Home Bank “Curbing the “Brain Drain”: Reporting Requirements for International Money Transfers over $1,000”

Bank

“Curbing the “Brain Drain”: Reporting Requirements for International Money Transfers over $1,000”

21 August, 2025

Reporting Requirements for International Transfers of $1,000 USD. (Image: Vietnam+)

The State Bank of Vietnam is developing a draft decree on licensing, operating banks, foreign exchange management, anti-money laundering, and counter-terrorism financing at the country’s international financial center.

Reporting Requirements for International Transfers

The decree details the responsibilities of reporting entities at the financial center and other related organizations and individuals in implementing anti-money laundering measures. It also outlines the roles of the financial center’s supervisory authority, the State Bank, the Ministry of Public Security, the Ministry of Defense, and other relevant ministries in ensuring effective anti-money laundering supervision and management.

Special Policies for Reporting Entities

The draft decree introduces special and favorable policies for reporting entities at the financial center, including allowing them to implement anti-money laundering measures applied by their parent banks or owners, even if they are not yet stipulated in Vietnamese law. Additionally, it imposes a reporting requirement for international electronic money transfer transactions with a threshold of $1,000 USD for reporting entities at the financial center.

According to the submission by the State Bank, Vietnam’s Law on Anti-Money Laundering mandates that anti-money laundering efforts must be conducted in accordance with the law while ensuring national sovereignty, territorial integrity, national security, and legitimate interests of organizations and individuals. It also emphasizes the importance of safeguarding against the misuse of anti-money laundering measures to infringe on the lawful rights and interests of involved organizations and individuals.

With the financial center’s higher level of openness in terms of capital and cross-border transactions, along with the presence of prominent international financial institutions beyond the banking sector, stringent policies are necessary to prevent the “legalization” of illicit funds through the center and its advantageous policies.

Foreign Exchange Management

Regarding foreign exchange usage by members (including commercial banks, State Bank branches, and other members), the draft decree aims to mitigate the risk of policy exploitation. To maintain a clear separation between foreign currency payment and transfer transactions within the financial center and those in the rest of Vietnam, the decree stipulates that such transactions among members must be conducted through foreign currency settlement accounts held at commercial banks or State Bank branches that are members.

No Early Intervention for Banks in the Financial Center

The draft decree proposes that the State Bank refrain from implementing early intervention, special control, restructuring measures, or providing special loans to banks within the financial center. It also exempts commercial banks and foreign bank branches that are members from participating in Vietnam’s deposit insurance program, as banks established in the financial center do not accept deposits from individuals within Vietnam.

Instead, the decree outlines procedures for license revocation, liquidation, bankruptcy, and asset disposal in the event of bank failures within the financial center.

It specifies four scenarios that would constitute a bank failure: cumulative losses exceeding 15% of charter capital and reserves, along with a breach of the minimum capital adequacy ratio; a breach of the minimum capital adequacy ratio for six consecutive months; a breach of the liquidity ratio for 30 consecutive days; or a bank run that leads to a potential or actual loss of liquidity, accompanied by a report to the competent authority.

The draft assigns the authority responsible for licensing, inspecting, and supervising commercial banks and State Bank branches that are members to monitor these institutions in case they fall under the aforementioned circumstances. In the event of bank failures within the financial center, the State Bank will not intervene with early corrective actions, special control, or special loans. The bankruptcy proceedings for these banks will be handled by a specialized court within the financial center.

The State Bank is seeking the government’s approval for this decree through an expedited process to establish a legal framework for banking operations, foreign exchange transactions, and anti-money laundering supervision at the financial center. This will also facilitate the implementation of inspection, supervision, and anti-money laundering efforts.

Additionally, the Action Plan for the Development of the Financial Center mandates relevant ministries to urgently submit decrees guiding the implementation of Resolution 222 through an expedited process, with a completion deadline of August 2025.

Thuy Ha

– 17:34 19/08/2025