State Bank of Vietnam: Electronic money transfer transactions from 1,000 USD at international financial centers must be reported

The State Bank of Vietnam (SBV) is introducing a Draft Decree on the International Financial Center (IFC), which includes a very notable point: all international electronic money transfers of 1,000 USD or more must be reported. This regulation is considered stricter than the current domestic practice, aimed at ensuring financial safety, preventing money laundering and terrorist financing as Vietnam prepares to establish its first IFC.

Why Choose the 1,000 USD Reporting Threshold?

According to the SBV, the 1,000 USD threshold stems from three main reasons:

1. Aligned with International Standards: Many countries with IFCs have applied low reporting levels for better cross-border transaction monitoring. In the US, banks must report transactions of 1,000 USD or more, while in Europe, some countries have even lower control levels.

2. Preventing Money Laundering Risks: Money laundering often occurs through multiple small transactions, breaking large amounts to avoid monitoring. Setting a 1,000 USD threshold will help limit this situation.

3. Ensuring Transparency in the IFC: With the aim of attracting international financial institutions, the IFC needs a transparent reporting mechanism to build trust for global investment funds and banks.

Impact on Financial Institutions in the IFC

This regulation will create significant changes in the operational methods of banks and financial institutions in Vietnam's IFC:

• Increased Reporting Volume: Financial institutions must invest in information technology systems and data analysis to ensure timely and accurate reporting.

• Higher Compliance Costs: Monitoring numerous small transactions requires increased internal control costs, especially for newly established banks.

• Enhanced International Reputation: By applying regulations equivalent to or stricter than international standards, Vietnam's IFC can build trust with foreign investors.

Lessons from International Experience

Experience from major financial centers like Dubai, Singapore, and Hong Kong shows that applying a low reporting threshold not only helps prevent illegal money flows but also creates an advantage in international credit ratings.

For example, Singapore has a very strict transaction reporting system and has built an image as a "safe destination" for global capital. Meanwhile, Hong Kong - considered a free financial center - also applies strict control mechanisms to maintain international reputation.

If Vietnam successfully implements the 1,000 USD regulation, it can create an image of a transparent and safe IFC from its very inception.

In the context of the US President Donald Trump's new economic policy focusing on stricter control of international capital flows, many countries are forced to raise financial monitoring standards to avoid being labeled a "money laundering haven". By applying the 1,000 USD transaction reporting regulation, Vietnam has taken a step ahead in harmonizing with global trends and avoiding the risk of being placed on a special monitoring list.