Central Bank Warns: Individuals Exploiting Cash Foreign Currency Purchases for Profit

The State Bank of Vietnam, Branch 2, has recently issued a directive to commercial banks and foreign bank branches licensed to conduct foreign exchange operations in Ho Chi Minh City and Dong Nai. The directive emphasizes the need to strengthen foreign exchange management.

According to the agency, recent global economic complexities have led to an increase in the unofficial exchange rate between the Vietnamese Dong (VND) and the US Dollar (USD), creating a disparity with the rates offered within the banking system.

Additionally, there have been instances of individuals exploiting the system by purchasing foreign currency for purposes such as travel or business trips from commercial banks and then selling it outside to profit from the exchange rate differences between the official and unofficial markets.

To proactively prevent and combat such negative behaviors, ensure compliance with the law, and maintain a stable foreign exchange market while minimizing risks to the banking system, the State Bank of Vietnam, Branch 2, urges all commercial banks in the region to strictly adhere to the legal regulations governing foreign exchange management, currency trading, and cross-border money transfers. This includes compliance with anti-money laundering and terrorism financing laws, as well as other relevant legal provisions.

When executing foreign exchange transactions for customers, commercial banks are responsible for scrutinizing, verifying, and retaining relevant documents and records to ensure that foreign exchange services are provided for legitimate purposes and in compliance with legal requirements.

Banks are also required to enhance internal inspection, control, and monitoring processes when conducting foreign exchange transactions for clients.

Violations related to foreign exchange activities will be penalized in accordance with Decree No. 88/2019/NĐ-CP on sanctions for monetary and banking violations, as amended by Decree No. 143/2021/NĐ-CP.

In a related development, the State Bank of Vietnam has also issued a directive to commercial banks and foreign bank branches authorized to engage in foreign exchange operations, emphasizing their legal responsibility to ensure that foreign exchange services are provided for lawful purposes and in accordance with regulatory requirements.

“In cases where organizations or individuals are suspected of violating legal provisions, banks must promptly notify the relevant authorities (including the Police Agency for Investigation of Corruption, Economic, and Smuggling Crimes under the Ministry of Public Security; the Economic Security Department under the Ministry of Public Security; and the State Bank Inspectorate) for appropriate action,” the State Bank of Vietnam’s directive states.