laundering for each specific industry and field. Both of these issues are assessed at a domestic and transnational scale. This helps competent state agencies assess the level of risk that domestic and foreign predicate crimes may pose to the financial system and society. At the same time, identifying money laundering risks for each specific industry and field helps focus anti-money laundering measures on high-risk areas.

Criteria for the appropriateness of anti-money laundering policies and measures focus on the comprehensiveness of the legal framework and the effectiveness of implementing legal regulations. This includes assessing the adequacy and accuracy of legal regulations related to money laundering prevention both at the national and industry levels. At the same time, assessing the effectiveness of implementing legal regulations helps identify shortcomings and propose improvements to enhance the effectiveness of anti-money laundering.

The money laundering consequences criterion concerns the negative impacts that money laundering can have on the economy, the financial system, industries and sectors, and society. Assessing the consequences helps understand the negative impact of money laundering and provides more effective prevention and control measures to protect the financial system and ensure economic and social stability.

Criteria for consequences of money laundering

Criteria for consequences of money laundering include the following 4 criteria: Criteria for negative impacts caused by money laundering on the economy; Criteria for negative impacts caused by money laundering on the financial system; Criteria for negative impacts caused by money laundering on industries and fields; Criteria for negative impacts caused by money laundering on society. You can refer to information, figures, and data to evaluate the consequences of money laundering as follows:

The criteria and data are specified in the appendices, creating high consistency in the form of Decree 19/2023/ND-CP compared to the old Decree.

New points of Decree 19/2023/ND-CP on measures to prevent and combat money laundering

The regulations of Decree 19/2023/ND-CP have changed significantly in content compared to Decree 116/2013/ND-CP, specifically Decree 19/2023/ND-CP only has 14 articles instead of 36 articles as in Decree 116/2013/ND-CP. At the same time, Decree 19/2023/ND-CP also adds regulations to suit the development of the 4.0 revolution, adding regulations on new payment methods such as e-wallets and e-banking.

Decree 19/2023/ND-CP also changes the criteria for identifying customers and determining beneficial owners, specifically as follows:

• Regarding customer identification criteria, when a customer does not have an account or a customer has an account but has not made a transaction within the previous 6 consecutive months, makes a deposit, withdrawal, or transfer with a total value of from 400,000,000 VND or in foreign currency of equivalent value or more in one day, financial institutions must identify customers. In Decree 19/2023/ND-CP, the transaction level performed in one day has been increased to 400,000,000 VND instead of 300,000,000 as in Decree 116/2013/ND-CP. Or in the case of organizations and individuals trading in prize-winning games, they must identify customers when they make transactions with a total value of 70,000,000 VND instead of 60,000,000 VND in Decree 116/2013/ND-CP.
• Regarding the criteria for determining the beneficial owner, the reporting object determines the beneficial owner in Decree 19/2023/ND-CP stipulates: “The reporting object determines the individual who holds directly or indirectly from 25% or more of the charter capital of that organization or the last individual has the controlling power over the customer being an organization” instead of “Individual has the right to control the legal entity: Individual holding 10% or more of the charter capital of that legal entity; Individuals holding 20% or more of the charter capital of organizations contributing more than 10% of the capital of that legal entity; private business owners; Other individuals control that legal entity” as in Decree 116/2013/ND-CP.

In addition, Decree 19/2023/ND-CP also adds a separate chapter related to money risk assessment and provides more detailed regulations on the functions and tasks of each agency.

The new regulations of Decree 19/2023/ND-CP are to keep up with social change and development along with the development of information technology in the 4.0 era when regulations and standards The criteria in Decree 116/2013/ND-CP are no longer appropriate.

Collect, process, and analyze money laundering prevention information

The process of collecting, processing, and analyzing money laundering prevention information plays an important role in preventing and dealing with money laundering activities. The agency performing the functions and tasks of preventing and combating money laundering under the State Bank of Vietnam is allowed to request relevant organizations and individuals to provide information, records, documents, and reports according to law. At the same time, they also receive and collect information within the scope of their functions, tasks, and powers to serve the analysis, exchange, provision, and transfer of information on anti-money laundering.

For relevant organizations and individuals, providing information, records, and documents to agencies performing the functions and tasks of preventing and combating money laundering must also comply with the required deadlines. This helps ensure efficiency and accuracy in collecting necessary information to prevent and combat money laundering.

The agency performing the functions and tasks of preventing and combating money laundering in the State Bank of Vietnam processes and analyzes the information received. They use available sources of information and collect additional information to identify money laundering trends and patterns. From there, this agency develops strategies and goals for preventing and combating money laundering appropriate to each stage in the industry, field, and country.

In addition, this agency also analyzes information based on available information sources and collects additional information to trace transactions. This helps identify connections and activities suspected of being related to money laundering or other criminal activities. This forms the basis for handling and responding to dangerous activities and potential money laundering risks.

Apply transaction delay measures

The transaction delay measure is one of the temporary measures applied by Decree 19/2023/ND-CP to combat money laundering and deal with related criminal activities. The decree has adjusted and added more detail on grounds to suspect and detect parties involved in blacklisted transactions, thereby effectively implementing measures to delay transactions.

Specifically, Decree 19/2023/ND-CP specifies that the following cases must apply transaction delay measures:

When there is an individual or organization involved in a transaction whose information is identical to an individual or organization on the Black List.

When an individual participating in a transaction has one of the following information that matches an individual on the Black List and the information collected shows a connection to terrorist activities, terrorist financing, and dissemination of information. proliferation and financing of weapons of mass destruction:

• Full name, date of birth.
• Full name, year of birth, nationality.
• Full name, and address.
• Name and address.
• Name and Passport number.
• Name and ID card number, Citizen Identification Number, or personal identification number.

When the organization involved in the transaction has one of the following information that matches an organization on the Black List the information collected shows that it is involved in terrorist activities, terrorist financing, and dissemination of information. proliferation and financing of weapons of mass destruction:

• Trading name.
• Establishment license number.
• Business code or tax code.

The cases mentioned above, when occurring during the transaction process, will require delay measures to check and verify information before continuing with the transaction. Applying transaction delay measures in this way helps ensure transparency and reliability in financial activities while limiting and preventing money laundering and related crimes.

Customers who need advice on investment law, civil law, or issues related to the Law on Anti-money Laundering, please contact Viet An Law Firm for the best support.