Clarifying the issue of beneficial ownership of the enterprise

Determined to remove Vietnam from the Grey List, relevant agencies are seeking opinions on adding regulations on beneficial owners of enterprises to legal regulations.

Removing Vietnam from the Grey List: Clarifying the issue of beneficial ownership of enterprises

Determined to remove Vietnam from the Grey List, relevant agencies are seeking opinions on adding regulations on beneficial owners of enterprises to legal regulations.

In June 2023, the Financial Action Task Force (FATF) placed Vietnam on the Enhanced Monitoring List (also known as the Grey List), and made 17 recommendations for action for Vietnam to address deficiencies in the anti-money laundering, anti-terrorism financing, and anti-proliferation financing of weapons of mass destruction mechanisms.

However, if there is no change in the legal framework, including the content on beneficial ownership, FATF may consider putting Vietnam on the Black List. This will affect the business investment environment and the economy. Accordingly, the private sector will be most affected. These measures will directly affect the effective operation of the financial system and indirectly affect many economic, political and social aspects of the country.

Determined to remove Vietnam from the Grey List, on February 23, 2024, the Prime Minister issued the National Action Plan to implement the Vietnamese Government's commitments on preventing and combating money laundering, terrorist financing and financing of proliferation of weapons of mass destruction.

In particular, the Prime Minister assigned the Ministry of Planning and Investment to develop a mechanism to provide competent authorities with timely access to complete, accurate and updated information on beneficial owners of legal entities (and legal agreements, if appropriate) and to apply appropriate, effective, proportionate and deterrent measures to violations, with a completion deadline of May 2025.

To carry out this task, the Department of Business Registration Management (Ministry of Planning and Investment) has just organized a seminar to collect opinions on adding regulations on beneficial owners of enterprises to the Enterprise Law, with the participation of representatives of professional units.

The purpose of developing regulations on collecting information on beneficial owners is to find out the ultimate individual who actually controls and governs the investment and business activities of the enterprise. Completing this regulation will contribute to improving Vietnam's anti-money laundering ranking and making the investment and business environment transparent and healthy, attracting investors, contributing to preventing and combating money laundering crimes.

According to research and synthesis by the Department of Business Registration Management, legal regulations and mechanisms for collecting information on beneficial owners of enterprises are one of the indicators of the new Business Environment Assessment Index of the World Bank (WB), international organizations (IMF, UN, OECD) included in relevant documents, papers and international declarations and agreements.

Currently, about 90/160 economies have regulations on beneficial ownership of enterprises. Conceptually, the common point is that most countries define a specific equity ownership threshold that defines the effective ownership of a legal entity as 10-25%, in addition to referring to control, dominance or direct or indirect ownership.

According to Lawyer Truong Thanh Duc, Director of ANVI Law Firm, amending and supplementing regulations on beneficial owners is very necessary, not only for the purpose of preventing money laundering. "We are deeply integrated, we cannot fail to comply and comply," said Mr. Duc.

Mr. Duc said that the issue of beneficial ownership has been mentioned in a number of legal documents and cooperation agreements between Vietnam and a number of countries in the past. However, when amending the Enterprise Law to supplement this issue in the future, the drafting agency needs to clarify the concepts of company owners.

According to the commitment of the Vietnamese Government, the deadline for completing the legal amendment is May 2025. However, the time for amending the law must be implemented according to the National Assembly's Law and Ordinance Development Program with many procedures according to the Law on Promulgation of Legal Documents.

In addition, most of the business community is unfamiliar with this concept, so the legalization of requirements for collecting information on beneficial owners of enterprises needs to be fully communicated for more effective implementation.

Mr. Nguyen Hoa Cuong, Deputy Director of the Central Institute for Economic Management, said that it is possible to consider amending the principled issue in the law, then amending it more carefully in the implementing guidelines. In addition, we should focus on two issues, which are what state management agencies need to do and what businesses need to do, in order to develop specific regulations.

Source: https://baodautu.vn/dua-viet-nam-ra-khoi-danh-sach-xam-lam-ro-van-de-chu-so-huu-huong-loi-cua-doanh-nghiep-d229828.html