Verifying companies in the Asian market can be difficult, but these tips can help simplify the process
As Vietnam works to increase the transparency of the country’s financial system, payment service providers (PSPs) are legally required to go through the merchant onboarding process.
Performing a Vietnam company check isn’t always straightforward. How businesses arestructured, typically within extended families, can complicate the process.
Here’s what you should know about a Vietnam KYC.
A Quick Look at Vietnam’s Anti-Money Laundering Law
So, what is the country’s anti-money laundering law and how does it apply to a Vietnam company check?
Known as the AML (anti-money laundering) law, the legislation went into effect on March 1st, 2023. The law’s purpose is to prevent financial crimes from occurring.
The law’s definition of money laundering under the act has broadened to include individuals and organizations who seek to legitimize money either directly or indirectly obtained from illegal activities.
AML goes on to require all payment service providers to perform know your customer (KYC) checks on all potential businesses looking for a partnership with a PSP.
For clarification if your company falls under the Vietnam KYC law, here’s a list of organizations required to run company checks before forming a partnership with a business.
- Payment services;
- Bank guarantees activities;
- Stockbrokers;
- Securities investment consulting, securities underwriting firms
- Management of securities investment funds
- Life insurance businesses
- Casino businesses
- Currency exchange companies
- Accounting and legal service providers
- Foreign exchange services
- Managers of securities investment funds
If, as a PSP, you are thinking of partnering with an organization that trades in precious metals, a KYC is required.
What is included in a KYC
The know-your-customer process involves more than an introduction. Exchanging names and business information is a great way to start getting acquainted but it does little to satisfy AML law.
The law has strict requirements all payment service providers looking to do business in Vietnam must follow. This includes the following.
- Verify the business owner is a Vietnamese citizen. If the owner is not a citizen, verify their country of origin. You also need to determine if they hold single or dual citizenship.
- Identify the organization and the individual’s role in the company.
Sometimes, a customer can fall into a slightly grey category when it comes to citizenship. Known as a stateless individual, this must be verified. You may also be required to perform a more rigorous background to verify their identity.
What is Considered Suspicious Transactional Activity
Sometimes a KYC is triggered when suspicious transactional activity is suspected. You may have a longstanding partnership with a business, but certain activities may mean you must conduct a KYC under the anti-money laundering law.
This includes sudden changes in the number of transactions a business is processing. A KYC is almost always required when the number of transactions increases but the company’s balance sheet remains the same.
Frequent small deposits or transactions are also reasons why you may need to perform a KYC.
Even though the new law may seem like it requires more work on PSPs end, the law is working to decrease fraudulent activities in Vietnam’s financial sector.
