Tiếng Việt

Legal update relating to Finance and Credit (Monthly Legal Update – 01/2022)

by | Jan 11, 2022 | Banking, EN, Legal Update | 0 comments

1. LEGAL DOCUMENTS ARE EFFECTIVE FROM 01/01/2022

1.1. Decree No. 143/2021/ND-CP amending and supplementing a number of articles of Decree No. 88/2019/ND-CP dated November 14, 2019 penalties for administrative violations in monetary and banking sector

  • Name of legal document: Decree No. 143/2021/ND-CP issued on 31/12/2021 by the State Bank of Vietnam amending and supplementing a number of articles of Decree No. 88/2019/ND-CP dated November 14, 2019 penalties for administrative violations in monetary and banking sector (referred respectively to as the “Decree No. 143/2021/ND-CP” and “Decree No. 88/2019/ND-CP”).

  • Effective date: 01/01/2022.

The content should be noted: Adding provisions on administrative violations many times.

Specifically, Clause 2, Article 1 of Decree No. 143/2021/ND-CP stipulates: “Article 1. Amending and supplementing to a number of articles of Decree No. 88/2019/ND-CP dated November 14, 2019 of the Government penalties for administrative violations in monetary and banking sector

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2. Adding Article 2a after Article 2 as follows:

“Article 2a. Administrative violations many times

Organizations and individuals that commit administrative violations many times shall be sanctioned for each violation act, except for repeated administrative violations which are aggravating circumstances specified in Article 5; Article 9; Article 10; Article 11; Article 12; Article 13; Article 14; Article 14a; Article 15; Article 16; Article 17; Article 18; Article 19; Article 20; Article 21; Article 22; Clauses 1, 3, 4, 5, 6, 7, 8 Article 23; Clauses 1, 3, 4, 5, 6, 7, 8 Article 24; Article 25; Article 26; Article 27; Article 28; Article 28a; Article 29; Article 30; Article 31; Article 32; Article 33; Clause 1, Article 34; Article 35; Article 36; Article 37; Article 38; Article 39; Article 40; Article 41; Article 42; Article 43; Article 44; Article 44a; Article 45; Article 45a; Article 46; Article 47; Article 50; Article 51 of this Decree.”.”

1.2. Circular No. 17/2021/TT-NHNN on amendments to Circular No. 19/2016/TT-NHNN dated June 30, 2016 of the Governor of the State bank of Vietnam on bank card operations

  • Name of legal document: Circular 17/2021/TT-NHNN issued on 16/11/2021 by the State Bank of Vietnam on amendments to Circular No. 19/2016/TT-NHNNdated June 30, 2016 of the Governor of the State bank of Vietnam on bank card operations (referred respectively to as the “Circular No. 17/2021/TT-NHNN” and “Circular No. 19/2016/TT-NHNN”).

  • Effective date: 01/01/2022.

Some contents should be noted:

  • Firstly, adding provisions on issuance of cards using electronic method.

Specifically, Clause 5 Article 1 of Circular No. 17/2021/TT-NHNN stipulates: “Article 1. Amendments to Circular No. 19/2016/TT-NHNN

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5. Article 10a shall be added as follows:

“Article 10a. Issuance of cards using electronic method

  1. The card issuer shall develop, issue, and make public the procedures for issuance of individual cards using electronic method in accordance with this Article, law on anti-money laundering, law on electronic transactions, relevant regulations of law concerning prudential measures and confidentiality of information of customers and safe operations of the card issuer, at least containing the following:a) Collect necessary information and documents before entering into an agreement on card issuance and usage with the customer to identify the customer and transaction limit of the debit card, personalized prepaid card, credit card as prescribed in clause 5 Article 10, clause 3 of this Article and Article 14 hereof, internal regulations of the card issuer and other regulations of law (if any);b) Inspect, collate, and verify the customer identification information;c) Warn the customer about prohibited acts during the opening and usage of the card issued electronically;d) Provide the customer with an agreement on card issuance and usage with the particulars specified in Article 13 hereof and enter into the agreement on card issuance and usage with the customer in accordance with law on electronic transactions;dd) Notify name of the card issuer, name and trademark of card, card number, validity period (or commencement date of validity) of card, name of cardholder, scope and functions of the card, prohibited acts in law on card usage for customers.

  2. The card issuer has discretion over measures, methods, technology to identify and verify the customer for issuance of cards using electronic method; take liability for any risks (if any) and meet the following premium requirements:a) Having solutions and technologies to collect, check, compare, and ensure the correct match between customer identification information, customer’s biometric data (which are biological factors and characteristics associated with the customers for identification purpose, difficult to fake, has a low overlap rate such as fingerprints, face, iris, voice and other biometric factors) with biometric information and factors corresponding on the necessary documents to identify the customer according to the law on anti-money laundering, at the request of the card issuer or with the personal identification data certified by the competent authority or by other credit institutions, foreign bank branches or by the provider of electronic identification and authentication services;b) Take technical measures to confirm that the identified customer agrees with the contents of the agreement on card issuance and usage;c) Develop a process of risk management, control and assessment, including measures to prevent acts of impersonation, interference, modification, or falsification of verification of customer identification information before, during, and after issuing the card to the customer; measures to check and verify customer identification information to ensure that the customer who is performing transaction of the card issued electronically is the principal cardholder.  The process of risk management and control must be regularly reviewed and improved based on updated information and data during the rendering of service;d) Save and store customer identification information and data derived the process of card issuance and use by the customer, such as: customer identification information; the customer’s biometric factors; sound, images, video recordings, sound recordings; phone number used for making transactions; transaction log.  The information and data must be stored safely and confidentially, backed up, ensuring the completeness and integrity of the data to serve the inspection, comparison, settlement of trace requests, complaints, disputes and providing information upon request from competent regulatory agencies.  The storage period complies with the law on anti-money laundering.

  3. The card issuer shall, based on the applicable technology when identifying and verifying the customer, assess risks and then decide the transaction limit of the customer’s card opened electronically as specified in Clause 2 of this Article, provided that the total transaction limit (including cash withdrawal, wire transfer, payment) of the customer’s debit or personalized prepaid card or credit card does not exceed 100 (one hundred) million Vietnam Dong in a month and that customer may neither withdraw cash in foreign currency in foreign countries nor make international payments.

  4. The card issuer may decide a transaction limit of a card issued electronically higher than the limit specified in Clause 3 of this Article and allow the customer to withdraw cash in foreign currency in foreign countries or make international payments of one of the following measure is taken:a) The card issuer applies technology to check and compare the customer’s biometrics with citizen biometrics data through the citizen identification database;b) The card issuer uses video calls to collect, check and verify customer identification information during the card issuance process in order to ensure that the online identification and verification is performed as effectively as the process done in person.  The video call solution must meet at least the following requirements:  ensure safety and security; high resolution; signal continuity; allow audio and visual interaction with the customer in real time to ensure real person identification; store all audio data, images or video recordings, audio recordings during card issuance to the customer;c) After the cardholder has identified and verified customer information through face-to-face meeting with the cardholder being an individual.

  5. The electronic card issuance in this Article does not apply to the entities specified at Point b, Clause 1, Clause 2, Clause 3, Article 16 of this Circular. The card issuer shall only issue cards by electronic method to individual customers who are foreigners according to Clause 4, Article 16 of this Circular as for debit cards.

  6. The granting of credit via overdrafted credit or debit cards, in addition to the compliance with this Article, must also comply with Article 15 of this Circular.”.”

  • Secondly, amending and supplementing Point g, Clause 1, Article 13 of Circular No. 19/2016/TT-NHNN.

Specifically, Clause 6 Article 1 of Circular No. 17/2021/TT-NHNN stipulates: “Article 1. Amendments to Circular No. 19/2016/TT-NHNN

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6. Point g Clause 1 of Article 13 shall be amended as follows:

 “g. The credit facility agreement to the cardholder, includes: Card facility agreement and changes of card facility agreement, including overdraft limit (for debit cards) and credit limit; interest rates, how interest is charged on the loan, order of recovery of loan principal and interest (for overdrafted credit and debit cards); credit granting period, terms of credit, loan term, minimum sum of repayment, method of repayment, overdue debt fee (if any).  The credit facility agreement concluded with the cardholder may be specified in the agreement on card issuance and usage or in another document;”.”

1.3. Circular No. 18/2021/TT-NHNN regulations on rediscounting of negotiable instruments between credit institutions, foreign bank branches

  • Name of legal document: Circular 18/2021/TT-NHNN issued on 18/11/2021 by the State Bank of Vietnam regulations on rediscounting of negotiable instruments between credit institutions, foreign bank branches (referred to as the “Circular No. 18/2021/TT-NHNN”).

  • Effective date: 07/01/2022.

Some contents should be noted:

  • Firstly, regulating on principles of rediscounting negotiable instruments.

Specifically, Article 3 of Circular No. 18/2021/TT-NHNN stipulates: “Article 3. Principles of rediscounting negotiable instruments

  1. Credit institutions, foreign bank branches may rediscount negotiable instruments when the License issued by the State Bank of Vietnam (hereinafter referred to as the State Bank) contains contents of operation on the rediscounting negotiable instrument.

  2. Credit institutions, foreign bank branches shall rediscount negotiable instruments according to the provisions of this Circular, in accordance with the provisions of the Law on Credit Institutions, the Law on negotiable instruments and regulations provisions of relevant laws. In case of rediscounting a negotiable instrument involving foreign elements, the parties shall comply with the provisions of this Circular, the Law on Credit Institutions, the provisions on application of international treaties and international trade practices in relation to negotiable instruments with foreign elements in the Law on negotiable instruments and the provisions of the law on civil relations with foreign elements.

  3. Credit institutions, foreign bank branches shall rediscount foreign currency negotiable instruments in accordance with the permitted scope of foreign exchange operations of each credit institution, foreign bank branch.”

  • Secondly, regulating on corporate bond purchase limit.

Specifically, Article 6 of Circular No. 18/2021/TT-NHNN stipulates: “Article 6. Rediscount currency

  1. For negotiable instruments payable in Vietnam dong, credit institutions, foreign bank branches shall rediscount in Vietnam dong.

  2. For negotiable instruments payable in foreign currency:a) Credit institutions, foreign bank branches shall rediscount in foreign currency stated on such negotiable instrument or in Vietnam dong as agreed. In case of rediscount in Vietnam dong, the parties shall agree on the applicable exchange rate in accordance with the regulations of the State Bank on the exchange rate;b) In case of rediscounting of a negotiable instrument by method of term purchase, a credit institution or foreign bank branch shall repurchase the negotiable instrument in the currency of the sale of such negotiable instrument.”

1.4. Circular No. 16/2021/TT-NHNN regulations on corporate bond trading of credit institutions and branches of foreign banks

  • Name of legal document: Circular 16/2021/TT-NHNN issued on 10/11/2021 by the State Bank of Vietnam on regulations corporate bond trading of credit institutions and branches of foreign banks (referred to as the “Circular No. 16/2021/TT-NHNN”).

  • Effective date: 15/01/2022.

Some contents should be noted:

  • Firstly, regulating on corporate bond eligible for trading.

Specifically, Article 5 of Circular No. 16/2021/TT-NHNN stipulates: “Article 5. Corporate bond eligible for trading

A corporate bond is eligible for trading when all requirements below are satisfied:

  1. The corporate bond is issued in accordance with regulations and law.

  2. The corporate bond is issued in VND.

  3. The corporate bond is under legal ownership of the seller, has not reached maturity which requires payment of both principal and interest, is not subject to any dispute, is allowed to be traded as per the law, is not under forward contract or discount contract or rediscount contract as guaranteed by the seller (except for cases where a credit institution purchases corporate bond to sell for the first time).”

  • Secondly, regulating on corporate bond purchase limit.

Specifically, Article 8 of Circular No. 16/2021/TT-NHNN stipulates: “Article 8. Corporate bond purchase limit

  1. The total corporate bond purchase balance shall be included in total amount of credit extended of a customer or a customer and a related person according to Article 128 of the amended Law on Credit Institutions and regulations of the State Bank of Vietnam on prudential limits and ratios in operations of credit institutions.

  2. Credit institutions shall elaborate on corporate bond purchase limits: Corporate bonds of an issuer; corporate bonds of an issuer and a related person; secured bonds; non-secured bond; readily marketable bonds; bonds held until maturity; corporate bonds being traded.”

1.5. Circular No. 25/2021/TT-NHNN amending and supplementing a number of articles of Circular No. 01/2015/TT-NHNN dated January 6, 2015 defining trading, supply of interest rate derivative products of commercial banks, branches of foreign banks

  • Name of legal document: Circular 25/2021/TT-NHNN issued on 31/12/2021 by the State Bank of Vietnam amending and supplementing a number of articles of Circular No. 01/2015/TT-NHNN dated January 6, 2015 defining trading, supply of interest rate derivative products of commercial banks, branches of foreign banks (referred respectively to as the “Circular No. 25/2021/TT-NHNN” and “Circular No. 01/2015/TT-NHNN”).

  • Effective date: 14/02/2022.

The content should be noted: Adding provisions on defining trading, supply of interest rate derivative products by electronic means

Specifically, Clause 4 Article 1 of Circular No. 25/2021/TT-NHNN stipulates: “Article 1. Amending and supplementing a number of articles of Circular No. 01/2015/TT-NHNN

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4. Adding Article 4a as follows:

“Article 4a. Defining trading, supply of interest rate derivative products by electronic means

  1. Commercial banks, foreign bank branches defining trading and supplying interest rate derivative products by electronic means must develop a business process for providing interest rate derivative products by electronic means in accordance with the provisions of this Circular, the provisions of the law on prevention and combat of money laundering, the law on electronic transactions and relevant legal provisions, ensuring the safety and confidentiality of customer information and safe operation of commercial banks and foreign bank branches.

  2. Commercial banks and foreign bank branches must fully store information related to the defining trading and supply of interest rate derivatives by electronic means to serve the inspection, compare, settle tracing, complaints, disputes and provide information upon request from competent state management agencies.””

1.6. Circular No. 24/2021/TT-NHNN amending and supplementing to some articles of Circular No. 39/2011/TT-NHNN December 15, 2011 of the Governor of the State bank of Vietnam providing independent audit of credit institutions and foreign bank branches

  • Name of legal document: Circular 24/2021/TT-NHNN issued on 31/12/2021 by the State Bank of Vietnam amending and supplementing to some articles of Circular No. 39/2011/TT-NHNN December 15, 2011 of the Governor of the State bank of Vietnam providing independent audit of credit institutions and foreign bank branches (referred respectively to as the “Circular No. 24/2021/TT-NHNN” and “Circular No. 39/2011/TT-NHNN”).

  • Effective date: 15/04/2022.

The content should be noted: Amending and supplementing regulations on contents with at least in independent audit of operations of the internal control system of credit institutions and foreign bank branches.

Specifically, Clause 2 Article 1 of Circular No. 24/2021/TT-NHNN stipulates: “Article 1. Amending and supplementing a number of articles of Circular No. 39/2011/TT-NHNN

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2. Amending and supplementing Clause 2, Article 8 as follows:

“2. Independently audit the operation of the internal control system of a credit institution or foreign bank branch with at least the following contents:

a) Auditing the internal control system of credit institutions, foreign bank branches (including internal mechanisms, policies, processes and regulations) in compliance with current law provisions and regulations of the State Bank on the internal control system of credit institutions and foreign bank branches.

For the contents of the internal control system that have been audited for compliance without any change, such content is not required to be re-audited;

b) Auditing the operation of the internal control system for the preparation and presentation of financial statements;

c) In addition to the audit contents specified at Points a and b of this Clause, the commercial bank or foreign bank branch must audit the operation of the internal control system for the content of the internal assessment on the sufficient capital level of commercial banks and foreign bank branches in accordance with the State Bank’s regulations on internal control system.””