A non-resident foreign investment company investing in Vietnamese derivative securities, specifically futures transactions contacted us on this matter. This company opened a derivative trading account with VNDirect to invest in bond futures listed in Ha Noi Stock Exchange (HNX), with deposits and payments made via an indirect investment capital account opened in a Vietnamese commercial bank. Then, the bank informed the investor of the investigation by the Vietnamese State authority into his transactions through such an account.
BLawyers Vietnam pointed out 3 criminal offenses that the investors could be investigated pursuant to the laws of Vietnam as follows:
1. Security market manipulation
Pursuant to Decree 156/2020/ND-CP and Criminal Code 2015, security market manipulation means the commission of prohibited acts in security and security market activities, including any of, several, or all the following acts:
- Using one or multiple accounts of the offender or another person, or colluding with another person, to continuously buy and sell securities to create false demand and supply;
- Colluding with another person to place orders for the purchase and sale of the same type of securities within the day, or selling and buying securities without the actual transfer of ownership or ownership is only transferred within the group in order to create false demand and supply;
- Continuously buying or selling securities with a controlling quantity at the opening or closing time of the market in order to create a new closing price or opening price for such type of securities on the market;
- Trading securities by colluding with another person or persuading another person to continuously place securities purchase and sale orders to remarkably affect the demand, supply, and securities prices, or manipulate securities prices;
- Offer opinions whether directly or via the media about a type of securities or securities issuer in order to affect the price of that type of security after a transaction has been made in order to have an advantage from it; or
- Using other methods or committing other acts to create false demand and supply to manipulate securities prices.
2. Money laundering
Pursuant to Criminal Code 2015 and Law on Prevention of Money Laundering 2022, money laundering means acts of individuals or organizations aiming to legalize the origin of property acquired from crime. This offense is included the following acts:
- Directly or indirectly participating in finance transactions, banking transactions, or other transactions to conceal the illegal origin of the money or property obtained through his/her commission of a crime, or obtained through another person’s commission of a crime to his/her knowledge;
- Using money or property obtained through his/her commission of a crime or obtained through another person’s commission of a crime to his/her knowledge for doing business or other activities;
- Concealing information about the true origin, nature, location, movement, or ownership of money or property obtained through his/her commission of a crime or obtained through another person’s commission of a crime to his/her knowledge, or obstructing the verification of such information; and
- Committing any of the offenses specified in Points (i), (ii), and (iii) mentioned above while knowing that the money or property is obtained through transfer, conversion of money or property obtained through another person’s commission of a crime.
In addition, prohibited acts related to money laundering prevention include:
- Hindering the provision of information to support money laundering prevention;
- Opening or sustaining anonymous bank accounts or accounts with false names;
- Providing illegitimate monetary services related to cash, cheques, other monetary instruments, or valuable monetary retention instruments and payment to the beneficiaries at different locations;
- Arranging or facilitating money laundering;
- Establishing and maintaining a business relationship with a bank located in a country or territory where one’s business is not situated, and such business is not under the control and/or supervision of the related competent authorities; and
- Abusing the suspension of circulation, freezing, sealing, temporary seizure, and handling of money and property related to terrorist financing to infringe upon the interests of the State, legitimate rights, and interests of agencies, organizations, and individuals.
3. Violations against regulations on foreign exchange activities
Violations of regulations on foreign exchange activities are handled as administrative violations. Pursuant to Decree No. 88/2019/ND-CP, some violations against regulations on foreign exchange activities that investors are handled include:
- Buying and selling foreign currencies at organizations not entitled to exchange foreign currencies;
- Making payments for goods and services in foreign currencies against related laws;
- Buying and selling foreign currencies at variance with the exchange rates prescribed in the State Bank;
- Remitting, taking foreign currency, Vietnamese Dong out of and/or into Vietnam against the related legal regulations;
- Transactions, quotations, valuation, pricing indicated in contracts, agreements, postings, goods price advertisements, services, land use rights, and other similar forms (including conversion or adjustment of the prices of goods and services, the value of contracts or agreements) in a foreign currency which fail to conform to the related laws;
- Opening, closing, and using foreign currency accounts opened overseas against the related legal regulations;
- Conducting local loan payments in a foreign currency against the related legal regulations;
- Failing to sell collected foreign currencies to the credit institutions as prescribed in related laws;
- Failing to adhere to the legal regulations on foreign loan borrowing and/or payment; loaning, foreign loan recovery; sponsorship about non-residents and other capital transactions; or
- Conducting other transactions in foreign exchange activities not complying with the laws.
The above is not official advice from BLawyers Vietnam. If you have any questions or suggestions about the above, please contact us at email@example.com. We would love to hear from you.
Date: 08 March 2023
Writer: BLawyers Vietnam