Financial crime in international trade recommendation and suggestion for vietnamese financial institutions and related ministries

DECLARATION OF AUTHORSHIP I hereby commit that the thesis "Financial crime in International Trade: Recommendation and Suggestion for Vietnamese Financial Institutions and Related Ministr

The rationale of the study

Global growth has been progressively declining recently, and the actual prediction for

2023 is predicted to be much gloomier Foreign commerce has been rapidly expanding in recent years By virtual of the internationalization of business, culture, and politics, international commerce plays a significant part in every nation's economic system On the one hand, this successfully propels each country's economy and global ranking places On the other side, this industry might be used by financial criminals to abuse and undermine commercial systems

It is reported that the global economy is at the beginning of a crisis of low economic growth and unemployment, rising inflation, food and energy problems, capital accumulation, labour, and climate change have all transformed multidimensional issues The cost of living is soaring in most locations, accompanied by tighter financial policy, while government assistance policy alternatives are diminishing Furthermore, global economic activity is facing a deeper and more severe slump than anticipated Global inflation has been unprecedentedly high in recent decades, rising from 4.7% in 2021 to 8.8% in 2022 and is expected to reduce to 6.5% in 2023 and 4.1% in 2024, according to the Vietnamese Banking Review 2022 Earnings in the nonrenewable energy sector are skyrocketing, but growing energy costs are the primary drag on national income and output growth As can be clearly seen from the mentioned economic situation, this volatile trend in the global economy is “fertile ground” for financial criminals to conduct crimes without governments’ wariness In other words, this is an appropriate period to study this persistent problem to clarify the tricks that are used in distinct types of crime to seek the particular solutions that can prevent and eliminate this sort of crime in the meantime

Furthermore, global fluctuating trends exist in a variety of nations alongside the 4.0 revolution, which leads to the case that many developed and developing countries must suffer from a tidal wave of financial issues, primarily financial criminals, which have existed continuously over the previous years and are predicted to be beyond government control in this complex and critical context “External fraud in the transformation of financial crime has been rising, both in terms of volume and total transaction amounts by 61% and 59% respectively” (Kurshan, Shen and Yu, 2020) Thus, studying these alarming financial issues is urgent and rational

Financial crime is a wide range of criminal offences that are mostly international in nature and involve looking at individuals, companies, organizations, and nations in the big picture It has a significant impact on the worldwide banking and financial sectors and can expose the sources, channels, and goals of money This has a negative impact on the economic and social system

At this point, the extent and complexity of financial data are issues Additionally, crooks constantly revise their techniques Criminals are always devising new strategies to stay ahead of the game Thus, presenting financial crime patterns should be properly examined In this environment, public awareness and reporting of questionable financial activities are crucial In the majority of research in this field, experts feel that the likelihood of financial crime has skyrocketed in recent years The UNODC believes that fewer than 1% of illegal funds travelling through the world's financial institutions are ever apprehended Therefore, this type of crime has a frequent impact on trade-based anti-money laundering (TBML), counter-terrorism funding, sanction avoidance, weapons of mass destruction (WMDs), bribery and corruption, commercial fraud, boycotts, and other areas in this field

With a significant increase in transnational crimes such as human trafficking, corruption, and the sale of illegal narcotics and weapons, trade finance transactions are a tempting way for financial criminals to legitimize their illicit profit sources Before these sorts of criminalities in international trade finance were prevalent, cash-based money laundering was a recurring issue for the FATF and governments worldwide Cash has traditionally been a vital raw material for criminal organizations, and many terrorist organizations prefer to utilize it as an anonymous financial tool Several levels of protection are given to block financial crime activities since numerous institutions have examined and encountered many incidents of trade-based money laundering over the previous decades, however, these attempts still not achieve the climax result David Thomas's “New Payment Methods and Financial Crime Risks”, said, “At all levels of crime, from street level to international organized networks, the common requirements for moving money are convenience, security, and obscurity, if not anonymity”

Financial crime is an issue for governments and other organisations all around the world This initiative's goals include defending the integrity and stability of the international financial system, cutting off terrorists' access to resources, and making it more difficult for criminals to profit from their illegal conduct Yet, the ability of both the commercial and governmental sectors to control and analyse financial crime is dependent on improved coordination across the many regulatory organisations and institutions (Down

Financial criminals exploit a lack of security and uncertain political and economic conditions to earn personal profits without acknowledging the risk to global financial health As a result, early detection and prevention can improve a specific proportion of the world's economic performance while assisting financial institutions and relevant ministries in developing compatible policies needed to progressively eliminate this crime, especially in the international trade process It is critical for financial crime and compliance experts to understand what constitutes insider dealing activity to detect and avoid exposure to the movement as a severe financial crime (Kurshan, Shen, 2020)

As mentioned, those unindicated activities not only have an impact on economic aspects but also on social life, politics, and military dimensions in many countries, which are easily exploited by international financial crime with sophisticated and unpredictable tricks Regarding this economic issue, the United Nations Office on Drugs and Crime (UNODC) estimates that the amount of money deemed "money laundering" globally is estimated at an average of US$2.4 trillion every year, with less than 1% clarity identified Nevertheless, financial crime is not distant from reality and impacts regular people in their everyday activities As per Global Financial Integrity estimations, the total sum of illegal inflows into and outflows from Vietnam in 2015 was more than USD 9 billion (inflows 9.7 billion and outflows 9.1 billion) As of February 2012, the Financial Action Task Force (FATF) blacklisted three ASEAN members – Indonesia, Myanmar, and Thailand – and graylisted four ASEAN members – Brunei, Cambodia, the Philippines, and Vietnam – for Poor Money Laundering Control The Vietnamese government is constantly concerned about financial concerns and works hard to put in place timely and adequate measures to prevent the spread of financial crimes

In conclusion, financial crime must be widely acknowledged by the government, citizens, and economists to prevent and eliminate these crimes from harming economic health and quality Therefore, the thesis “Financial Crime in international trade: Recommendation and Suggestion for Vietnamese financial institutions and Related Ministries” was selected to be established to detect these kinds of crimes and enhance economic health, which has deteriorated by this controversial issue.

Research purpose

According to the ICA (International Compliance Association), financial crime has become a growing problem for governments worldwide in the last 30 years, and it is feasible to split financial crime into two distinct, closely linked categories of behaviour According to Sanction Scanner, financial crime generates a significant amount of global

GDP (2% - 3%), with the most prevalent crimes being terrorist funding, money laundering, corruption, and fraud There have been a considerable number of articles and scientific works that analyze the impact and consequences of financial crime However, they are still vague or only focus on a typical type of crime, not the entire problem that these crimes are still on the rise and challenging to recognize Besides, inefficient approaches that have been executed by governments and authorities over the world could be used to single out lessons for Vietnamese institutions and ministries Intending to tackle the existing problem, this thesis's goal is to give the explicit identification of each type of financial crime in international trade to supply an array of suggestions To reach this study purpose, this thesis builds the two main questions as a primary structure for the research content:

Question number 1: What are the causes, effects, and consequences of financial crime in terms of several nations in general and Vietnam in specific?

Question number 2: What are the suggestions and recommendations for Vietnamese ministries and financial institutions to detect and prevent financial crime efficiently?

Research scope and subject

By comparing the current situation in numerous economic sectors, particularly in Vietnam, to the theoretical basis of financial crime content in trade finance throughout the world, the dangers, and limits of financial institutions in managing this activity As a result, I propose options that are best suited to our country's current condition

The purpose of this study is to clarify the definition, content, identification signs, and prevention of financial crime, by relying on clear and reputable research data Financial crime research organizations and authors whose research is published in the field Afterwards, the suggestions and recommendations will be released as means of implementation for the Vietnamese authorities

Several theories and identifications used in this thesis have ranged from 1998 to 2023, while the reporting indicators annually belong to the period of 2020 to 2023 with synthesis sources in international trade.

Research methodologies

To perform the study, the issue is based on the research procedures of analysis, synthesis, and comparison

4.1 Analytical method: Analytical approaches are used to better understand the theory of various types of money laundering by reviewing publications on the content of anti- money laundering in trade finance from organisations such as FTAF, Wolfsberg, and ICC

4.2 The synthetic method: This technique is used to generalise the principles, methods, and limitations of the problem of financial crime Meanwhile, the synthesis strategy is utilised to generalise and draw conclusions about the subject after assessing and comparing different aspects of it

4.3 Comparison method: Utilize case studies from around the world and in Vietnam to identify commonalities in financial crime and draw lessons for Vietnam.

Thesis structure

LITERATURE REVIEW

“Financial crime in international trade” is not a new controversial topic evidenced in its existence for ages and its flourishment in recent decades Financial crime includes everything from small-scale theft or fraud done by well-intentioned people to large-scale schemes orchestrated by international organizations of criminals As stated by the International Compliance Association, financial crime has become increasingly of concern to governments throughout the world over the last 30 years Financial crime is divided into two basically distinct categories To begin, dishonesty generates riches for criminals through invisible transactions that authorities cannot readily identify and examine Money laundering from human trafficking or the selling of firearms and illegal substances, for example, is constantly a source of contention for nations Furthermore, this sort of crime may contain behaviours that may not require the dishonest obtaining of a benefit, but rather defend an already gained advantage or enable the getting of such benefit This is typical of the tactic of moving profit from a controlling corporation in one nation to several subsidiaries in other countries

Four thousand years ago, a book known as The Dead Sea Scrolls offered proof of deception, stealing things, and trading metals from ancient Egypt, India, and ancient Central American civilizations Nevertheless, the twentieth century had several notable financial crime incidents, such as Allen Stanford's 2.2 billion USD defrauding of the USA investment business or Jordan Belford, who is well-known for causing the Wall Street stock market to tremble Nowadays, financial crime has progressed to a new level, owing to the massive growth of the international trade business This form of crime occurs not just on a national level, but also on a worldwide scale International commerce has been a rapidly expanding industry in recent years Since there is a worldwide integration of various sectors such as business, culture, politics, and so on Foreign commerce is critical to the economic systems of all countries On the one hand, this successfully propels each country's economy and ranks places on the global map On the other side, this industry might be used by financial criminals to abuse and undermine international systems

The research on terrorist crimes by Forman (2006), “Combating terrorist financing and other financial crimes through private sector partnerships”, provides very profitable incentives such as counterfeit cigarettes, counterfeit commodities, illicit substances, and charity Forman also demonstrated that terrorists are always looking for methods to launder their acquired assets through nontransparent commerce, alternate remittance channels (such as hawala), or underground banking systems

In "Review of Laws and Economics", Zdanowicz (2009), discusses how data analysis from commercial databases in the United States might be utilized to evaluate various policies However, these two books have not shown the roles of parties in TBML prevention, such as customs authorities, law enforcement agencies, and commercial banks, so that they can take preventive measures timely Unfortunately, these two publications do not depict the responsibilities of parties involved in TBML prevention, such as customs officials, law enforcement agencies, and commercial banks, so that preventative actions can be implemented on time

Schneider, Buehn and Montenegro (2010) in “New Estimates for the Shadow Economy All Over the World”, provides a brief survey of the applied literature on the turnover of organized crime and money laundering Finally, for 20 OECD nations, an attempt is made to assess the turnover of organized crime In summary, the following three important findings are reached: First, the necessity of ML is discussed, as currency is used in all unlawful (criminal) activities As a result, the proceeds from illicit acts must be laundered to make a "legal" profit, invest, or consume in the legal or official world

Second, the report quantifies and forecasts the financial amount and growth of organized criminal operations The amount of turnover from illegal activities is calculated using a MIMIC (multiple indicators, multiple causes) estimating approach, with the various types of criminal acts, the operation of the judicial system, and per capita income as causative factors, and confiscated

Preference to Anti-Money Laundering through Vietnam's Banking System by Master Le Xuan Hien (2010) offered an overview of the definition of money laundering along with the limits and flaws of banks in managing this crime On the contrary, because of old documents (2010), these theses are still only mentioned in the national scope without mentioning committing crimes through international commercial transactions, highlighting crimes through trade finance products, or making appropriate suggestions for today's level of countering crimes

The thesis “Anti-Money Laundering in Customs” by author Nguyen Ngoc Linh has raised the outstanding problems of money laundering in the world and Vietnam, recommending removing difficulties to improve the fight against financial crime in the field of customs However, the scope of this thesis's research is limited to the customs office, while commercial banks are also an important link in the process of preventing this type of crime

According to “Anti-Money Laundering Regulation of China’s Mobile Payment and Settlement Industry”, Kumar (2012), money laundering is a method of making a large sum of unlawfully obtained money from drug trafficking, terrorist activities, or other major crimes that appear to have come from a legitimate source Since ML has a negative influence on the country's economic and political stability, it must be strictly prohibited

As a result, governments throughout the world must band together and take action to dismantle ML syndicates through rigorous law enforcement This research attempts to describe the notion, its relevance, and the influence of financial crimes in international trading (Kumar, 2012)

There are already countless books on this essential topic available around the globe According to “A new approach to the criminalization of terrorist financing and its compatibility with Sharia law”, Tofangsaz (2012), terrorist finance, a type of finanncial crime, is the stage at which monies are legally or illegally donated and gathered for the future conduct of terrorism-related crimes; hence, it is preparatory in character (Tofangsaz, 2012)

In the book “Trade-Based Money Laundering”, John A Cassara (2015), The Next Frontier in International Money Laundering Enforcement, for example, outlines the signs and patterns of trade-based money laundering (TBML) to help you recognize when it occurs and to show how data and analysis can be used to uncover it The book also demonstrates the strategies that this sort of crime frequently employs, such as invoice fraud, over-and-under billing, and deception, to avoid detection by monitoring organizations, so as real-life case studies to demonstrate how hazardous they are

“Trade credit as an alternative to bank credit during the financial crisis”, Zubair et al

(2015) defined this issue as providing property for terrorists in connection to the proceeds of criminal operations; it also includes carrying out transactions that may or may not be on behalf of terrorists but are aimed to aid in the conduct of terrorism

Nguyen Thi Loan (2016) published an article titled "Prevention of Money Laundering Through the Vietnamese Financial System" in the scientific journal Open University Ho Chi Minh City, No 11, analyzing and judging the limitations and reasons why anti- money laundering activities in the banking sector in Vietnam have not been paid attention to and making recommendations to strengthen the legal system on this issue The author has detailed the reality of suspicious banking transactions from 2006 to 2014, and criminals' main methods of money laundering, such as splitting the money and gradually transferring it abroad, using fake documents, posing as corporations, and customers to cheat credit, appropriate loans, and so on These are broad types of banking that do not specialize in a single industry, such as trade finance products

In “Using social network analysis to prevent money laundering”, Colladon and Remondi

(2017) investigated the possibilities of using network analytic approaches to avoid ML During the course of 19 months, they worked with actual data, analyzing the primary database of an Italian factoring firm The database stores the financial activities of the factoring firm regarding certain client information They introduced a novel approach to sorting and mapping relational data, in response to predictive models based on network metrics, to investigate the risk profiles of factoring clients and discovered that risk profiles may be predicted using social network metrics

FRAMEWORK AND REGULATION AUTHORITIES ADJUST

To summarize, there is a significant corpus of research on financial crime, but most of it is outdated compared with the continuous change of the world; or the studies only one facet of financial crime rather than all aspects of this crime

1.2 FRAMEWORK AND REGULATION AUTHORITIES ADJUST FINANCIAL CRIME

The Global Association “International Compliance Association (ICA)”, which was established in 2001, is the world’s leading professional body for regulatory and financial crime compliance President of the ICA, William Howarth, claimed, "The ICA is dedicated to expanding the knowledge and abilities of regulatory and financial crime compliance experts worldwide." This association provides a wide range of financial crime education courses, webinars, news, etc., enhancing the knowledge for citizens to have a fundamental awareness of how dangerous these kinds of crimes gradually harm the economies

In the United States, especially, the Financial Crime Enforcement Network is one of the worldwide communities fighting this crime segment FinCEN was established in 1990 to assist federal, state, local, and international law enforcement by evaluating information needed under the Bank Secrecy Act (BSA), one of the nation's most critical anti-money laundering instruments The BSA's recordkeeping and reporting requirements provide a financial trail that investigators may use to track criminals, their actions, and their assets

Additionally, various authorities prevent financial crime worldwide namely: Interpol; Financial Action Task Force; Association of Certified Anti-Money Laundering Specialists; Association of Certified Anti-Money LaunderiAssociation of Certified Fraud Examiners and Specialists; Dow Jones & Company

1.3 THEORETICAL OF FINANCIAL CRIME IN INTERNATIONAL TRADE 1.3.1 The definitions of financial crime in international trade

The IMF defined financial crime as all crimes that cause a monetary loss by processing nonviolent activities in the broadest sense According to the International Compliance Association (ICA), financial crime is defined as a generality consisting of two primary dimensions According to the International Compliance Association, financial crime has become increasingly of concern to governments throughout the world over the last 30 years Financial crime is divided into two basically distinct categories To begin, dishonesty generates riches for criminals through invisible transactions that authorities cannot readily identify and examine For example, money laundering from human trafficking or the selling of weapons and illegal substances is constantly a source of contention for many nations Furthermore, this sort of crime may contain some behaviours that may not require the dishonest obtaining of a benefit, but rather defend an already gained advantage or enable the getting of such benefit This is typical of the tactic of moving profit from a controlling corporation in one nation to several subsidiaries in other nations For example, exploitation of insider information or deception in acquiring another person's property will always be done to obtain a monetary profit Financial crime does not entail the dishonest taking of a benefit but rather safeguards or enables the obtaining of a benefit that has already been secured An example of such behaviour is when someone tries to launder the illicit proceeds of another crime to keep the funds out of the reach of the law

Trade-based money laundering, according to FATF definitions from 2006, is the practice of masking the proceeds of crime and shifting value via trade transactions in an attempt to legitimize their illicit origin or support their operations The major goal of this crime is not to transport commodities, but to exploit the movement of money through commercial transactions There are three major strategies for criminals and terrorists to hide their illegally obtained funds and move them into the official economy First, it benefits the financial system by utilising bank products such as cheques and wire transfers; second, it transfers cash across borders via cash couriers and bulk cash smuggling; and finally, and currently, the most common method is the movement of physical goods via the international trade system Although trade-related crimes encompass acts such as selling and consuming illicit items for profit, TBML use a variety of money laundering strategies to diversify their risk exposure through export-import operations

Down Jones defined financial crime as referring to all crimes committed by an individual or a group of individuals that involve taking money or other property that belongs to someone else, to obtain a financial or professional gain For criminal groups, financial crime is a multi-trillion-dollar enterprise Criminals are incredibly inventive in creating techniques to perpetrate such crimes, and they are greatly affected by the economies, financial markets, and anti-money laundering (AML) and counter-terrorism financing

(CTF) regimes of the countries in which they operate Many are increasingly taking advantage of the complicated structure of financial services, making identification and prevention even more difficult Additionally, large-scale syndicates, such as transnational organised crime organisations, take advantage of disparities in national criminal laws which would be an offence if it had taken place in the United Kingdom The Financial Conduct Authority (FCA) dictionary claims that “financial crime” (following Section 1H of the Act) is any kind of criminal conduct relating to money or financial services or markets, including any offence involving: (a) fraud or dishonesty; (b) misconduct in, or misuse of information relating to, a financial market; (c) handling the proceeds of crime; or (d) the financing of terrorism; in this definition, "offence" includes an act or omission According to the UN Office on Drugs and Crime, up to $2 trillion in illegal funds are laundered via global financial networks each year, accounting for 2% to 5% of global GDP (and it is increasing each year) It is believed that barely 1% of illicit financial flows are apprehended globally

Financial crime may have major ramifications for people and society, including economic insecurity, a loss of public faith in financial institutions, and a breakdown in the rule of law Financial crime is a complicated and ever-changing issue that needs a diversified approach to address it Financial crimes are detected and prevented by law enforcement authorities, regulatory bodies, and financial institutions Strengthening anti- money laundering and counterterrorist financing rules, improving cross-border collaboration, and utilising technology and data analytics to spot suspicious activity are all effective ways to combat the problem (What is Financial Crime? - Sanction

Europol defines financial crime in international trade, also known as economic crime, as

"illegal activities” undertaken overseas by an individual or a group of individuals to achieve a financial or professional advantage “The primary motivation in such crimes is monetary gain" This encompasses money laundering, tax evasion, investment fraud, and mass-marketing fraud, among other things The World Economic Forum estimated financial crime to be a trillion-dollar business Financial crime is being perpetrated via cyberspace using hacking tools and social engineering tactics that circumvent banking and corporate institution security This causes scholars and companies to see financial crime differently since the boundary between financial crime, hacking, and social engineering for economic benefit has blurred

“Financial crime” is the category that has various methods for committing crimes A short brief before looking into the detail of how many kinds of financial crime existed in the trading world and how it has performed through decades Although there are various kinds of financial crime, the thesis focuses on analyzing money laundering, terrorism financing, and cybercrime, which are considered the most common types that occur in the finance trade For the downfall of cash-based money laundering, TBML emerged as a more sophisticated way for criminals to make their money legal Because of the difficulty in detecting small transactions, TBML has become more appealing to criminals in recent years They are able to conceal their actions amid the millions of containers shipped each week Considering the massive export-import volume, as well as the magnitude, speed, and complexity of global commerce, supervisory agencies may struggle to detect minor transactions Furthermore, by employing several money laundering strategies, the majority of it seems to be genuine trade activity, posing a detecting challenge

There are additionally certain extrinsic factors leading to the rise in this vexing sort of crime The first is the large restriction within which they may operate due to a lack of companies across nations to provide a comprehensive image of this crime Second, trading goods transactions include participants, including the buyer, seller, shipper, customs officials, law enforcement, and banks, and they involve a lengthy procedure This may result in a superficial control of authorities, which is a necessary condition for illegal operations to take place In addition, the intricacy of the unnamed and inconsistent price of commodities made the TBML process easier for thieves One example is the lack of preventative regulation and effective operations against trade-based money laundering offences In a 2019 survey by Wolfsberg Group, about 80% of international trade processes went through financial institutions using “open account” payment terms, which commercial banks do not take part in The Government Accountability Office (GAO) identified that “open account is one of the primary vulnerabilities of the US financial and trade systems” This is always an alarming issue for banks since they do not have enough access to this kind of transaction To a certain extent, an “open account'' is a perfect cover for criminals Due to its personal nature, no parties involved can verify this payment term Based on a Wolfsberg Group report from 2019, almost 80% of foreign trade operations passed through financial organisations employing "open account" payment conditions, which commercial banks do not participate in According to the Government Accountability Office (GAO), "open account is one of the key weaknesses of the US banking and commerce systems." This is always a concern for banks since they do not have enough access to this type of transaction To some extent, a "open account" serves as an ideal cover for crooks This payment term cannot be verified because of its personal nature

1.3.2 Subjects that commit the crimes

Those who perpetrate various sorts of financial crime in international trade fall into one of seven categories:

- Organized crime syndicates, including terrorist organizations, are increasingly committing large-scale frauds to support their operations, especially in multinational company;

- Corrupt rulers of state may utilize their position and influence to plunder their (often destitute) countries' finances

- Financial data is manipulated or misreported by business leaders or senior executives to misrepresent a company's genuine financial status

- Workers stealing business finances and other assets range from the most senior to the most junior

- Fraud can be committed from outside the corporation by a client, supplier, contractor, or a person with no relation to the organization

- External fraudsters are increasingly collaborating with employees to obtain greater and better outcomes

- Ultimately, successful individual criminals, serial, or opportunist fraudsters, and those in possession of their proceeds constitute a separate category of persons who have committed a financial crime

Financial crime is broadening and gaining the attention of academics in today's global financial system Financial crime offenders might be foreign, internal, or a combination of the two According to a PwC poll from 2021, 43% of the major offenders of disruptive financial fraud were foreign, 31% were inside, and 26% were the consequence of coordination

Money laundering is a financial crime in which the proceeds of unlawful acts such as drug trafficking, bribery, or fraud are disguised as legitimate payments The idea is to make the funds look legitimate so that they may be spent without being discovered This procedure often comprises a series of transactions that make tracing the origin of the money challenging It is generally defined as “transferring illegally obtained money or investments through an outside party to conceal the true source.” (Oxford English Dictionary, Second Edition, 1989, p 702.) According to the IMF (IMF, 2001), it is claimed and highlighted that the percentage of money being laundered fluctuates from 2%–5% of the global GDP annually, which is the basis of the majority of research in the financial crime field In addition, financial crime contains some offences with no violence that some groups of people financially benefit from while causing monetary loss to others Money laundering is defined by the FATF as "the processing of criminal profits to conceal their unlawful origin," and by the International Organization of Securities Commissions (IOSCO) as "a wide range of operations and transactions locating and seizing the proceeds of crime or utilising the proceeds as evidence in a criminal case Such processing may entail concealing the beneficial owner of either real criminal money or other property that may be confiscated, according to the Criminals may attempt to launder illegal gains through the banking system after receiving them Money laundering has the characteristic of avoiding tax and excise Nevertheless, TBML differs from trade-based tax fraud in that it not only avoids paying taxes on traded items but also uses the trading process to shift funds discreetly and conceal the source of these funds Money laundering is frequently highlighted as a common financial crime in this issue While the TBML foundation is based on unlawful profits, terrorist-financing crime funds can come from both legal and criminal sources, such as corporate organisations or Organized Crime Organizations (OCGs) Because of these complicated origins, authorities have a more difficult time locating and sanctioning this form of crime Moreover, TBML is utilised to legitimate its quantity of unknown origin, but TBML is specifically designated to finance weapons, fund, etc for terrorist purposes

Moving to analyse the process of money laundering (Picture 1.1), laundering money generally consists of three steps: placement, layering, and integration (James Chen,

2023) This template may differ in real-life scenarios

Step 1 - Placement sneakily introduces "bad money" into the lawful financial system

Step 2 - Layering: through a sequence of transactions and bookkeeping procedures, layering hides the source of the money

Step 3 - Integration: the now-laundered money is removed from the real account in the final phase, integration, to be utilised for whatever reasons the criminals have in mind for it

Picture 1.1 Money laundering circle (Money Laundering: What It Is and How to

THE REALITY OF FINANCIAL CRIME IN THE WORLD

2.1.1 The overview of international trade

It is projected that trade growth is expected to rebound to 3.2% in 2024 as GDP growth accelerates to 2.6%, but this estimate is more uncertain than usual due to the presence of significant downside risks, such as rising global food insecurity, geopolitical tensions, the possibility of unanticipated consequences of monetary tightening, rising levels of debt, and risks to financial stability (Figure 1.1) As can be clearly witnessed from the chart, after a long period of undergoing fluctuating trends in international trade between

2015 and 2020, The world’s indicators in trade volume growth experienced a positive recovery in 2021, then plummed down dramatically in 2022 and projected to be more gloomy in 2023 before bouncing back in 2024 According to the OECD, core inflation (excluding volatile goods like food and gasoline) is still persistently high According to the OECD, US headline inflation declined from 9.1% in June to 6.0% in February 2023, while core inflation fell from 6.6% in September to 5.5% in February Similarly, in the European Union, headline inflation declined from 11.5% in October to 9.9% in February, while core inflation continued to climb, reaching 6.6% in February

The general population has recently shown a strong interest in stock market investment This industry is equally vulnerable to financial crime That is, insider trading in the stock market is a criminal offence since profit can be achieved by exploiting inside knowledge before it becomes public Moreover, information from within, which can take numerous forms, might artificially influence stock values As a result, early discovery is critical at this stage to prevent people or groups from profiting illegally

Figure 1.1 Growth in global merchandise trade and GDP (2015-2014) (WTO,2022)

Commodity price fluctuations had a substantial influence on inflation and trade volumes in 2022 Despite the impact of the Russia-Ukraine war, trade products remained more resilient in 2022 The rise in global commodity prices was one of the reasons that led to the trade decline in the fourth quarter of 2022 (Figure 1.2)

Although food and energy prices had fallen from their post-conflict heights by the fourth quarter, they remained high by historical standards, eroding real income and import demand

Merchandise trade volume growth Real GDP growth at market exchange rates Average trade growth 2010-2022

Figure 1.2 Consumer price inflation in developed economies, January 2019 –

Energy costs had the greatest impact in Europe during the winter months when gas supplies from Russia were cut off Rising wheat and other food prices were also felt strongly in Middle Eastern and African nations that relied significantly on supplies from Ukraine and Russia prior to the war

As can be seen from the unstable status of the global economy, this will create a favourable environment for criminals in the financial sector to have a loophole to self- benefit, specifically in developing nations with an incomplete regulatory legal system, including Vietnam Global financial crime volume was estimated to be around $1.4–$3.5 trillion per year, according to the latest industry reports, especially through international payments (Piper and Metcalfe, 2020)

2.1.2 The reality statics of financial crime over the world

“Financial crime is multi-faceted, multi-national, and very often invisible, making it hard to identify, measure, and combat.” Phil Cotter (2018), Managing Director of Refinitiv

Furthermore, an estimated $2.4 trillion in earnings from crimes such as forced prostitution, terrorism, and drug trafficking are laundered via the world's financial markets and banking institutions each year There has been a limited amount of this activity discovered in the global financial system According to the IFCACC (INTERPOL's Financial Crime and Anti-Corruption Centre), transnational financial crime has increased at an exponential rate in recent years, weakening global financial institutions, hindering economic progress, and incurring massive losses to firms and individuals throughout the world Corruption exacerbates the difficulties by providing a breeding environment for organized criminal activity Criminals can perpetrate financial crime with greater efficiency and complexity by taking advantage of globalization and digitalization processes

Moreover, the COVID-19 epidemic has shown how quickly criminal organizations may adapt their strategies to capitalize on new chances for scamming individuals and businesses, such as phone fraud, phishing, non-delivery fraud, investment fraud, and credit card fraud Financial crime and corruption are serious concerns not just for law enforcement but also for financial institutions, the private sector, and other international organizations There was a noteworthy period in the observed duration (Figure 1.1) belonging to 2020, in which the world’s indicator registered at -5.1% due to the noticeable impact of the Covid-19 pandemic, in which, Financial crime is a serious concern, especially money laundering and cybercrime It is worth noting that the present method for preventing financial crime, however costly, is centered on regulatory compliance Unsurprisingly, it has been ineffective in detecting and intercepting financial crime The so-called Panama Papers leak, which exposed the papers of a huge offshore legal firm, is an example The files revealed that wealthy and influential individuals were taking advantage of offshore tax laws by channelling their income through hundreds of thousands of offshore businesses

In summary, the current financial crime situation is still volatile, and more drastic measures are needed to reduce the increase in this type of crime Above all, the world is changing, and this situation is happening in almost every country around the globe.

THE REALITY OF FINANCIAL CRIME IN VIETNAM

2.2.1 Overview of the Vietnamese economy

Economic growth in most nations and areas is uncertain and challenging in the setting of a global economy with numerous strong and unpredictable oscillations, and Vietnam is a part of this phenomenon, experiencing similar unstable change patterns (Figure 2.1)

According to World Bank statistics, Vietnam's economy has grown at an astonishing rate during the last 35 years In 2019, overall social development investment capital realized at current prices amounted to VND 2,046.8 trillion; total foreign direct investment (FDI) amounted to 38.02 billion USD, the highest level in the previous ten years In 2022, the total export and import turnover of goods is estimated to be 732.5 billion USD, up 9.5% from the previous year, with the export turnover of goods estimated to be 371.85 billion USD, up 10.4%; commodity export prices increased by 7.09% and export volumes increased by 3.09%; the trade balance reached a surplus, with an estimated trade surplus of 11.2 billion USD, marking the seventh consecutive year of trade surplus Vietnam's economy had a good "launching pad" when GDP growth was among the highest in the world and was highly appreciated for controlling inflation and stabilizing the macroeconomy

However, the growth trend is slowing down, and difficulties have appeared more and more since the second half of 2022 Vietnam's economy operated against the backdrop of the world economy's rapid and unpredictable developments, which will increase threats to financial markets, currency, energy security, and global food security Although the economic situation has prospered, along with the fluctuations of the world economic situation, Vietnam is inevitably the target of money laundering crimes

Besides, the financial market in Vietnam in recent years has been full of changes, notably in the banking sector

Figure 2.1 Growth in Vietnamese merchandise trade and GDP (2015-2014)

Following the 2022 financial status report of the Financial and Monetary Market magazine, interest rates are expected to rise and stabilize at a significantly higher level than at the start of the year Besides lowering the operational interest rate by 2%, the SBV also cut the pace of money supply growth to 3.2% in the first nine months of 2022 The SBV tightened monetary policy primarily to stabilize the money supply, currency rates, and inflationary pressures While relatively lower than in many other nations, inflation in Vietnam during the same time has been on the rise and has peaked at 4% since October 2022 The corporate bond market suffered in the last months of 2022 as a result of the Tan Hoang Minh and Van Thinh Phat incidents Numerous real estate companies have been unable to borrow cash and are having problems repaying debts before they mature In the backdrop of the SBV tightening monetary policy, the volatility

Merchandise trade volume growth 2015 - 2022 (Trillion VND)Avarage trade growth 2015 - 2022 (%) in the corporate bond market stretched system liquidity and drove up deposit and lending interest rates

2.2.2 Overview of the Vietnamese financial crime status

As of February 2012, the Financial Action Task Force (FATF) had blacklisted three ASEAN members (Indonesia, Myanmar, and Thailand) and graylisted four ASEAN members (Brunei, Cambodia, the Philippines, and Vietnam) for poor money laundering control With major growth in transnational crimes such as human trafficking, corruption, and the sale of illegal narcotics and weapons, trade finance transactions are appealing means for money launderers and other criminals to legitimate their sources of cash According to Global Financial Integrity estimates, the total sum of illegal inflows into and outflows from Vietnam in the recent decade was more than USD 9 billion (inflows 9.7 billion and outflows 9.1 billion) Vietnam is a major beneficiary of overseas remittances, receiving around USD 12.3 billion, whereas unrecorded or informal subterranean remittance flows are not included in these numbers

Figure 2.2 Combination graph of Vietnam and worldwide international trade trend

World Merchandise Trade Volume Growth 2015-20222 Vietnam Merchandise Trade Volume Growth 2015-20222World Average Trade Growth 2015-2022 Vietnam Average Trade Growth 2015-20222

According to the combination chart, There was a significant period in 2020, in which Vietnam's trade volume growth (1.9%) outweighed the world’s indicator (-5.1%) due to the noticeable impact of the covid 19 pandemic Vietnam is inevitably the target of this sort of crime during that year From the two economic contexts, it could be concluded that Vietnam experiences the same trend as the world in financial crime development Especially, Vietnam is assumed as a money-laundering paradise with several hidden financial frauds in international trade have occurred

At the conference on developing a safe, transparent, efficient, and sustainable capital market to stabilize the macro-economy and ensure major balances in the economy There was a discussion on the corporate bond stock market, with an assessment of the lack of transparency in the market "I would say it is not exaggerated to say that Vietnam is a money-laundering paradise," says Vietnam National Assembly member Duong Trung Quoc, highlighting the need to avoid financial crime that may harm the Vietnamese economy The Vietnamese government is always concerned about financial issues and works tirelessly to implement timely and effective measures to prevent the spread of this financial crime

According to Minister To Lam, a Politburo member and Minister of Public Security, corruption, economics, and smuggling offences are extremely complex Securities, corporate bond issuance, bidding, auctions, public procurement, healthcare, education, land, finance, banking, natural resources, minerals, and disease prevention and control, all saw violations The number of discovered economic order and management crimes was reduced by 36.68%, but the number of detected corruption and positions grew by 40.97% Furthermore, according to “The Growing Threat of Money Laundering to Vietnam: The Necessary of Intensive Countermeasures”, CL Nguyen (2013), Vietnam's geographical, economic, and legal backdrop offers numerous distinct characteristics that make it an appealing location for contaminated money For example, Vietnam has a predominantly cash-based economy that is bordered by other cash-based countries

(Cambodia, Laos and China) Currency may be freely swapped and transported over Vietnam's lengthy border Moreover, being one of the fastest expanding countries in the Southeast Asian area with a liberal legal structure facilitates ML Nevertheless, Vietnamese competent authorities have yet to do extensive study on genuine ML, its typologies, and its threat to Vietnam The threat of ML to Vietnam appears to be understated (CL Nguyen, 2013) Vietnam's geographical position and weak capacity to combat drug trafficking are two major enablers that make Vietnam an appealing transit place for drug traffickers smuggling drugs from the Golden Triangle to Australia, the United States, Canada, and European countries (U.S Department of State, 2011, p 582)

At the same time, Vietnam offers a potential consumer market for drug manufacture, with an increasing number of drug users in the last decade (U.S Department of State,

2011, p 584) Drug-related crimes have surged dramatically in recent years A significant portion of the enormous earnings produced by drug-related crimes was thought to be laundered in Vietnam through several typologies

According to a report by the State Securities Commission, in 2021 isolated, 38 inspection teams inspected and issued 471 decisions on sanctioning administrative violations with an amount of over 20 billion VND Analysis of violations mainly focuses on acts such as disclosing untruthful information and manipulating securities prices, and these acts have not yet reached the level of criminal prosecution Especially the act of buying and selling shares without reporting and disclosing information before the transaction of major shareholders, internal shareholders, and related people of internal shareholders still tended to increase in complexity and complexity, causing a lack of confidence for investors, directly affecting transactions, and posing problems of lack of transparency in the stock market.

Assessing Vietnam’s Experiences In Preventing Financial Crime

2.3.1 Vietnam’s positive result in preventing financial crime

Vietnam also has significant forums, organizations, and particular ministries to adjust this section All these organizations are important parts of the financial crime prevention system in Vietnam

- The Crime Prevention Police Department (C50): This is the leading agency responsible for crime prevention in Vietnam, including financial crime

- The Ministry of Finance: The Ministry of Finance is responsible for the management and supervision of financial activities in Vietnam, including banking, securities, and insurance

- The State Bank of Vietnam: The State Bank is responsible for supervising and regulating the activities of banks in Vietnam

- The Civil Judgment Enforcement and Government Inspectorate: These agencies are responsible for supervising and inspecting the activities of enterprises and organizations in Vietnam, including financial activities

2.3.1.2 Vietnamese Financial crime law and agreements

One of the most profound achievements gained from the process of combating financial crime in Vietnam is successfully enrolling in many international forums and organizations belonging to the financial crime anti-section Furthermore, Vietnam has established numerous financial crime combat regulations while enacting and amending the Vietnam Anti-Money Laundering Law 2012 in a sensible and reasonable manner, although there are still many shortcomings

The government is also continuing to build capacity and strengthen cooperation among these agencies to strengthen the fight against financial crime in Vietnam Vietnam has signed and participated in international agreements on anti-money laundering, including:

- United Nations Convention on Anti-Money Laundering and Counter-Terrorism, 1988: This convention covers anti-money laundering and counter-terrorism measures, including suspicious transaction reporting and customer verification

- The Agreement on cooperation in crime prevention between the government of the Socialist Republic of Vietnam and the government of the French Republic in 1997: This agreement, along with many others, laid the foundation for cooperation in crime prevention crime, including anti-money laundering

- The Agreement among ASEAN Countries on the Prevention of Drug-Related Crime and Other Crimes (2004): This agreement aims to strengthen cooperation in crime prevention, including the prevention of money laundering

- The Vietnam Anti-Money Laundering Law 2012: This law prescribes anti-money laundering and counter-terrorism financing measures, including suspicious transaction reporting and customer verification

- The Anti-Money Laundering Law: This law was enacted in 2012 to prevent money laundering and terrorist financing in Vietnam

Vietnam has signed some international agreements to combat financial crime, including the United Nations Convention against Corruption (UNCAC), the United Nations Convention against Transnational Organized Crime (UNTOC), and the Asia/Pacific Group on Money Laundering (APG) In addition to these regulations and agreements, Vietnam has established some government agencies and institutions to combat financial crime, including the Ministry of Public Security, the State Bank of Vietnam, and the Anti-Corruption Bureau These agencies work together to investigate and prosecute financial crime, and to ensure compliance with the relevant regulations and agreements

Additionally, according to FATF 2022, in April 2019, Vietnam conducted its first formal ML/TF risk assessment, the National Risk Assessment on Money Laundering and Terrorist Financing (NRA) The effort was coordinated by an NRA Working Group6 comprised of 16 ministries and organisations representatives

2.3.1.3 Attemption in combating the financial crime of Vietnamese authorities

Major General Assoc Prof Dr Tran Anh Vu, Deputy Director of the Academy of Public Security, affirmed: “Before the complicated developments of transnational crime in the financial and banking sectors, under the leadership of the National Assembly and the Government, ministries and agencies have synchronously implemented solutions and activities to prevent and detect crimes proactively In particular, professional units of the People's Police Force have received, processed, and exchanged tens of thousands of turns of information related to transnational crimes with member countries of the International Criminal Organization Interpol, which has a lot of news related to transnational organized crime in the banking and finance sectors Professional units of the Ministry of Public Security have coordinated to investigate and handle many cases of transnational organized crime in the fields of finance and banking; verify and arrest hundreds of Vietnamese wanted people who fled abroad; and capture and coordinate with police forces of other countries to extradite dozens of foreigners who choose Vietnam as a place to commit, hide, or hide crimes

Several seminars and discussions on financial crime have been held and will be held in the existing scenario with the concentration and attentive attention of ministries and professionals in Vietnam The authorities have also stated a readiness to eliminate this type of crime in an effort to improve the economy's health

Picture 2.1 Ms Dinh Thi Thai – Deputy General Director spoke at the Anti-money laundering and financial terrorism seminar

The presentations "The Role of the State Bank of Vietnam to Participate in the Prevention and Detection of transnational organized crime in the Field of Finance and Banking", "Money laundering crime, concepts and levels serious and Affecting”;

“Framework and Practice in the prevention and combat of money laundering”;

“Transnational organized crime in the financial and banking sector in Southeast Asia and the role and responsibility of Aseannapol”; “Effectiveness of measures to prevent and combat money laundering, case studies from EU member states”, “Identifying transnational organized crime in the financial and banking sector in Vietnam and several solutions to improve the efficiency of criminal investigation activities of the People's Public Security force”, representatives from the State Bank, international organizations and some functional units of the Ministry of Public Security pointed out achievements in coordination, difficulties, and obstacles, and at the same time make some recommendations to improve the efficiency of cooperation in this field

Speaking at the seminar "Improving the law on prevention of money laundering through virtual assets" recently organized by the State Bank of Vietnam (SBV), Deputy Governor Pham Thanh Ha said that the State Bank chaired and coordinated with relevant agencies to research and propose amendments to the Law on Anti-Money Laundering, focusing on the issue of reporting subjects, especially those related to assets virtually In addition, the SBV also absorbed the opinions and experiences of experts around the world to have a more comprehensive view, improve the efficiency of state management in this field, and overcome the crime situation that uses virtual assets as a tool to carry out money laundering

In the bargain, Vietnam has become a worldwide phenomenon in terms of economic and social growth during the last ten years Vietnam is amassing internal resources to join the ranks of middle-income countries and, eventually, become a developed country On this trip, there is an urgent need to establish Vietnam's brand and reputation as a secure and effective location for company owners and investors from across the world, to attract finance and other vital aspects

2.3.2 Vietnam’s limitation in preventing financial crime

Notwithstanding the achieved results, fighting transnational organized crime still has some limitations and drawbacks, such as criminals often taking full advantage of their profits and information technology, such as using security, encryption, and "anonymity" features to avoid detection when committing criminal acts; the system of technical means in service of detecting, collecting, and evaluating documents and evidence proving criminal acts has not yet met the set requirements; some managers and functional units at home and abroad also refuse to provide information about customers and their operation history; and the legal system is still incomplete The above fact posed an objective requirement to research and summarize the investigation of transnational organized crimes in the financial and banking sectors to continuously improve efficient results of this criminal investigation in the new situation

Financial crime in Vietnam takes place in many sophisticated forms, hidden in many different forms of transactions Vietnam is fertile ground for financial crime to thrive, and we need to stop this According to the Vietnam General Statistics Office, trade finance solutions offered by banks demand more caution than ever before There is still no research being undertaken into Vietnam's reality to gain a full grasp of the dangers and solutions to lower the percentage of financial crime in Vietnam Since it has not been constantly updated, Vietnam's anti-money laundering system still has various shortcomings, such as internal control between subsidiaries and international branches and suspicious transaction reports As a result, establishing methods to avoid financial crime in trade finance is vital in this new era Financial crime studies have been established to warn about the dangers of these illegal actions and suggest solutions to protect them from harming the Vietnamese economy

In late 2019, Vietnam supplemented the NRA with risk assessments on nonprofit organisations (NPOs), legal persons, and funding the spread of weapons of mass destruction (WMD) Vietnam has not done explicit or systematic ML/TF risk evaluations before the NRA The NRA lays the groundwork for Vietnam's knowledge of its ML/TF vulnerabilities The assessment team does remark, however, that the ML threat and risk assessment for some of the predicate offences and industries needed further investigation and evaluation of a broader variety of data This may have an influence on the risk ratings issued

2.3.2.1 Money laundering combating case study - Establish "ghost" import-export companies to buy and sell short commodities

RECOMMENDATION FOR VIETNAMESE FINANCIAL

FINANCIAL CRIME ANALYSIS AND FORECASTING IN THE

When it comes to identifying financial crime, structural risk indicators are the first layer that an investigator must consider It is vital to have a strong and tight client access review procedure that includes a plethora of the following information

To begin, detectives must examine the structure of their suspect company from the outside A trading entity's corporate structure demonstrates an abnormally complicated and doubtful organisation; this may be reflected in the use of the cover of shell or "brass plate" service businesses A shell corporation is used to conceal money laundering operations and the identities of those engaged to disguise the money trail It is necessary to conduct research to find the suspicious entity situated in a high-risk location where it may occur

Businesses with inexplicable periods of inactivity or penny stock revivals are other red flags that must be carefully studied Has it been purchased as a penny share, or has it been registered on the stock market after being inactive for a long time? For what purpose has it been resurrected? Checking with the customer firms to see if they have recently reported accounts in compliance with mandatory standards or if the most current tax returns have been filed The goods or services that the corporation claims to be its principal business are presented in broad strokes rather than in specifics To illustrate, the classification of electrical devices is too broad; it might be "brown goods" like television sets and audio equipment, or "white goods" like major electrical goods used in the home such as refrigerators and washing machines

The activity or predicted activity on an account is one of the factors that authorities must consider This information should be gathered prior to onboarding or throughout the review process To understand the fundamentals of the firm, detailed sales information for at least the last two years must be provided

Unrelated trade procedures must be taken into consideration by both sellers and purchasers, with many middlemen in unrelated business industries, such as furniture makers selling gold and diamonds The primary market on which the trading company focuses is whether or not the country is high-risk They must also seek known transfer points for sanctioned nations and prohibited products, where they are known to receive items and then transmit them to sanctioned countries The company's financial capability does not correspond to the volume of its transactions A new or revived firm begins with a large number of trade products that seem suspicious to authorities

The need to comprehend a company's expected behaviour to compare new consumers to former customers under evaluation Understanding not only the qualities of the firms and their businesses but also the industry in which they operate A trading business used transactions, shipping routes, or techniques that did not conform to the foundation trading standard or the business was not conducted following the business that the firm was registered to accomplish A business that uses a variety of trade products that are superfluous or overly sophisticated in comparison to the magnitude of the transaction The goal of this action is to extend the active companies' financing duration beyond the customary transaction financing time for similar trade transactions In general, every company's purpose is to maximize profits from its products When a trade firm's data reveals a low-profit margin from its trade operations, it indicates that the company does not care about sales and that its objective is to groom the filthy money Now is the time for inquiries about ownership and management changes, to have an oversight review

3.1.1.3 Trade document and commodity risk

Inconsistencies in contracts, invoices, and other trade papers can be viewed as a possible red flag for financial crime compliance (FCC) For example, discrepancies between the supplier's name and the name on the payment document, pricing in invoices and contracts, or discrepancies between quantity, CBM on the packing list, and their descriptions Further fees or samples on an invoice that appear to be unrelated to a prior transaction, or payment for third-party engagement that does not exist in the process, should be investigated Contracts in complicated or frequent trade transactions are greatly simplified since they are derived from Internet samples that do not represent the exact needs for a given item

Items are imported under the temporary importation system and then processed under the inward processing regime before being exported using forged documentation The links between the carrier and one of the parties participating in the transactions must be carefully examined Part of the latest scam stems from the fact that the carrier was owned by the company responsible for the bank crimes Carousel transactions, in which products travel in circles inside a specific territory or economic sector, are designed to transfer high-value items imported at below-market prices that subsequently appear in other transactions at inflated rates The issue also arises when the carrier is an NVOCC (non-vessel-owning common carrier) with connections to the transaction's parties When it comes to financing containers, most bills of lading are not owned and issued by the carrier; rather, they are issued by a freight forwarder who has rented space on a vessel While the real ship owner issues the master bill of lading, the NVOCC issues the bill of lading that the buyer is dealing with This might be a concern if the NVOCC is a component of the web of intrigue used to launder money

3.1.2 Forecasting financial crime trends in the international finance trade

We can estimate the next movement of this type of financial crime in the future by examining the risk indicators listed above The attitude of other types of financial institutions makes it harder for banks and law enforcement to implement anti-crime measures These money laundering groups and organizations can use various sorts of financial services, such as money value transfer services, in addition to trading financial goods supplied by banks

The penetration of legitimate supply chains by acquiring the stocks of companies that are experiencing financial difficulties leverages their supply chains as a mechanism for integrating illegal funds into the legal financial system by keeping the company's structure and aims intact since their purpose is to maintain a regular and undetected illicit cash transfer to avoid detection Third-party mediators appear to have a crucial role in the criminal procedure to arise as part of the invoice settlement process and collaborate with the consignee to abuse open-account transactions since banks lack information management.

CASE STUDIES OF NATIONS SUCCESSED IN COMBATING

According to the banking and compliance press, the Financial Crime Enforcement Network and the Office of the Comptroller of the Currency fined USAA Federal Savings Bank $140 million for failing to implement and maintain a BSA/AML compliance program Deficiencies pointed out include inadequate internal controls; detection, evaluation, and reporting of suspicious activity; staffing; training; and third-party risk management, in addition to significantly understaffed BSA/AML compliance departments Due to the difficulty and discomfort associated with transformations, most firms delay implementing changes in response to regulatory findings until the last minute Banks are required to review, verify, and report suspicious activity in response to regulatory findings and sanctions In conclusion, in this case, internal controls, detection, appraisal, and reporting of suspicious behaviour, personnel, training, and third-party risk management were all found to be deficient at USAA FSB In addition, the bank's BSA/AML compliance department was considerably understaffed While it is usually in the banking business to outsource work to contractors, especially when confronted with enormous workloads and tight deadlines, USAA FSB failed to offer enough training or confirm that its contractors held the requisite credentials, worsening the problem Fraud risk management and anti-money laundering (AML) are ever- changing zones as new fraud possibilities emerge in response to changing economic and commercial contexts

An important sugeestion for banking system in Vietnam from this case is that heavy regulations do not occur by accident; they result from accumulating failures and procrastination about implementing the necessary changes to meet regulatory requirements, which could be a pattern for Vietnam to implement this method It can be concluded that there are some noteworthy cautions:

- An AML risk management framework should incorporate technology and automation for detection and alerts in addition, to the proper recording of different situations

- Ensuring the quality and quantity of professional employees defer properly to typical requirements in detecting financial criminals

- Warranting sufficient training and certification when outsourcing

In 2015, Australia was considered one of the most money-laundering countries in the world and home to many terrorists posing as fundraisers In 2020, Australia was ranked 13th in the world in terms of GDP, 22nd in total exports, 24th in total imports, and 14th in terms of GDP per capita

On August 17, 2020, Philip Northam appeared in Brisbane District Court for his role as a major promoter in an elaborate asset-stripping scheme He and four previously jailed people claimed that all tax laws are illegal and that no one is legally required to pay any tax The unlawful method provided a mechanism for corporations with a tax liability to transfer all of the company's assets to directors and shareholders, leaving the company unable to pay its tax The corporation was dissolved once its assets had been removed This case underscores our commitment to preserving the integrity of our tax system by apprehending individuals who avoid their tax duties, regardless of how long it takes The conviction of the fifth and final fraudster concludes a 19-year-long collaborative tax fraud investigation by the Australian Taxation Office and the Australian Federal Police

This criminal subsequently transported 3 million AUD (approximately 2.2 million USD) to Hong Kong and China to earn the abalone company's compensation of USD 23,000 Westpac Bank, one of Australia's four main banks, stated in 2020 that it has approved a request to pay a money-laundering charge of up to 1.3 billion AUD (920 million USD), the highest corporate punishment in Australian history The Australian Financial Intelligence Service said Westpac violated the law by failing to disclose foreign STRs totalling around $7 billion between 2013 and 2018 and failing to effectively monitor suspicious client transactions connected to fraud and child abduction Commercial banks in Australia have concluded that collaboration is the key to TBML prevention In 2017, AUSTRAC launched the Fintel Alliance, the world's first private-public collaboration of specialists from the financial sector, intelligence agencies, law enforcement, and academic and research organizations

Nevertheless, Australian commercial banks, particularly those that have previously defied the law, such as Westpac, have created their own standards Their major AML/CTF principles are as follows:

- Comply with Australian government AML/CTF regulations

- Make every effort to fully implement international standards as outlined in the FATF guidelines

- Collaborate with the Australian Government and the governments of the countries where their consumers are situated, and support their goals for TBML prevention, detection, and control

- The decision to not provide products or services is governed by ML/TF risk appetite and corporate social responsibility

This principle can be a lesson for Vietnamese commercial banks to utilize in our systems, assisting in the effectiveness of detecting and preventing criminal behaviours

3.3 RECOMMENDATIONS AND SUGGESTIONS FOR AUTHORIZED MINISTRIES IN VIETNAM

3.3.1.1 Recommendations for The Ministry of Justice a Professional recommendations on The Law on Prevention and Combat of Money Laundering (amended version)

Proposing to add the reporting object specified in Clause 2, Article 4 as an asset auction organization because an auction is a common form of asset purchase and sale In recent years, the auction of land use rights has been continually active Revenue from the auction of land use rights accounts for a substantial proportion of local budget revenues Therefore, it is also necessary to closely monitor the cash flow from participating in the auction Simultaneously, adding suspicious indications in the sphere of real estate business is described in Article 33 of the Draft Law, which is a client who performs more than one transaction in a day or a customer who buys and sells a large amount of real estate, moveable or otherwise, at the same time Lawyer Truong Thi Hoa suggested that Article 6 of the Draft Law regulating international cooperation in the prevention and combat of money laundering should be regulated in a separate chapter because, at present, crime prevention and control in the field of this is a transnational, global issue to deal with increasingly sophisticated, diverse, and complex money laundering acts; at the same time, adding, more specifically, a number of contents on the responsibilities of functional agencies such as the Ministry of Public Security, the People's Procuracy, the Ministry of Finance, and the Ministry of Public Security b Blocking accounts

There should be strict regulations for blocking accounts In the past year, since May

2020, the Ministry of Public Security has discovered 5408 cases of fraud and appropriation of property, including 2540 cases of fraud and appropriation of assets in cyberspace, accounting for 46.5% including international trade transactions There are many distinct types of swindles, which means the draft Law on Anti-Money Laundering does not have strict regulations in the matter of freezing accounts Therefore, this thesis proposes to amend Point B, Clause 1, Article 37 of the draft law as follows: “At the request of competent state agencies to conduct criminal proceedings to serve the inspection and verification of denunciations and information about crimes, propose investigation, prosecution, and trial”, it is necessary to clearly state that Besides, the law should regard criminal procedural authorities as responsible for their request to delay the transaction Such regulations will be strict, not affecting other economic activities, and at the same time, raise the issue of liability to the prosecution agencies, prevent money laundering, and block accounts so that they can be withdrawn the corrupt property c Prevent financial crime on online transactions – money laundering

The Ministry of Justice should specify the transaction level of large value in Clause 5, Article 3 of the law to easily monitor the implementation and ensure legal validity In case of necessity, it will be assigned to the government, not to the Prime Minister, to change the level In addition to transactions in cash, gold, or cash in foreign currencies recognized by the state, there are actually activities related to virtual currencies Transactions on online platforms are very popular and unregulated, and it is forecasted that in the future, with the expansion of international integration, virtual currency transactions will develop This is a favourable condition for money laundering activities that we have not fully anticipated Therefore, the drafting agency needs to add more specific and stricter regulations related to transactions on online platforms It is necessary to draft a law on international cooperation in the prevention and combat of financial crime, which should be specified in a separate chapter because, at present, crime prevention and control in this field is a transnational issue globally to deal with increasingly sophisticated, diverse, and complex money laundering acts; at the same time, adding, more specifically, a number of contents on the responsibilities of functional agencies such as the Ministry of Public Security, the People's Procuracy, the Ministry of Finance, etc in the prevention and combat of money laundering

3.3.1.2 Suggestion for The Ministry of Justice

The Ministry of Justice should issue a complete set of laws regulating financial fraud and financial crime The law should stipulate mechanisms, sanctions, and ways to deal with and identify financial criminals Regulatory laws need to be strict and deterrent with a fully regulated legal framework In addition, the code needs to harmonize with the sources of law regulating financial crime globally Moreover, strengthenning inspection and supervision of merchandise and monetary transactions with foreign nations that often exceed the permissible limit (> VND 200 million)

Proposing to develop a law regulating agencies in charge of preventing and combating financial crime It is proposed to develop a law regulating the specialized agency for the prevention and combat of financial crime to create a legal basis to form a specialized agency with appropriate competence in this crime prevention and control to meet task requirements when the country is integrating internationally

In addition, review and supplement regulations on crime prevention and control for specific types of assets such as cryptocurrencies, and virtual assets; add organizations and individuals providing international e-commerce services to the regulated subjects; amend and supplement the content to ensure regulations on the obligation to report suspicious transactions and the responsibility to ensure confidentiality in providing information related to suspicious transactions of credit institutions; study, review and supplement regulations related to other legal documents and regulations to ensure the uniformity, consistency, and effectiveness of the law in the field of financial crime prevention and control

Emphasizing that the amendment of the law is an urgent requirement today to improve the legal basis for financial crime prevention activities The Ministry of Justice should continue to review and ensure the constitutionality and legitimacy of the law; The bill must be considered and evaluated comprehensively in the legal system, ensuring that it does not overlap with the provisions of other laws The Ministry of Justice should continue to review thoroughly, fully, comprehensively, and carefully the contents of the draft law with the current laws such as Criminal Code, Civil Code, Law on Insurance Business, etc Laws on Government Organizations, Law on State Bank, Law on Enterprises, Law on Investment, Law on Notary, Law on Lawyers, and even the draft Law on Electronic Transactions are being considered and commented on by the National Assembly at the next session 4th meeting to ensure the legitimacy, consistency, and feasibility of the law in the legal system Regulation and enforcement of financial crime regulations in the real estate sector are essential, not only to fulfil Vietnam's commitments to the world but also to make an important contribution to the fight against corruption

3.3.2 Recommendation and suggestion for The Vietnamese Ministry of Finance

First and foremost, the Ministry of Finance is a head ministry that is at the forefront of financial crime prevention; therefore, they should require staff working in the relevant department to have a certificate in CIPFA financial crime investigation The certificate is one of our core training items, and it is intended to provide public finance professionals with the skills and information they need to efficiently investigate financial crime It covers a lesson on fraud and financial crime prevention, detection, and risk assessment Additionally, improving the professional abilities, knowledge, ethics, and virtues of Ministry of Finance officials is critical This ministry should provide counter-fraud specialists with the tools and information they need to handle the danger in a reasonable and cost-effective way, balancing individual rights against the protection of important public funds from the unscrupulous

Secondly, the Ministry of Finance should coordinate with other relevant ministries and departments to complete the legal framework on virtual currency in Vietnam, studying the management and handling of virtual money in the direction of banning the use of virtual currency for transactions in any form, such as goods, services, or means of payment, through a specific legal document regarding regulations on specific and clearer sanctions in handling acts of issuing, supplying, and using virtual currencies in Vietnam

Thirdly, the Ministry of Finance should coordinate with foreign partners any information they may have locally, including information held by financial institutions, in a manner appropriate to their respective needs Financial custodians should be able to communicate the following types of information for AML/CFT purposes, particularly with other relevant supervisors with shared responsibility for financial institutions, mainly in the same group According to FATF Guideline No 26, it is required to establish an agency with functions and duties Furthermore, it is no longer acceptable, according to the rules, to generate statistics and record all transactions at the level of

RECOMMENDATIONS AND SUGGESTIONS FOR FINANCIAL

3.4.1 Recommendation and suggestion for the Banking sector

In the presentation "Policy of the State of the Socialist Republic of Vietnam towards transnational organized crime in the Field of Finance and Banking", Lieutenant General Prof Dr Nguyen Ngoc Anh, a member of the Specialized Research Committee To assist the Minister of Public Security, the Minister of Public Security has recommended many solutions to improve the criminal policy of the Party and State against transnational organized crime in the financial and banking sectors In, priority should be given to reviewing the criminal policy, on that basis, continuing to improve the criminal law and criminal procedure for this field; correctly forecast the situation, and strengthen the coordination relationship between the People's Police force and relevant ministries such as the Ministry of National Defense, the Ministry of Finance, the State Bank of Vietnam and international law enforcement forces, law enforcement forces, etc laws of countries sharing a border with Vietnam; interested in training a team of experts to prevent transnational crimes in the field of finance and banking

3.4.1.1 Recommendation and suggestion for The State Bank of Vietnam

Initially, the SBV should study, amend, and supplement legal documents on assurance of network information security in line with technology development trends and investigate and incorporate worldwide standards and practices on information system security and safety, along with a framework for assessing information technology risks, into legal instruments controlling information technology application activities

Secondly, the SBV should improve the quality of inspection and assessment of conformity with regulations governing credit institutions and payment intermediaries' safety and security

Thirdly, the SBV should implement strict strategies to use safety and security solutions in online payments and bank card payments Speed the implementation of the magnetic card-to-chip card conversion strategy Comprehensive information security equipment;

The SBV shall be in charge of developing and executing strategic strategies, guidelines, policies, plans, prevention, and combating money laundering in the area in collaboration with the Ministry of Public Security and other relevant entities Vietnam is a country

- Research and find solutions to limit cash payments in the territory of Vietnam;

- Act as a focal point for banks to regularly exchange information about money laundering crimes at their banks and to have consensus when implementing measures to prevent financial crime;

- Organize research, apply for scientific and technical advances, and effectively use software to detect and prevent suspicious transactions The State Bank should act as a focal point to guide and support commercial banks in developing effective financial crime prevention activities through the following activities:

- Development of risk-based financial crime prevention methods;

- Improve the operational capacity of the Financial Crime Prevention Department

- Develop an effective feedback mechanism;

- Expand and improve the quality of training for relevant units and individuals on financial crime prevention;

- Launching campaigns to increase public awareness about financial crime prevention;

- Building a national database on money laundering;

- Continue to strengthen international cooperation and support financial crime prevention

3.4.1.2 Recommendation and suggestion for Vietnamese Commercial Banks

Commercial banks and payment service providers have to finalize and organize the implementation of information technology security policies and information technology risk management policies per state legal documents and State Bank of Vietnam regulations; develop a roadmap for the application of international standards on the security and confidentiality of information technology systems; and provide online payment and card payment services Vietnamese commercial banks have to recognize the importance of financial crime prevention and reaffirm Vietnam's will Our nation has made continuous efforts to develop a legislative framework, construct an effective management apparatus, and engage closely with nations across the world in the fight against financial crime One of the most pressing tasks that must be completed to thoroughly enhance the quality of financial crime prevention and match worldwide standards in this sector is the completion of the legislative framework This regulatory framework should prioritize the implementation of effective preventative measures, the collection and administration of consumer information, the veracity of reports of suspicious transactions, and management and oversight

Besides, Vietnamese commercial banks can apply a successful model at Standard Chartered Bank through knowledge sharing and improving compliance standards across the system Accordingly, Standard Chartered wishes to be able to support correspondent banks that are partners of Standard Chartered and support the Vietnamese banking system in general,” said Mr Nirukt Saprucho This is a solution to help the bank control risks related to financial crime in the field of correspondent banking, support growth in emerging markets, and promote financial inclusion In addition, commercial banks in Vietnam should also put into operation an online learning platform that allows customers to update their knowledge on detecting and preventing financial crime To guarantee successful financial crime prevention in the banking system, decrease risks, and safeguard shareholders' interests, banks must adopt policies and procedures directing how to carry out financial crime prevention at the following stages:

- Customer identity rules: simplifying and increasing customer identification

The money laundering risk matrix, which is designed to analyze risks, could be used to regulate recognized hazards and evaluate their frequency of occurrence and effect A good financial crime prevention system also requires management's support and a risk perspective on financial crime prevention; hence, each commercial bank should have a leader in charge of financial crime prevention Moreover, compliance control, implementation of financial crime prevention and control, and appropriate performance of tasks, obligations, and rules on financial crime prevention cannot exist without a department to inspect and regulate compliance

3.4.2 Recommendation and suggestion for other financial institutes

Because financial crime has such a negative impact on society, the financial system, and the bank accounts of ordinary people and companies, governments and financial institutions alike make combating it a top priority The battle has grown significantly in recent years and will continue to do so in the future This is due to several factors:

We are already seeing the work of fraud teams and anti-financial crime teams combine into a strategy within financial institutions When both teams actively communicate data across their own silos, this is conceivable not just to respond to dangers, but also to detect hazards and collaborate to avert problems The same holds true at the industrial level

Those fighting these crimes are increasingly relying on technology such as machine learning to detect threats or hostile actors early on, predict hazards, and take action to disrupt and report these activities Machine learning will be a terrific facilitator for teams wanting to increase their efficacy in identifying new risks and unknown unknowns

Financial crime fighters in the private sector can be more proactive as a result of closer teamwork and the benefits that technology can provide Rather than struggling with inefficient processes or heavy banking information, these experts are empowered to work alongside law enforcement and regulators to take swift action and be more effective in the battle against financial crime

- Competing with high-technology financial crime

To cope with the above situation and effectively fight financial crime using high technology, it is necessary to focus on implementing several basic solutions, as follows:

Firstly, promoting propaganda and education on crime prevention and law violations, especially financial crime, for agencies, departments, and especially financial institutions using high technology Second, agencies performing the administrative management of security and order through their activities are responsible for proactively detecting in time the causes, conditions, methods, and tricks of the crime in economic and financial crime using high technology and taking appropriate handling measures Third, strengthening measures to prevent crimes using high technology through administrative management of security and order Finally, individuals must accept responsibility for engaging in the use of high technology to prevent crimes and violations of financial and economic regulations

Financial institutions must detect and promptly report crimes and other law violations committed using high technology to the nearest police agency or local administration; closely collaborate with the specialised agency in the procedure for investigating and clarifying crimes and other law violations committed using novel technology; and provide the necessary information and relevant documents to the specialised agency when legally mandated

Chapter 3 provides solutions and recommendations for ministries and agencies responsible for preventing financial crime and related financial institutions Based on the practical experience analyzed above along with the international experiences that have been implemented, these recommendations and proposals contribute to the consideration of ministries, sectors, financial institutions, and financial institutions change to suit Vietnam and enhance the effectiveness of crime prevention and control in this economy Financial institutions should plan for account takeover situations and focus on providing a smooth resolution procedure Exploring solutions to enhance procedures related to credential issuance and recovery is a research opportunity As technology advances, the area of applicability for illegal acts has increased This research aims to call attention to the importance of identifying and stopping financial crime by developing technical expertise and awareness It is necessary to update customer identification information and quantify suspicious signs of financial crime in the fields of banking, payment intermediaries, life insurance businesses, securities, real estate businesses, finance, and network security In the increasingly strong development of international trade, in addition to focusing on developing the country's economy through import and export activities, Vietnamese ministries and other financial institutes play an integrated role in preventing certain types of crimes in international trade