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Money transfers abroad from USD 1,000 may require reporting

The State Bank of Vietnam (SBV) is currently seeking public feedback on a draft Decree regulating the operations of the International Financial Center. The draft covers licensing, foreign exchange management, anti-money laundering, counter-terrorism financing, and risk handling measures for financial institutions.

One of the most notable provisions is the reporting requirement for electronic fund transfers. Under Clause 4, Article 127 of the draft, financial institutions operating in the International Financial Center must comply with reporting obligations similar to international transactions. Specifically, all transfers abroad valued from USD 1,000 or more, as well as domestic transactions from VND 500 million, must be reported in line with Circular 09/2023.

According to SBV, most transactions in the International Financial Center will be conducted via international payment systems such as SWIFT. Therefore, applying international reporting requirements to all transactions from the beginning is considered necessary to control risks and prevent the misuse of capital flows for money laundering or terrorism financing. SBV emphasized that this is also a measure to prevent “capital flight” from Vietnam through the International Financial Center.

Once the Center becomes operational, SBV will conduct a comprehensive assessment of transaction scale, volume, risks, and the system’s capacity to store and exploit data for supervision. Based on the findings, regulations on reporting obligations may be adjusted to better reflect practical operations.

Another important point in the draft concerns the management of banks operating in the International Financial Center. SBV will not apply early intervention measures as it currently does for domestic banks, including special supervision, restructuring, emergency lending, or other central bank operations. In practice, this means that if member banks face financial distress, they will bear responsibility themselves and will not receive the same level of support as banks inside Vietnam’s domestic system.

Commercial banks or branches of foreign banks operating in the Center will also not participate in Vietnam’s deposit insurance scheme. This is because these institutions are prohibited from accepting deposits from individuals residing in Vietnam, making deposit insurance unnecessary.

Regarding risk handling, the draft sets out four situations in which a member bank may be subject to dissolution, bankruptcy, or asset liquidation: (1) cumulative losses exceeding 15% of charter capital and reserve funds; (2) continuous violation of minimum capital adequacy ratios for six months; (3) continuous violation of liquidity requirements for 30 days; or (4) large-scale withdrawals leading to insolvency risks. In these cases, SBV will not intervene, and all bankruptcy or dissolution proceedings will be handled by a specialized Court established within the International Financial Center.

With this new regulation, enterprises, organizations, and individuals seeking to transfer funds abroad should pay close attention to their reporting obligations. Any transfer from USD 1,000 upwards must be accompanied by transparent documentation, including purpose and supporting records. This will facilitate regulatory monitoring of money flows but also increase administrative costs and procedures for transaction parties.

From a macroeconomic perspective, the reporting threshold is considered an important tool to prevent illicit capital transfers and safeguard national financial security. However, some experts caution that overly strict rules may reduce the attractiveness of the International Financial Center for investors, who might be deterred by complicated and time-consuming administrative procedures.

In summary, requiring reports for outbound transfers starting from USD 1,000 is one of SBV’s strong measures to tighten foreign exchange management and combat money laundering. To achieve both objectives—ensuring financial security and attracting investors—the policy will need a balanced, flexible approach and timely adjustments based on actual conditions.

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