SUSPICIOUS TRANSACTIONS – HOW SHOULD VIETNAMESE BANKS ADDRESS THE BURDEN?

Recently, our bank clients have come across a number of suspicious transactions and asked us whether those transactions should be approved. Below are several takeaways for your reference if you happen to encounter a suspicious transaction.

1. Suspicious transactions are transactions with unusual signs or it is reasonable to suspect the property in the transaction has derived from criminal activity or related to money laundering.

2. Basic leery facets of a transaction may include:

· The customer provides incorrect, incomplete and inconsistent customer identification information;
· The customer persuades the reporting subjects not to make the report on the transactions to the competent State agencies;
· Unable to identify the customer by the information provided by the customer or the transaction related to a party whose identity cannot be identified.
· The individual or agency phone number provided by the customer agency cannot be reached or the phone number does not exist after opening the account or doing the transaction;
· The transaction is done by the order or under the authorization of the organizations and individuals in the warning list;
· The transaction that through the customer identification information or through the consideration of economic and legal grounds of the transaction can be determined that there is a relationship between the parties taking part in the transaction with the criminal activities or in relation with the organizations and individuals in the warning list;
· The organizations and individuals involved in the transaction with a large amount inconsistent with the income, and business activities of these organizations and individuals;
· The transaction done through the reporting subject is not in proper process and procedures as prescribed by law.

3. There are also doubtful signs applicable to each particular industry such as banking, securities, real estate, and insurance which must be verified very meticulously when conducting the transaction for the customer.

4. Moreover, the reporting entities must put irregularly huge transactions and complicated transactions under special supervision.

· Transactions with unusually huge value are transactions that are clearly unproportional with income or not conformable with the level of the regular transaction value of the customer with the reporting entity.

· Complicated transactions are transactions that are performed through methods not conformable with the nature of the transactions such as transactions performed through many intermediate parties, many accounts in an unnecessary way; transactions performed among various accounts of the same account holder, at a wide range of geographical regions; any transaction which the reporting entities assume that it is abnormal and are required to apply special supervision.

5. The reporting subjects must examine the legal grounds and purpose of the transactions in case of doubt about the honesty and the purpose of the transaction, the reporting subjects must make reports on such transactions to the State Bank of Vietnam, and in the worst case scenario, rejecting those transactions may be a more prudent choice.