Illegal use of foreign currency in transactions in Vietnam

Writer: Ngan Nguyen & Vi Tran

Illegal uses of foreign exchange in transactions in Vietnam

The demand for using foreign currencies in common business and trading transactions in Vietnam has recently kept increasing. To let this demand go on the right track, the Government issued some legal documents on controlling use foreign currency for transactions within Vietnam’s territory. One of them is Decree No. 88/2019/ND-CP (“Decree 88”) dated 14 October 2019 regulating administrative penalties in those sectors. Besides, the Penal Code 2015 of Vietnam also regulates criminal penalties for violations regarding use of foreign currencies.

By this article, BLawyers Vietnam would lead your attention on those regulations to avoid potential risks.

1. What are the illegal uses of foreign currencies?

In Vietnam’s territory, foreign currencies can be legally used in transactions between non-residents, agreements between organizations and foreigners on paying salaries, or capital funding in foreign investment projects, etc. Except for some specific cases provided by laws, all transactions, payments, listing, advertisements, quotations, pricing in contracts, agreements or other similar forms must be in Dong Vietnam.

Accordingly, Article 23 of Decree 88 regulated some administrative violations in using foreign currencies, including:

  1. Ineligible entities using foreign currencies in trading transactions. Such as, selling or buying foreign currencies, making payment in foreign currencies for goods and services;
  2. Violations against regulations on listing, notification of foreign exchange rates, registration for foreign exchange operations of agents, gaming/ casino businesses, credit institutions or foreign bank branches;
  3. Investment activities in foreign currencies failing to comply with Vietnamese laws in terms of conditions or procedures. The failures are related to foreign loans and repayment, issuance of bonds or shares, funding transactions, opening, using or closing accounts, etc.
  4. Transferring, carrying, importing foreign currencies into Vietnam’s territory against the laws.

Besides, the Penal Code 2015 regulated some relevant crimes, such as smuggling or illegal transportation of foreign currencies across the border or between the non-tariff zones and the inland area of Vietnam. To prosecute someone for those crimes, the value of foreign currency amount is from VND100 million (for individuals) or double (for organizations). However, if the value is below the mentioned level but the offender has incurred an administrative penalty for the same offence, the authority could prosecute him.

2. Which penalties of illegally using foreign currencies in the territory of Vietnam?
2.1. Administrative penalties

Anyone who commits to the violations under Decree 88 must bear administrative penalties depending on nature and seriousness of violations. Particular:

(i) Ineligible entities using foreign currencies in trading transactions:

  • Be given cautions if the value of foreign currency is less than USD1,000; or
  • A fine from VND10 million to VND100 million.
  • Additional penalty: the State confiscates the foreign currency in the breach.

(ii) Violations against regulations on listing, notification of foreign exchange rates, registration for foreign exchange operations:

  • A fine from VND20 million to VND250 million.
  • Additional penalty: the certificate or license for foreign exchange operations is invalid for a certain period of time.

(iii) Investment activities in foreign currencies but failing to comply with Vietnamese laws: A fine from at least VND20 million to VND200 million.

(iv) Acts of transferring, carrying, importing foreign currencies into Vietnam’s territory against the laws:

  • A fine from VND30 million to VND200 million.
  • Additional penalty: the State confiscates the foreign currency in the breach.

Of note, the fines above are applicable to individuals. Then, the fines applicable to organizations are twice as much as the fines for individuals.

2.2. Criminal penalties

Organizations and individuals commit to criminal signs relating to foreign currencies under the Penal Code 2015 could bear a crime. So, depending on the value of the foreign currency amount thereof, the crimes include:

(i) Firstly, crime of smuggling with penalties of:

  • A fine ranging from VND50 million to VND5 billion.
  • Imprison penalty from 06 months to 20 years.
  • Additional sentences: a fine from VND20 million to VND100 million, or prohibition on holding certain positions or doing certain works for 01 – 05 years, or confiscation of all property.

(ii) Secondly, crime of illegal transportation of foreign currencies, with penalties of:

  • A penalty of up to 02-year community sentence.
  • A fine ranging from VND20 million to VND3 billion.
  • Imprison penalty from 03 months to 10 years.
  • Additional sentences: a fine from VND10 million to VND50 million, or prohibition on holding certain positions or doing certain works for 01 – 05 years.

In addition, if commercial legal entities commit to any crimes mentioned-above, they could bear:

  1. A fine from VND300 million to VND15 billion for smuggling foreign currencies.
  2. A fine from VND200 million to VND5 billion for illegally transporting foreign currencies across the border of Vietnam.
  3. A suspension on operating for 06 – 36 months or permanently shut down in some circumstances.
  4. Additional sentences: a fine ranging from VND50 million to VND300 million (for smuggling) or to VND200 million (for illegal transportation) and cannot operate in certain fields or raising capital for 01 – 03 years.

Do you want to study more about bankruptcy/ illegal one-sided termination of labor contracts/ VAT invoice? Just click and read.

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