Legal update relating to Finance and Credit (Monthly Legal Update – 02/2021)

1. LEGAL DOCUMENTS ARE EFFECTIVE FROM 01/02/2020

1.1. Circular No. 15/2020/TT-NHNN amendment and supplement a number of articles of Circular No. 26/2013/TT-NHNN issued on December 5, 2013 of the State bank of Vietnam promulgating the tariff of charges for payment services offered via the State bank of Vietnam

• Name of legal document: Circular No. 15/2020/TT-NHNN issued on 20/11/2020 by the Governor of the State Bank amendment and supplement a number of articles of Circular No. 26/2013/TT-NHNN issued on December 5, 2013 of the State bank of Vietnam promulgating the tariff of charges for payment services offered via the State bank of Vietnam (referred to as the “Circular No. 15/2020/TT-NHNN).
• Effective date: 01/02/2021.

The content should be noted: Amending and supplementing regulations on International payment service charge.

Specifically, Clause 3 of Article 1 Circular No. 15/2020/TT-NHNN stipulates: “Article 1.

3. Part IV “International payment service charge” in the Tariff of charges for payment services offered via the State bank of Vietnam issued together with Circular No. 26/2013/TT-NHNN is amended and supplemented as follows:IV. International payment service charge:

1.2. Circular No. 17/2020/TT-NHNN amending and supplementing a number of articles of the Circular No. 33/2013/TT-NHNN dated December 26, 2013 of the Governor of the State bank of Vietnam guiding procedures for the approval for activities of export and import of foreign currencies in cash of the authorized banks

• Name of legal document: Circular No. 17/2020/TT-NHNN issued on 14/12/2020 by the State Bank amending and supplementing a number of articles of the Circular No. 33/2013/TT-NHNN dated December 26, 2013 of the Governor of the State bank of Vietnam guiding procedures for the approval for activities of export and import of foreign currencies in cash of the authorized banks (referred to as the “Circular No. 17/2020TT-NHNN”).
• Effective date: 01/02/2021.

The content should be noted: Amending and supplementing regulations on dossiers and procedures for requesting for the approval for export and import of foreign currencies in cash of the authorized banks are specified in Article 3 of Circular No. 33/2013/TT-NHNN.

Specifically, Article 1 Circular No. 17/2020/TT-NHNN stipulates: “Article 1. Amending and supplementing a number of articles of Circular No. 33/2013/TT-NHNN

Article 3 is amended and supplemented as follows: “Article 3. Procedures for requesting for the approval for export and import of foreign currencies in cash of the authorized banks

…

2. Dossier includes:a) An application form for the approval for export and import of foreign currencies in cash of the authorized banks, made according to the form provided in Appendix 01 to this Circular;b) Contract of export and/or import of foreign currencies in cash signed between a authorized bank and a foreign bank or foreign financial institution enclosed with a Vietnamese translation certified by the authorized bank’s legal representative (only send for the first time and send additionally when there is a change);c) Internal regulations of the authorized bank on the export and import of cash foreign currencies, in which the provisions on decentralization of authorization to carry out the cash foreign currency import and export activities within the system and regulations on management, supervision and safety assurance in the delivery, preservation and transportation of cash foreign currencies must comply with the State Bank of Vietnam regulations (sending only for the first time and sending supplement when there is a change);d) Power of attorney in case the person signing the application for approval is the authorized representative of the authorized bank (only send for the first time and additionally send when there is a change).
3. Order and procedures for the approval for export and import of foreign currencies in cash:a) When wishing to export or import cash in foreign currency, authorized bank to prepare and send 01 (one) set of dossier to the State Bank branch in Hanoi city or the State Bank branch in Ho Chi Minh city as prescribed in Clauses 1 and 2 of this Article;b) Within 02 (two) working days from the date of receipt of complete and valid dossiers as prescribed in Clause 2 of this Article, the State Bank branch in Hanoi city or the State Bank branch in Ho Chi Minh city shall consider and approve the export and import of cash in foreign currencies by an authorized bank using the form provided in Appendix 02 to this Circular and send it to the authorized bank under Points a and b Clause 1 of this Article.In case the application is incomplete or invalid, the State Bank branch in Hanoi or the State Bank branch in Ho Chi Minh City shall issue a notice on the national single-window portal or a written notice to authorized bank (in the case specified in point b clause 1 of this Article) and clearly state the reason.
4. Within 03 (three) working days from the date of receipt of all documents related to the export and import of cash foreign currency (payment wire and customs declaration), the authorized bank sends The State Bank branch in Hanoi city or the State Bank branch in Ho Chi Minh City a copy of the payment wire and the customs declaration (certified by the legal representative of the authorized bank).”

1.3. Circular No. 23/2020/TT-NHNN provisions on safety ratios and limitations in the operation of non-bank credit institutions

• Name of legal document: Circular No. 23/2020/TT-NHNN issued on 31/12/2020 by the State Bank provisions on safety ratios and limitations in the operation of non-bank credit institutions (referred to as the “Circular No. 23/2020TT-NHNN”).
• Effective date: 14/02/2021.

Some contents should be noted: Providing conditions for credit extension for stock investment and trading.

Specifically, Clause 1, Article 12 of Circular No. 23/2020/TT-NHNN stipulates: “Article 12. Conditions and limits on credit extension for stock investment and trading.

1. Finance companies may only extend credit for a period of up to 01 (one) year for customers to invest in and trade in stocks and when extending credit, must satisfy the following conditions:a) The credit extension must ensure the prudential ratios and limits as prescribed by law;b) Bad debt ratio below 3%;c) Fully complying with regulations on risk management in accordance with regulations of the State Bank on internal control system of non-bank credit institutions and regulations on classification of assets, appropriation, method of setting up of risk provisions and the use of provisions to deal with risks in the operations of credit institutions, foreign bank branches.”

1.4. Circular No. 18/2020/TT-NHNN abolishing a number of legal documents promulgated by the Governor of the State Bank of Vietnam

• Name of legal document: Circular No. 18/2020/TT-NHNN issued on 30/12/2020 by the State Bank abolishing a number of legal documents promulgated by the Governor of the State Bank of Vietnam(referred to as the “Circular No. 18/2020TT-NHNN”).
• Effective date: 15/02/2021.

The content should be noted: abolishing Decision No. 1087/2003/QD-NHNN dated on 17/09/2003 of the Governor of the State Bank of Vietnam and Decision No. 45/2007/QD-NHNN dated on 17/12/2007 of the Governor of the State Bank of Vietnam.

Specifically, Clause 4 and Clause 7 Article 1 Circular No. 18/2020/TT-NHNN stipulates: “Article 1. Abolishing all legal documents

Abolishing all the following legal documents promulgated by the Governor of the State Bank:

…

4. Decision No. 1087/2003/QD-NHNN dated on 17/09/2003 of the Governor of the State Bank of Vietnam on issuance of regulations on protecting state secrets;

…

7. Decision No. 45/2007/QD-NHNN dated on 17/12/2007 of the Governor of the State Bank of Vietnam on the confidentiality of each type of document, materials containing state secret in banking area;”

1.5. Circular No. 22/2020/TT-NHNN amending and supplementing a number of articles of the 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 No. 22/2020/TT-NHNN issued on 31/12/2020 by the State Bank amending and supplementing a number of articles of the Circular No. 19/2016/TT-NHNN dated June 30, 2016 of the Governor of the State Bank of Vietnam on bank card operations (referred to as the “Circular No. 22/2020TT-NHNN”).
• Effective date: 16/02/2021.

Some contents should be noted: Amending and supplementing regulations on Transformation schedule designed for card acquirers.

Specifically, Article 1 of Circular No. 22/2020/TT-NHNN stipulates: “Article 1. Amending and supplementing a number of articles of Circular No. 19/2016/TT-NHNN

1. Clause 2 Article 27a (supplemented in accordance with Clause 5 Article 1 of the Circular No. 41/2018/TT-NHNN dated December 28, 2018 of the Governor of the State Bank of Vietnam amending and supplementing a number of articles of Circular No. 19/2016/TT-NHNN) is amended and supplemented as follows:

“2. As of December 31, 2021, 100% of ATMs and card processing devices at point of sale operating in Vietnam of card acquirers shall comply with the basic standard of domestic chip cards.”

2. To add Clause 4 to Article 27b (supplemented in accordance with Clause 5, Article 1 of the Circular No. 41/2018/TT-NHNN dated December 28, 2018 of the Governor of the State Bank of Vietnam amending and supplementing a number of articles of Circular No. 19/2016/TT-NHNN) as follows:“4. From March 31, 2021, card issuers that issue cards with BINs issued by the State Bank must comply with the basic standard of domestic chip cards. ”.”

2. LEGAL DOCUMENTS ARE ISSUED IN 01/2020

Directive No. 02/CT-NHNN on strengthening prevention, fighting of violations of the law in banking card operations

• Name of legal document: Directive No. 02/CT-NHNN issued on 07/01/2021 by the State Bank on strengthening prevention, fighting of violations of the law in banking card operations (referred to as the “Directive No. 02/CT-NHNN”).
• Effective date: 07/01/2021.

The content should be noted: Adding regulations on payment fees are regulated in Circular No. 26/2013/TT-NHNN.

Specifically, Item II of Directive No. 02/CT-NHNN stipulates: “… To limit risks, continue to strengthen control, prevent illegal acts in banking card operations, Governor of the Bank The State Bank of Vietnam (SBV) requires affiliates of the State Bank, card issuers, card payment organizations, providers of intermediary payment services, and Representative Offices of international card organizations take the following measures:

II. For card issuers and card payment organizations

1. Checking and reviewing the entire process, procedures and regulations on dossiers and contracts for opening and using payment accounts and bank cards, on that basis, to amend, supplement and complete the above internal regulations to ensure the safety and confidentiality of customers’ information and comply with the law; reviewing the scope of use of bank cards in card issuance and usage contracts, limit and exchange rate in card transactions to ensure compliance with law; strictly comply with the instructions and warnings of the State Bank of Vietnam1 on the supervision and control of the banking card operations, with special attention paid to the identification and verification of information of customers and merchants. Thoroughly understand all relevant officials in the whole system to strictly comply with the laws and regulations and internal guidelines issued.
2. Improve the efficiency of administration, operating and the internal inspection and control system to limit risks, prevent violations of the law on bank card operations. Organize and coordinate with the information provider to monitor, check and review card transactions arising at merchants to prevent: (i) the use of credit card limit for money transfer and credit checking account, debit card or prepaid card of a customer or a third party (not merchant); (ii) Payment transactions that do not happen actually at merchants (no purchase and sale of goods and service provision) for the purpose of cash withdrawal; (iii) card transactions not in accordance with the law (related to prize-winning games, gambling, gambling, foreign exchange, securities, virtual money, electronic money …). Review, terminate cooperation and take appropriate measures for information providers, merchants that use bank cards in contravention of law.
3. Strengthen propaganda and guidance so that customers, providers of intermediary payment services and merchants can understand and use card services safely, comply with legal regulations: actively share and exchange information between card issuers and card payment organizations to promptly detect suspicious transactions; warns customers, providers of intermediary payment services, merchants not to use or facilitate other entities to take advantage of the use of payment accounts, bank cards for illegal purposes, such as leasing, lending current accounts, buying, selling, renting, leasing cards or card information, opening card for…
4. To closely coordinate with legal protection agencies and relevant functional agencies in detecting and handling violations of the law on banking card operations in accordance with law.”