In the first article, we answered the question “Is Forex trading regulated under the laws of Vietnam?”.
Accordingly, Forex business is not regulated under the laws of Vietnam and the competent authority in Vietnam, i.e., the State Bank of Vietnam has not, so far, issued any further guidance or instruction on such kind of business in Vietnam.
Today, in the second article, we will discuss the legal risks in doing Forex business in Vietnam without license.
Doing Forex business in Vietnam without license: legal risks
Doing Forex business has been excluded by Vietnam in the Schedule of WTO Commitments. Since Vietnamese legislation does not have specific regulations on this kind of business, any investor wishing to do Forex business in Vietnam must consult with and obtain the approval from various competent authorities in Vietnam, including Ministry of Planning and Investment, the Ministry of Finance, Ministry of Industry and Trade, the State Bank of Vietnam; and other relevant Ministry (if any) in accordance with clause dd, Article 10, Decree 118/2015/ND-CP. In the absence of specific regulations under the Vietnamese laws on this kind of business, the competent authorities in Vietnam hardly accept and approve Forex business for the investor.
Doing Forex business in Vietnam without license shall be subject to administrative sanctions in accordance with Vietnamese law. In particular, any investor doing Forex business in Vietnam without license shall be subject to an administrative penalty of from VND 200,000,000 to VND 250,000,000 and foreign exchange operations of the credit institution shall be suspended for 03 – 06 months. In addition, he/ she may be requested by the competent authorities to stop or suspend its operation until more regulations on this kind of business are issued.
Doing Forex business in Vietnam without license: current status
Currently, there are not any foreign-invested financial institutions licensed to do the Forex business in Vietnam. Vietnamese traders who want to do Forex trading will often choose the other prestigious Forex Exchange Platforms licensed in other countries to register to create accounts and link with banks via Visa or Master Card for the purpose of the transaction.
In a recent interview, an officer in charge from the State Bank of Vietnam verbally confirmed that “The nature of Forex trading (on Forex Exchange Platform) is foreign currency business through accounts, in margin trading form and the value will be revalued continuously according to the fluctuations of exchange rates of currency pairs or other commodities (included gold). Forex trading is not considered as buying and selling foreign exchange to serve the needs of using foreign exchange but in order to speculate on price fluctuations”. As such, organizations and individuals are only allowed to perform foreign exchange transactions in accordance with the laws after obtaining approval from the Prime Ministry and the State Bank of Vietnam. Since there are no specific regulations on the Forex trading, any Forex business activity without approval from the competent authorities of Vietnam is not allowed.
-  Clause dd, Article 10, Decree 118/2015/ND-CP: ” With regard to sectors and sub-sectors excluded from commitments or not specified in Vietnam’s WTO Schedule of commitments and other international agreements on investment, if the investment conditions applied to foreign investors are also not provided for in Vietnam’s law, the investment registration authority shall consult with the Ministry of Planning and Investment and relevant Ministries”.
-  Clause 8 and Clause 9, Article 23 of Decree No. 88/2019/ND-CP regulates administrative sanctions for violations on foreign exchange as follows:
- “8. A fine ranging from VND 200,000,000 to VND 250,000,000 shall be imposed for committing one of the following violations:
- c) Carrying out foreign exchange operations without a license granted by a competent authority, or with an expired or revoked license, or against the license, except for the cases prescribed in Points d, o Clause 4, Points a, d Clause 5 of this Article.
- 9. Additional penalties:
- dd) Foreign exchange operations of the credit institution or foreign bank branch that commits the violation prescribed in Point c Clause 8 of this Article shall be suspended for 03 – 06 months.”