Vietnam needs bold acts to exit int’l watch list of money laundering: deputy PM

Central agencies must do their best to get Vietnam off the monitoring list, aka grey list, of the Financial Action Task Force (FATF) in two years’ time, otherwise the country will face severe consequences, Deputy Prime Minister Le Minh Khai said.

Khai made the call at a meeting of the anti-money laundering national steering committee on Wednesday.

He asked the State Bank of Vietnam (SBV) to take the lead in this colossal task while the Ministry of Public Security would have to enhance investigations into money laundering.

Together with Cameroon and Croatia, Vietnam was put under the FATF’s grey list in June this year, thus it needs to work with the FATF on 17 recommendations to address strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing. Vietnam was put on this list for the first time in 2010.

Getting Vietnam off the grey list will also be significant in the cause to perfect the country’s general legal framework to fight crime and push its anti-corruption drive, the deputy prime minister noted.

Speaking at the meeting, Deputy Governor of the SBV Pham Tien Dung pointed out the consequences of Vietnam being on this list, including increased loan costs and higher operating costs that could lead to reduced foreign direct investment (FDI).

Vietnam will have narrower access to loans from international institutions such as the IMF, ADB, and WB as they will be tied to conditions on compliance with rules of anti-money laundering and anti-terrorism. Such harsher conditions will force Vietnam to look to commercial loans with higher interest rates.

According to IMF calculations, most countries under Increased Monitoring have seen weaker capital inflows, with an average cost of 7.6% of GDP.

What’s more, Vietnam has been added to the EU list of countries with high money laundering risks and even a blacklist if the Southeast Asian nation fails to prove a progress in meeting the FATF’s policy recommendations. In such case, foreign firms will bear high operating costs or even cease doing business as in Myanmar in 2022, Dung warned.

Established in 1989 by the G7 and based in Paris, the FATF is the global money laundering and terrorist financing watchdog. The inter-governmental body sets international standards that aim to prevent these illegal activities and the harm they cause to society.

As a policy-making body, the FATF works to generate the necessary political will to bring about national legislative and regulatory reforms in these areas.

The 39-member body sets international standards to ensure national authorities can effectively go after illicit funds linked to drugs trafficking, the illicit arms trade, cyber fraud and other serious crimes. In total, more than 200 countries and jurisdictions have committed to implement the FATF’s standards as part of a coordinated global response to preventing organized crime, corruption and terrorism.