Vietnam

Sanctions

No

FATF AML Deficient List

No

Higher Risk

US Dept of State Money Laundering assessment 
Compliance with FATF 40 + 9 Recommendations
Not on EU White list equivalent jurisdictions
Corruption Index (Transparency International & W.G.I.))
Failed States Index (Political Issues)(Average Score)

Medium Risk

Weakness in Government Legislation to combat Money Laundering
World Governance Indicators (Average Score)

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ANTI-MONEY LAUNDERING

FATF Status

Vietnam is no longer on the FATF List of Countries that have been identified as having strategic AML deficiencies

Latest FATF Statement - 14 February 2014

The FATF welcomes Vietnam’s significant progress in improving its AML/CFT regime and notes that Vietnam has established the legal and regulatory framework to meet its commitments in its action plan regarding the strategic deficiencies that the FATF had identified in October 2010. Vietnam is therefore no longer subject to FATF’s monitoring process under its on-going global AML/CFT compliance process. Vietnam will work with APG as it continues to address the full range of AML/CFT issues identified in its mutual evaluation report.

 

Compliance with FATF Recommendations

The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Vietnam was undertaken by the Financial Action Task Force (FATF) in 2009. According to that Evaluation, Vietnam was deemed Compliant for 1 and Largely Compliant for 3 of the FATF 40 + 9 Recommendations. It was Partially Compliant or Non-Compliant for all 6 of the Core Recommendations.

 

US Department of State Money Laundering assessment (INCSR)

 

Vietnam is categorised by the US State Department as a Country/Jurisdiction of Primary Concern in respect of

Money Laundering and Financial Crimes.

OVERVIEW

 

Large parts of Vietnam’s economy remain cash-based, but the government has set aggressive targets to move its economy to being significantly cashless by 2020.  Vietnam has made progress in many areas, including its newly revised penal code and increased international cooperation.  Continuing economic growth and diversification; increased international trade; a long, porous land border; a relatively young, tech-savvy population; and newly legalized local casinos all suggest Vietnam’s exposure to illicit finance will increase in coming years. 

 

Vietnam needs to continue to build its AML capabilities, especially within key enforcement agencies and the National AML Steering Committee.  Vietnam will need political will and a stronger coordinated effort across government to increase enforcement of existing AML laws. 

 

SANCTIONS

There are no international sanctions currently in force against this country.

BRIBERY & CORRUPTION

Rating                                                                           (100-Good / 0-Bad)

Transparency International Corruption Index                           33

World Governance Indicator – Control of Corruption             32

Corruption continues to be pervasive in Vietnam's business environment. Companies are likely to experience bribery, political interference and facilitation payments in all sectors. The land administration, construction sector, and public administration are especially prone to corruption. The Vietnamese Penal Code and the Law on Anti-Corruption criminalizes public sector corruption, in the form of attempted corruption, facilitation payments, extortion, abuse of office, fraud, money laundering, and active and passive bribery. Punitive measures range from fines to capital punishment, depending on the severity of the corruption case. Enforcement of the anti-corruption framework is lacking. Gifts are criminalized by law, but there are exceptions for special occasions gifts with a value below VND 500,000. Facilitation payments are illegal but common in practice. For further information - GAN Integrity Business Anti-Corruption Portal

ECONOMY

Vietnam is a densely populated developing country that has been transitioning from the rigidities of a centrally-planned economy since 1986. Agriculture's share of economic output has shrunk from about 25% in 2000 to 18% in 2014, while industry's share increased from 36% to 38% in the same period. State-owned enterprises now account for only about 40% of GDP.

Vietnamese authorities have reaffirmed their commitment to economic modernization and a more open economy. Vietnam joined the WTO in January 2007, which has promoted more competitive, export-driven industries. Vietnam was one of 12-nations that concluded the Trans-Pacific Partnership free trade agreement negotiations in 2015.

 

Hanoi has oscillated between promoting growth and emphasizing macroeconomic stability in recent years. During 2015, Vietnam's managed currency, the dong, depreciated about 5%. Poverty has declined significantly, and Vietnam is working to create jobs to meet the challenge of a labour force that is growing by more than one million people every year.

 

Vietnam is trying to reform its economy by restructuring public investment, state-owned enterprises, and the banking sector, although Hanoi’s progress in meeting its goals is lagging behind the proposed schedule. Vietnam's economy continues to face challenges from an undercapitalized banking sector and nonperforming loans.

 

Agriculture - products:

rice, coffee, rubber, tea, pepper, soybeans, cashews, sugar cane, peanuts, bananas; poultry; fish, seafood

 

Industries:

food processing, garments, shoes, machine-building; mining, coal, steel; cement, chemical fertilizer, glass, tires, oil, mobile phones

 

Exports - commodities:

clothes, shoes, electronics, seafood, crude oil, rice, coffee, wooden products, machinery

 

Exports - partners:

US 21.2%, China 13.3%, Japan 8.4%, South Korea 5.5%, Germany 4.1% (2015)

 

Imports - commodities:

machinery and equipment, petroleum products, steel products, raw materials for the clothing and shoe industries, electronics, plastics, automobiles

 

Imports - partners:

China 34.1%, South Korea 14.3%, Singapore 6.5%, Japan 6.4%, Hong Kong 5.1%, Thailand 4.5% (2015)

 

Investment Climate  -  US State Department

Vietnam continues to work to improve its business climate in order to attract foreign direct investment (FDI), and has sustained registered FDI of roughly $18.5 billion per year over the last five years. In 2015 Vietnam successfully attracted new and additional investment in the IT sector and energy. Investors commonly cite Vietnam’s geographic proximity to global supply chains, political and economic stability, expected benefits from the Trans-Pacific Partnership (TPP) and other recently signed free trade agreements (FTA’s), and an increasing desire to diversify their manufacturing base in Asia away from China as reasons for investing in Vietnam. Vietnam is one of the few counties in Asia that has been able to sustain manufacturing growth. Fueled by a growing economy with a young, increasingly urbanized population and inexpensive labor, Vietnam could become the next manufacturing powerhouse of Asia. Last year was an important year for Vietnam as it made great strides in integrating into the global economy. In 2016 signed the Trans-Pacific Partnership (TPP) and in 2015 Vietnam signed the European Union FTA (EV-FTA), the Korea FTA, Eurasian Economic Union (EAEU), is a part of the newly formed ASEAN Economic Community (AEC).

 

Manufacturing dominated FDI inflows last year as investors continue to move large scale operations from other developing countries to Vietnam. In 2015, the investment influx to the textiles and apparel industries continued in anticipation of the conclusion of the Trans-Pacific Partnership. Information technology (IT) also attracted major investments from Samsung ($3 billion), LG ($1.5 billion), and Microsoft ($500 million). The FDI inflows to the IT sector are in line with Vietnam’s strategic efforts to shift FDI from low-end manufacturing to the high tech sector. Vietnam also continued to attract investment in infrastructure projects such as power generation, roads, railways and water treatment. Vietnam needs an estimated $170 billion in additional infrastructure development in order to meet growing economic demand. In energy alone, the Vietnam's General Statistics Office (GSO) estimates that electricity demand will continue to grow at a rate of 10 percent to 12 percent per year, rising from 169.8 terawatt hours in 2015 to 615.2 terawatt hours by 2030.

 

In 2015, Vietnam issued the underlying decrees to implement several key laws, including the Enterprise Law, the Investment Law, the Bankruptcy Law, Housing Law and Real Estate Business Law. The State Bank of Vietnam (SBV) executed its plan to strengthen the banking sector last year, and was successful in maintaining stability of the Vietnamese Dong (VND) despite a challenging global currency environment in the latter part of the year.

 

However, the new Investment Law failed to create a clearer licensing process, and reforms allowing foreigners access to property have failed to attract large-scale foreign investment in real estate. The state-owned enterprises (SOE) reforms also fell short of the Government of Vietnam’s (GVN) ambitious goal of equitizing over 500 SOEs by the end of 2015.

 

While Vietnam continues to attract increasing amounts of FDI, several challenges in the business climate remain, including: corruption and weak legal infrastructure, a shortage of skilled labor that can meet the demands of an increasingly sophisticated global market, low labor productivity, a weak judicial system, the need for better infrastructure, and a cumbersome bureaucracy that still focuses on monitoring and control rather than business facilitation.

Country Links
State Bank of Vietnam​
Other Useful Links
FATF
US State Department
Transparency International
World Bank
CIA World Factbook

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