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The International Anti-Money Laundering Regime and Its Adoption by Vietnam

Published online by Cambridge University Press:  10 February 2014

Chat Le Nguyen
Chat Le Nguyen*
Affiliation:
University of Canterbury, New ZealandChat.Lenguyen@pg.canterbury.ac.nz
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Abstract

The international anti-money laundering (AML) regime has developed and diffused rapidly in the last two decades. Most developing countries have engaged with the international AML regime under pressure from other states rather than on a voluntary basis.1 Establishing the national AML regime in these countries in compliance with international standards is very expensive, while the benefits are elusive.2 This paper reveals that the adoption of basically similar AML norms by many developing countries results from the global diffusion of the international AML regime through two major mechanisms: coercion (by powerful economies and international institutions) and socialization (through tactical communications). This paper points out that although the AML regime of Vietnam was established under external coercion and socialization, domestic factors determine the extent of compliance with international standards. In Vietnam, a determinative factor is the political willingness of the Communist Party in fighting money laundering.

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Articles
Information
Asian Journal of International Law , Volume 4 , Issue 1 , January 2014 , pp. 197 - 225
Copyright
Copyright © Asian Journal of International Law 2014 

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Footnotes

*

PhD candidate, University of Canterbury, School of Law, New Zealand. I wish to thank my supervisor, Professor Neil Boister (of the University of Waikato, New Zealand), and the anonymous reviewers for their invaluable comments on an early draft of this paper.

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60. Ibid., art 7.

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113. Art. 4 of Hien Phap Nuoc Cong Hoa Xa Hoi Chu Nghia Viet Nam [Constitution of Socialist Republic of Vietnam] (Hanoi) 15 April 1992, revised by Resolution No. 51/2001/QH (amending and supplementing a number of Articles of the 1992 Constitution of Socialist Republic of Vietnam) states that “the Communist Party of Vietnam, the vanguard of the Vietnamese working class, the faithful representative of the right and interest of the working class, people, and the whole nation, acting upon the Marxist-Leninist doctrine and Ho Chi Minh's thought, is the force leading the State and society”.

114. Dieu Le Dang Cong San [Statute of the Vietnamese Communist Party] (Vietnam) 19 January 2011, art. 41(1) stipulates that “[T]he Party leads the State and Mass Organisations by political platform, strategies, policies and directives; by educating ideology, recommending personnel; and by inspecting, monitoring the implementation of these …”.

115. The most recent directive is the Dang Cong San Viet Nam, “Chi Thi Ve Tang Cuong Su Lanh Dao Cua Dang Doi Voi Cong tac Phong, Chong Toi Pham Trong Tinh Hinh Moi” [The Communist Party of Vietnam, “Directive of the Politburo on Strengthening the Party's Leadership for the Prevention and Suppression of Crimes in the New Situation”] No. 48-CT/TW, 22 October 2010 [Directive 48-CT/TW].

116. In May 2012, the fifth meeting of the 11th Party Central Committee decided to establish the Central Steering Committee on Preventing and Combating Corruption controlled by the Politburo. See Ban Chap Hanh Trung Uong, “Quyet Dinh Thanh Lap Ban Chi Dao Trung Uong ve Phong, Chong Tham Nhung” [Central Committee of the Communist Party of Vietnam, “Decision on the Establishment of Central Steering Committee on the Prevention and Suppression of Corruption”] No. 162-QD/TW, 1 January 2013 [Decision 162-QD/TW]. This committee consists of sixteen senior comrades and operates under the control of the Politburo.

117. Thu Tuong Chinh Phu, Quyet Dinh Ve Viec Thanh Lap Ban Chi Dao Phong, Chong Rua Tien [The Prime Minister, Decision on Establishment of the Steering Committee on Prevention and Suppression of Money Laundering] No. 470/QĐ-TTg (Vietnam), 13 April 2009.

118. Transparancy International, “Corruption Index 2012” (2012), online: 〈http://cpi.transparency.org/cpi2012/results/〉.

119. A comprehensive survey about corruption in Vietnam is found in World Bank, Corruption from the Perspective of Citizens, Firms, and Public Officials: Results of Sociological Survey (Hanoi: National Political Publishing House, 2013), online: 〈http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2013/03/13/000333037_20130313144107/Rendered/PDF/738070REVISED0000January02013000ENG.pdf〉. See more in Corruption, Public Administration Reform and Development: Challenges and Opportunities as Vietnam Moves Towards Middle-income Status (Hanoi: National Political Publishing House, 2009) at 279; and Le VAN LAN, “Tham Nhung o Viet Nam Vua Tinh Vi Vua Trang Tron” [“Corruption in Vietnam is Blatant and Subtle”] (11 September 2012), online: 〈http://vnexpress.net/gl/phap-luat/2012/09/tham-nhung-o-viet-nam-vua-tinh-vi-vua-trang-tron/〉.

120. World Bank, “Strengthening World Bank Group Engagement on Governance and Anticorruption” (March 2007), online: 〈http://siteresources.worldbank.org/PUBLICSECTORANDGOVERNANCE/Resources/GACStrategyPaper.pdf〉.

121. FATF, “Laundering the Proceeds of Corruption” (July 2011), online: 〈http://www.fatf-gafi.org/media/fatf/documents/reports/Laundering%20the%20Proceeds%20of%20Corruption.pdf〉 at 16−24.

122. The launch of Doi Moi has transformed Vietnam from one of the poorest countries in the world to a lower-middle-income country within a quarter of a century. The ratio of population in poverty fell from fifty-eight percent in 1993 to 14.5 percent in 2008, and most indicators of welfare have improved. See World Bank, “Vietnam Overview” (2013), online: 〈http://www.worldbank.org/en/country/vietnam/overview〉.

123. State Bank of Vietnam, Annual Report on Credit Institutions (2012).

124. Luat Ngan Hang Nha Nuoc Viet Nam [Law on the State Bank of Vietnam] (Vietnam) Law No. 46/2010/QH12, 16 June 2010 (entered into force 1 January 2011), art. 4.

125. The 15th Banking Vietnam Conference, “Post-Show Report” (2012), online: 〈http://www.banking.org.vn/hn2013/〉.

126. Ibid.

127. Uy Ban Thuong Vu Quoc Hoi, “Phap Lenh Ngoai Hoi” [Standing Committee of the National Assembly, “Ordinance on Foreign Exchange”] No. 28/2005/PL-UBTVQH11 (Vietnam), 13 December 2005 (entered into force 1 June 2006) [Ordinance on Foreign Exchange], art. 11.

128. State Bank of Vietnam, Annual Report on Credit Institutions (2013) at 2.

129. The property market experienced a boom during 2007 and the first half of 2008, with prices rocketing to as much as 200 percent of its 2007 level. In 2012, foreign direct investment (FDI) in property projects alone, with a capitalization of around US$49.8 billion, accounted for 23.32 percent of Vietnam's total FDI. See Voice of Vietnam, “Foreign Investment Pours into Real Estate Market” (24 January 2013), online: 〈http://english.vov.vn/Economy/Market/Foreign-investment-pours-into-real-estate-market/253705.vov〉.

130. Vietnam has two stock exchanges: the Ho Chi Minh Stock Exchange (HOSE), established in 2000, and the Hanoi Stock Exchange (HNX), opened in 2006. In the period from 2000 to 2004, the securities market was in a nascent stage. From 2005 to 2007, the market soared, and peaked in 2007. Since 2008, due to Vietnam's economic downturn, the market has suffered from various fluctuations, sometimes decreasing sharply.

131. The Association of Vietnamese Insurers (AVI) estimates that total insurance revenue reached US$1.78 billion in 2011, a 21.6 percent increase compared with 2010. See A.M. Best Company, Vietnam Market Review (2012), online: 〈http://www.ambest.com/press/041802vietnamreport.pdf〉.

132. GILLESPIE, John, Transplanting Commercial Law Reform: Developing a ‘Rule of Law’ in Vietnam (Burlington, VT: Ashgate Publishing Company, 2006) at 39−68Google Scholar.

133. STEINER, Eva, French Law: A Comparative Approach (Oxford: Oxford University Press, 2010) at 3−14Google Scholar.

134. Luat Ban hanh van ban quy pham phap luat [Law on the Promulgation of Legal Documents] (Vietnam) Law No. 17/2008/QH12, 30 June 2008 (entered into force 1 January 2009).

135. QUIGLEY, John, “Socialist Law and the Civil Law Tradition” (1989) 37 American Journal of Comparative Law 781CrossRefGoogle Scholar.

136. Gillespie, supra note 132 at 75–77Google Scholar.

137. Gillespie, supra note 132Google Scholar.

138. Constitution of Socialist Republic of Vietnam (Hanoi), supra note 113, art. 83.

139. Ibid., art. 109.

140. Ibid., art. 127.

141. Ibid., art. 137.

142. Ibid., art. 84(6).

143. Luat Ky Ket, Gia nhap va Thuc Hien Dieu Uoc Quoc Te [Law on the Conclusion, Accession to and Implementation of International Treaties] (Vietnam) Law No. 41/2005/QH11, 14 June 2005 (entered into force 1 January 2006), art. 6.

144. Chinh Phu, “Nghi Dinh cua Chinh Phu ve Phong, Chong Rua Tien” [Government, “Government Decree on Prevention and Suppression of Money Laundering”] No. 74/2005/ND-CP (Vietnam), 7 June 2005 [Government Decree 74/2005/ND-CP], arts. 17–19.

145. NGUYEN, Chat LE, “Towards the Effective ASEAN Mutual Legal Assistance in Combating Money Laundering” (2012) 15 Journal of Money Laundering Control 383 at 392CrossRefGoogle Scholar, 394.

146. Vietnam ratified these treaties in 1997, 2009, and 2012, respectively.

147. ASEAN Treaty on MLA in Criminal Matters, supra note 71. This is a major regional treaty providing most of the objectives of mutual assistance in the prevention, investigation, and prosecution of transnational crime, including money laundering.

148. It should be noted that the national regimes against drug crimes, corruption, and human trafficking have been initiated earlier than the AML regime. Several drug-related activities have been criminalized since 1999 (Bo Luat Hinh Su [Penal Code] (Vietnam) Law No. 15/1999/QH10, 21 December 1999 (entered into force 1 July 2000), Chapter XVIII, and Luat Phong, Chong Ma tuy [Law on Prevention and Suppression of Narcotics] (Vietnam) Law No. 23/2000/QH10, 9 December 2000 (entered into force 1 June 2001)). The crimes of corruption have also been provided for since 1999 (Penal Code (Vietnam), Chapter XXI, s. A). Trafficking in women was criminalized in the 1999 Penal Code (Penal Code (Vietnam), art. 119). More information about the national regime against drug crimes and human trafficking can be found in Hoa PHUONG THI NGUYEN, “Legislative Implementation by Vietnam of its Obligations under the United Nations Drug Control Conventions”, Doctoral thesis, University of Wollongong, 2008), and Kneebone and Debeljak, supra note 83 at 150−5.

149. See APG, “VIETNAM ME1 (Mutual Evaluation Report on Anti-Money Laundering and Combating the Financing of Terrorism)” (2009), online: 〈http://www.apgml.org/documents/docs/17/Vietnam%20ME1.pdf〉; and FATF, “High-risk and Non-Cooperative Jurisdictions” 2012), online: 〈http://www.fatf-gafi.org/topics/high-riskandnon-cooperativejurisdictions/〉.

150. World Bank, “Banking Sector Review: Vietnam” (June 2002), online: 〈http://siteresources.worldbank.org/INTVIETNAM/Data%20and%20Reference/20210601/Banking-Sector-Review.pdf〉 at 51−4.

151. Vietnam Chamber of Commerce and Industry (VCCI), “IMF, WB Urge Vietnam to Launch Money Laundering Decree” (22 March 2005), online: 〈http://vccinews.com/news_detail.asp?news_id=3727〉.

152. The Association of National Police Forces of the ASEAN-ASEANPOL (ASEAN chiefs of police of ten ASEAN Member States) was established in 1981 to facilitate the exchange of criminal information among the ASEAN Member States. It is also a forum for exchanging views and updating the latest developments in law enforcement for fighting transnational crime; see online 〈http://www.aseanapol.org/home〉.

153. UNODC, “UNODC Delivers Anti-money-laundering Training in Viet Nam”, online: 〈http://www.unodc.org/southeastasiaandpacific/en/2010/05/aml/story.html〉.

154. UNODC, “Final Evaluation Report: Project Number VNM/S65”, online: 〈http://www.unodc.org/documents/evaluation/ProjEvals-2012/VNMS65_FE_Report_FINAL_rev.pdf〉 at 16−19. The project conducted financial investigation training courses for investigators, and mock trials for training prosecutors and judges.

155. Ibid. The visits focused on studying the money laundering typologies, the legal and institutional frameworks for AML/CFT, and the techniques for investigating financial crimes.

156. Thanh HANG, Tong ket du an tang cuong nang luc chong rua tien tai Viet Nam [“Summarize the Project on Strengthening the Capacity of Anti-money Laundering in Vietnam]” Tieng Chuong (26 April 2012), online: 〈http://tiengchuong.vn/Ma-tuy/Tong-ket-Du-an-tang-cuong-nang-luc-chong-rua-tien-tai-Viet-Nam/6825.vgp〉.

157. Government Decree 74/2005/ND-CP (Vietnam), supra note 144, arts. 7, 8, and 9.

158. APG, supra note 149 at 97−124.

159. See Bo Tai Chinh, “Thong Tu Huong Dan Thuc Hien Cac Bien Phap Phong, Chong Rua Tien Doi Voi Linh Vuc Bao Hiem, Chung Khoan va Tro Choi Co Thuong” [Ministry of Trade, “Circular 148/2010/TT-BTC on Guiding the Implementation of Measures to Prevent and Combat Money Laundering in Insurance, Securities Sector and Games of Chance”] No. 148/2010/TT-BTC (Vietnam), 14 September 2010 [Circular 148/2010/TT-BTC]. Arts 6 and 7 refer to CDD requirement, arts 9 and 10 set out the reporting obligation.

160. See Bo Xay Dung, “Thong Tu Huong Dan Thuc Hien Mot So Noi Dung cua Nghi Dinh so 74/2005/ND-CP Ngay 07 Thang 6 Nam 2005 cua Chinh Phu Ve Phong, Chong Rua Tien Doi Voi Hoat Dong Kinh Doanh Bat Dong San” [Ministry of Construction, “Circular on Guiding the Implementation of a Number of Articles of Government Decision No. 74/2005/ND-CP 7 June 2005 to Prevent and Combat Money Laundering in Real Estate Business”] No. 12/2011/TT-BXD (Vietnam), 1 September 2011 [Circular 12/2011/TT-BXD]. Arts. 6 and 7 provide CDD requirement, art. 9 refers to the reporting obligation.

161. See Luat Phong, Chong Rua Tien [Law on Prevention and Suppression of Money Laundering] (Vietnam) Law No. 07/2012/QH13, 18 June 2012 (entered into force 1 January 2013). Art. 8(1) prescribes certain circumstances in which financial institutions must conduct customer identification. Customer identification must also be undertaken by other individuals and entities listed in art. 8(2), which are consistent with the FATF definitions of non-designated businesses and professions. CDD measures are provided in art. 11, which complies with the measures stated in R10(a) and (c) of the 2012 FATF Recommendations. “Ongoing CDD” is stated in art. 10, which is in compliance with R10(d) of the 2012 FATF Recommendations. Art. 12 refers to the risk-based approach in CDD. “Enhanced Due Diligence” is applied to certain circumstances prescribed in arts. 13−17. The retention of transaction records, account profiles, and business correspondence is required by art. 27. Art. 22 provides for the STRs obligation, and for comprehensive categories of grounds for suspecting the transactions in the sectors of banking, securities, casinos and games of chance, and property.

162. State Bank of Vietnam, Bao Cao Tong Ket Sau Nam Thi Hanh Nghi Dinh 74/2005/ND-CP ve Phong, Chong Rua Tien [Report on Result of the Implementation of Decree 74/2005/ND-CP in Six Years] (No. 109 /BC-NHNN, 7 September 2011) at 8. The number of STRs in 2007, 2008, 2009, 2010, and 2011 was 12, 39, 93, 326, and 304, respectively.

163. Ibid.

164. Financial inclusion involves providing access to adequate, transparent, and affordable financial services to disadvantaged and other vulnerable groups, who have been excluded from the formal financial sector. Some studies pointed out that more access to formal financial services result in an increase in the effectiveness of the AML measures. See Bester et al., “Implementing FATF Standards in Developing Countries and Financial Inclusion: Findings and Guidelines”, online: 〈http://www.cenfri.org/documents/AML/AML_CFT%20and%20Financial%20Inclusion.pdf〉.

165. See Government Decree 74/2005/ND-CP (Vietnam), supra note 144, art. 24; and Law on Prevention and Suppression of Money Laundering (Vietnam), supra note 161, art. 35.

166. In an interview with a senior official of the AMLD.

167. Penal Code (Vietnam), supra note 148.

168. Government Decree 74/2005/ND-CP (Vietnam), supra note 144.

169. APG, supra note 149 at 40−50.

170. Luat Sua Doi, Bo Sung Mot So Dieu Cua Bo Luat Hinh Su [Law Amending and Supplementing to a Number of Articles of the Penal Code] (Vietnam) Law No. 37/2009/QH12, 19 June 2009 (entered into force 1 January 2010).

171. Bo Cong An-Bo Quoc Phong-Bo Tu Phap-Ngan Hang Nha Nuoc Vietnam-Vien Kiem Sat Nhan Dan Toi Cao-Toa An Nhan Dan Toi Cao, “Thong Tu Lien Tich Huong Dan Ap Dung Quy Dinh Cua Bo Luat Hinh Su Ve Toi Chua Chap Tai San Pham Toi Ma Co va Toi Rua Tien” [Ministry of Public Security-Ministry of Defence-Ministry of Justice-State Bank of Vietnam-Supreme People's Procuracy-Supreme People's Court, “Inter-agency Circular on Guiding the Implementation of the Provisions of the Penal Code Regarding Crime of Harbouring or Consuming Property Derived from the Commission of Crime by other Persons and Crime of Money Laundering”] No 09/2011/TTLT-BCA-BQP-BTP-NHNNVN-VKSNDTC-TANDTC (Vietnam), 30 November 2011 [Circular 09/2011/TTLT-BCA-BQP-BTP-NHNNVN-VKSNDTC-TANDTC].

172. UNODC, supra note 154 at 10.

173. Chat LE NGUYEN “Criminalisation of Money Laundering in the International Anti-Money Laundering Regime and its Adoption by Vietnam” (2013) 14 Australian Journal of Asian Law 1 at 13Google Scholar.

174. In ALLDRIDGE, Peter, “The Moral Limits of the Crime of Money Laundering” (2001) 5 Buffalo Criminal Law Review 279 at 286−319CrossRefGoogle Scholar, the author argues that the justification for criminalization of money laundering is very weak under the theory of “moral limits”.

175. FATF, supra note 90.