Circular No. 17/2023/TT-NHNN on inspecting compliance with monetary policy and banking laws

CIRCULAR

Regulations on inspection of compliance with monetary policy and banking laws

concerning currency and banking

Pursuant to the Law on the State Bank of Vietnam dated June 16, 2010;

Pursuant to the Law on Credit Institutions dated June 16, 2010; the Law Amending and Supplementing Certain Articles of the Law on Credit Institutions dated November 20, 2017;

Pursuant to the Inspection Law on November 14, 2022;

Pursuant to Decree No. 102/2022/NĐ-CP dated December 12, 2022 of the Government stipulating the functions, tasks, powers, and organizational structure of the State Bank of Vietnam;

At the proposal of the Director of Banking Inspection and Supervision;

The Governor of the State Bank of Vietnam issues this Circular to regulate inspections of compliance with monetary policy and banking laws.

PART I
GENERAL PROVISIONS

Article 1. Scope of Regulation

This Circular regulates inspections of compliance with monetary policy, banking operations, foreign exchange activities, and anti-money laundering measures (hereinafter referred to as monetary and banking matters) for inspected entities.

Article 2. Applicability

This Circular applies to:

1. Banking Inspection and Supervision Authority, units under the Banking Inspection and Supervision Authority.

2. State Bank of Vietnam branch in provinces and centrally-administered cities (hereinafter referred to as State Bank of Vietnam branch), Inspection and Supervision of State Bank of Vietnam branch.

3. Other administrative units under the State Bank of Vietnam.

4. Credit organizations, foreign bank branches, representative offices in Vietnam of foreign credit organizations, other foreign organizations engaged in banking activities.

5. Organizations engaged in foreign exchange activities, gold trading activities; organizations engaged in credit information activities; organizations providing non-bank payment intermediary services.

6. Other organizations and individuals related to inspections of compliance with monetary and banking laws.

Article 3. Explanation of Terms

1. Circular No. 33/2017/TT-BGTVT amending and supplementing some provisions of Circular No. 54/2013/TT-BGTVT dated December 16, 2013 issued by the Minister of Transport regarding Marine Inspector Officers is based on the following grounds: is a regular activity of the inspecting unit towards the inspected entity aimed at examining and evaluating the inspected entity's compliance with monetary and banking laws to ensure the effectiveness of the State Bank of Vietnam's state management work.

2. Inspecting Unit are the units specified in Clause 1, Clause 2, and Clause 3 of Article 2 of this Circular.

3. Inspected Entity is an entity within the State Bank of Vietnam’s regulatory functions, including the entities specified in Clause 4 and Clause 5 of Article 2 of this Circular.

4. Decision Maker for Inspection is:

a) The head of the inspecting units specified in Clause 1 and Clause 2 of Article 2 of this Circular;

b) For the units specified in Clause 3 of Article 2 of this Circular, the Governor of the State Bank of Vietnam assigns the head of the inspecting unit as the decision maker for inspection; the head of the inspecting unit signs on behalf of the Governor of the State Bank of Vietnam the documents of the decision maker for inspection as stipulated in this Circular.

Article 4. Purpose of Inspection

1. To examine and evaluate information, data, and compliance with monetary and banking laws of the inspected entity to ensure completeness, accuracy, and adherence to legal provisions on monetary and banking matters.

2. To enhance the effectiveness of state management work in the monetary and banking sector.

3. To detect, prevent, and handle violations of laws in the monetary and banking sector.

4. To propose amendments, supplements, and improvements to mechanisms, policies, and legal provisions on monetary and banking matters if necessary.

5. To contribute to ensuring safe and sound development of the credit organization system and financial system; to protect the rights and legitimate interests of depositors and customers of credit organizations.

Article 5. Principles of inspection

1. Inspections shall be conducted within the scope of authority and based on legal regulations.

2. Inspections shall be carried out regularly according to plans or unexpectedly.

3. To ensure accuracy, objectivity, honesty, democracy, timeliness, and effective coordination.

4. To ensure that there is no overlap or repetition in content, time, or inspected entities between inspection activities of different inspecting units, and between inspection and audit activities.

When conducting inspection activities, if overlapping or repetition is found between inspection and audit activities, audit activities shall be carried out; if overlapping or repetition is found in inspection activities, the heads of the inspecting units shall coordinate to conduct one inspection.

Article 6. Annual inspection plan annually

1. Based on their functions, tasks, and granted authorities, the Banking Inspection and Supervision Agency and the State Bank branch shall issue the annual inspection plan. The Governor of the State Bank shall assign the heads of other administrative units under the State Bank to sign and implement the annual inspection plan. The issuance of the inspection plan shall be carried out as follows:

a) The Banking Inspection and Supervision Agency shall develop and issue the annual inspection plan before December 15 each year, and send the issued inspection plan to other administrative units under the State Bank.

b) Other administrative units under the State Bank shall develop and issue the annual inspection plan before December 25 each year, ensuring that it does not overlap with the inspection plan of the Banking Inspection and Supervision Agency for that year.

2. The annual inspection plan may be amended or supplemented when necessary.

3. The annual inspection plan shall be developed based on the following information:

a) Results of implementing inspection work by the inspecting unit in previous years;

b) The inspection plan of the Banking Inspection and Supervision Agency for the year in which the inspection plan is expected (for the inspection plan of the Banking Inspection and Supervision Agency); the inspection plan of the Banking Inspection and Supervision Agency and the inspection plan of the State Bank branch for the year in which the inspection plan is expected (for the inspection plan of the State Bank branch); the inspection plan of the Banking Inspection and Supervision Agency and the inspection plan of the State Bank branch in the area where the inspection is expected for the year in which the inspection plan is expected (for the inspection plan of other administrative units under the State Bank).

c) Compliance with monetary and banking policies and laws by the inspected entity;

d) Directives and requirements from competent authorities;

đ) Requirements of state management within the industry and field under the scope of management;

e) Requirements of economic and social development tasks.

4. The annual inspection plan must include at least the following contents:

a) Basis for issuing the inspection plan;

b) Purpose and requirements of the inspection;

c) Inspected entities;

d) Inspection contents;

đ) Time to conduct the inspection.

5. The annual inspection plan and documents amending or supplementing the annual inspection plan must be sent to the inspected entity no later than five working days from the date of issuance.

Article 7. Surprise inspections

The inspecting unit shall carry out surprise inspections based on management requirements and actual situations, or upon requests, proposals, or reflections from authorized state agencies, organizations, individuals, or when instructed by the Governor of the State Bank.

Chapter II
SPECIFIC PROVISIONS

Section 1
INSPECTION ACTIVITIES

Article 8. Inspected entities of the inspecting unit

1. The Banking Inspection and Supervision Agency shall inspect compliance with monetary and banking policies and laws by inspected entities, including:

a) Credit institutions, except those specified in points a and c of Clause 3 of this Article;

b) Branches of foreign banks as assigned by the Governor of the State Bank;

c) Organizations engaged in credit information activities;

d) Inspected entities of State Bank branches, Banking Inspection and Supervision Agency branches if deemed necessary.

2. Units under the Banking Inspection and Supervision Agency shall inspect the inspected entities specified in Clause 1 of this Article as the inspected and supervised entities of the unit according to its functions and tasks.

3. State Bank branches and Banking Inspection and Supervision Agency branches shall inspect compliance with monetary and banking policies and laws by inspected entities in the province or centrally-administered city where the State Bank branch is located, including:

a) People's Credit Funds;

b) Branches of foreign banks, except those specified in point b of Clause 1 of this Article;

c) Branches and transaction offices of credit institutions;

d) Representative offices in Vietnam of foreign credit institutions and other foreign organizations engaging in banking activities;

đ) Organizations engaging in foreign exchange activities, gold trading activities; non-bank organizations providing payment intermediary services.

4. Other administrative units under the State Bank shall inspect compliance with policies and implementation of regulatory documents within the scope of their advisory and assistance functions to the Governor of the State Bank for state management over inspected entities, including:

a) Credit institutions, except those specified in point a of Clause 3 of this Article;

b) Branches of foreign banks;

c) Organizations engaging in foreign exchange activities, gold trading activities; non-bank organizations providing payment intermediary services.

5. In cases of necessity, inspecting units shall inspect other inspected entities when assigned by the Governor of the State Bank.

Article 9. Decision on inspection, inspection plan, and establishment of inspection team

1. Inspection shall be conducted at the premises of the inspected entity or the inspecting unit. The inspecting unit must issue the Decision on Inspection, the inspection plan, and establish the inspection team.

2. The Decision on Inspection shall be signed and issued by the person issuing the inspection decision and must be sent to the inspected entity no later than five working days before the planned inspection date, except in cases of surprise inspections.

The Decision on Inspection must include at least the following contents:

a) Basis for issuing the Decision on Inspection;

b) Object and content of the inspection;

c) Composition of the inspection team;

d) Inspection location;

đ) Inspection period, time expected to start the inspection;

e) Information and documents required from the inspected entity to report and send to the inspecting unit (if necessary).

The Decision on Inspection shall be implemented according to Model No. 01 attached hereto.

3. The inspection plan shall be drafted by the Head of the Inspection Team, submitted for approval by the person issuing the inspection decision based on the Decision on Inspection, and must include at least the following contents:

a) Purpose and requirements of the inspection;

b) Object and content of the inspection;

c) Inspection period, location, time expected to start the inspection;

d) Method of conducting the inspection;

đ) Implementation organization (assignment of responsibilities; information and reporting system).

The inspection plan shall be implemented according to Model No. 02 attached hereto.

4. The inspection team must have two members or more, including:

a) The Head of the Inspection Team must be a leader at the department level or above, or a senior specialist or equivalent with at least five years of service in their rank, or a specialist or equivalent with at least five years of service in their rank;

b) Members of the inspection team.

The Head of the Inspection Team and members of the inspection team must be individuals with good moral character and expertise appropriate to the requirements and tasks of the inspection.

5. The person issuing the inspection decision may change the Head of the Inspection Team and members of the inspection team if they fail to meet the requirements and tasks of the inspection, engage in violations of the law, or due to other objective reasons that prevent them from performing their duties.

Article 10. Conducting Inspection

Based on the approved and issued Decision on Inspection and inspection plan, the inspection team shall conduct the inspection as follows:

1. The inspection team announces the Decision on Inspection.

2. The inspection team requests the inspected entity to report and provide information and content as required by the inspection team.

3. The inspection team exchanges and discusses directly with the inspected entity regarding the inspection content. If necessary, the Head of the Inspection Team decides to work directly with persons related to the inspection content, requests the inspected entity to explain in writing about unclear issues related to the inspection content, and organizes verification related to the inspection content.

4. The inspection team reviews and evaluates the inspected entity based on the provided information, files, and documents according to the inspection content, purpose, and requirements. If necessary, the inspection team requests the inspected entity to provide additional information, files, and documents related to the inspection content.

5. The results of the work with the inspected entity must be recorded in a record between the inspection team and the inspected entity according to Model No. 03 attached hereto.

6. During the inspection, if the inspected entity is found to have committed administrative violations in the field of currency and banking, the Head of the Inspection Team must prepare an administrative violation record and transfer it to the competent authority for handling according to the law. In cases where the administrative violation does not pertain to the field of currency and banking, the Head of the Inspection Team must prepare a work record to document the incident and immediately transfer the record to the competent authority for handling according to the law.

In cases where criminal offenses are suspected, the Head of the Inspection Team must report to the person issuing the inspection decision to immediately transfer the case file and relevant documents to the investigation agency for examination and decision according to the law.

Article 11. Inspection Period and Extension of Inspection Period

1. The maximum inspection period is 10 working days from the date of announcing the Inspection Decision and may be extended by up to 05 additional working days.

2. Cases where the inspection period can be extended include:

a) When it is necessary to verify information and documents to clarify issues related to the inspection content.

b) Complex inspection content involving the responsibility of multiple agencies, organizations, and individuals.

c) When the inspected subject, organization, or individual does not cooperate, obstructs, opposes, or creates difficulties for the inspection activities, affecting the inspection period.

3. The extension of the inspection period shall be reviewed and decided by the person issuing the inspection decision.

The head of the inspection team shall submit a document to the person issuing the inspection decision requesting an extension of the inspection period along with a draft decision extending the inspection period; the request must clearly state the reasons and duration of the extension.

4. The decision to extend the inspection period must be sent to the inspected subject before the end of the inspection period specified in the Inspection Decision and must include at least the following contents:

a) The Inspection Decision.

b) Reasons for extending the inspection period.

c) Duration of the extended inspection.

The decision to extend the inspection period shall be implemented according to Model No. 04 issued together with this Circular.

Article 12. Suspension of Inspection, Resumption of Inspection

1. Inspection shall be suspended in the following cases:

a) In the event of an unforeseen circumstance as prescribed by law that affects the progress of the inspection.

b) If the inspected subject requests a suspension of the inspection for a valid reason and obtains the agreement of the person issuing the inspection decision; in this case, the suspension period shall not exceed 10 working days.

2. The person issuing the inspection decision shall decide to resume the inspection when there is no longer an unforeseen circumstance or when the suspension period specified in point b, Clause 1 of this Article has expired.

3. The suspension and resumption of inspection must be decided by a decision signed and issued by the person issuing the inspection decision.

4. The decision to suspend inspection must include at least the following contents:

a) The Inspection Decision.

b) Start time and location of the inspection.

c) Reasons for suspending the inspection.

d) Suspension period and start date of suspension.

The decision to suspend inspection shall be implemented according to Model No. 05 issued together with this Circular.

5. The decision to resume inspection must include at least the following contents:

a) The Inspection Decision.

b) The decision to suspend inspection.

c) Reasons for resuming the inspection and the resumption date.

The decision to resume inspection shall be implemented according to Model No. 06 issued together with this Circular.

6. The decision to suspend inspection and the decision to resume inspection must be sent to the inspected subject before the suspension and resumption of inspection.

7. The suspension period shall not be counted within the inspection period.

Article 13. Termination of Inspection

1. The person issuing the inspection decision shall issue a decision to terminate the inspection or one or several inspection contents in the following cases:

a) The inspection content has been concluded by the competent authority.

b) There is a criminal case indictment decision by the competent state agency regarding the inspection content.

c) The Governor of the State Bank has issued a document requesting the termination of the inspection.

d) The inspected subject no longer exists.

đ) Belongs to overlapping or repetitive cases that have been handled according to Clause 4, Article 5 of this Circular.

2. The decision to terminate the inspection must be signed and issued by the person issuing the inspection decision, sent to the inspected subject at least one day before the start of the termination of the inspection and must include at least the following contents:

a) The contents prescribed in point a, b Clause 4 of Article 12 of this Circular.

b) Reasons for terminating the inspection.

c) Start time of the termination of the inspection.

The decision to terminate the inspection shall be implemented according to Model No. 07 issued together with this Circular.

3. When terminating the inspection, the inspection team is responsible for revoking all measures applied under their authority during the inspection process; returning all files and documents provided by the inspected subject.

Article 14. Report on Inspection Results and Inspection Conclusion

1. Within 05 working days from the end of the inspection, each member of the inspection team is responsible for submitting a written report on the inspection results for the assigned inspection content and proposing recommendations to the head of the inspection team.

2. Within 05 working days from receiving the written reports of the inspection team members, the head of the inspection team must submit a report on the inspection results and a draft inspection conclusion along with relevant inspection files, proposals, and recommendations to the person issuing the inspection decision.

3. Within 05 working days from receiving the inspection results report and draft inspection conclusion from the head of the inspection team, the person issuing the inspection decision must review and sign to issue the inspection conclusion.

4. Within 05 working days from issuance, the inspection conclusion must be sent to:

a) The inspected subject and related agencies, organizations, and individuals to implement the recommendations stated in the inspection conclusion.

b) Relevant units under the State Bank to implement the recommendations stated in the inspection conclusion according to their assigned functions and tasks.

5. The report on inspection results and inspection conclusion must include at least the following contents:

a) Inspected subject.

b) Inspection content.

c) Inspection results.

d) Inspection conclusion (conclusion on compliance with monetary and banking policies and laws; clearly identifying violations: nature, severity, consequences, causes, responsibilities of organizations and individuals for each violation (if applicable)...).

đ) Measures applied under authority (if applicable).

e) Recommendations for handling the inspection results.

g) Reporting system for implementing corrective actions and handling according to recommendations (if applicable).

The report on inspection results and inspection conclusion shall be implemented according to Model No. 08 and Model No. 09 issued together with this Circular.

Section 2
HANDLING INSPECTION RESULTS AND RECOMMENDATIONS AFTER INSPECTION

Article 15. Measures to handle the results of inspection

1. The inspection unit shall issue recommendations, warnings, corrections, or requests for the inspected entity to rectify identified deficiencies and violations discovered through inspections, with deadlines for implementation (if applicable).

2. The inspection unit shall apply or recommend that the competent state authority apply measures prescribed by law to handle violations if violations are detected.

3. The inspection unit shall submit to the competent authority for consideration and initiation of an audit against the inspected entity in cases where complex violations of laws are discovered and are beyond the inspection unit's jurisdiction.

4. The decision-making authority for inspections shall immediately transfer the case file and related documents to the investigation agency for examination and decision in accordance with the law if criminal offenses are suspected.

5. Other measures as prescribed by law.

Article 16. Monitoring and Urging Implementation of Recommendations Following Inspection

1. The head of the inspection unit shall be responsible for organizing monitoring and urging the implementation of recommendations stated in the inspection conclusion by the inspected entity.

2. The head of the inspection unit shall base decisions on the results of monitoring and urging the implementation of recommendations stated in the inspection conclusion of the inspected entity to decide:

a) To conclude monitoring and urging the implementation of recommendations stated in the inspection conclusion and archive the file if the implementation of such recommendations has been completed;

b) To apply handling measures prescribed by law if the inspected entity does not implement or implements inadequately the recommendations stated in the inspection conclusion.

Section 3
RIGHTS AND RESPONSIBILITIES OF THE INSPECTION UNIT, DECISION-MAKING AUTHORITY FOR INSPECTIONS, HEAD OF THE INSPECTION TEAM, MEMBERS OF THE INSPECTION TEAM, AND THE INSPECTED ENTITY

Article 17. Rights and Responsibilities of the Inspection Unit

1. To develop and issue annual inspection plans in accordance with Article 6 of this Circular.

2. To organize and conduct inspections in accordance with this Circular.

3. To monitor and urge the implementation of recommendations stated in the inspection conclusion.

4. Other rights and responsibilities as prescribed in this Circular and relevant laws.

Article 18. Rights and Responsibilities of the Decision-Making Authority for Inspections, Head of the Inspection Team, and Members of the Inspection Team

1. Rights and Responsibilities of the Decision-Making Authority for Inspections

a) To organize and establish the inspection team; select and appoint the Head of the Inspection Team and members of the inspection team; sign and issue the Inspection Decision; approve the inspection plan;

b) To direct the inspection team to organize and conduct inspections according to the Inspection Decision and inspection plan;

c) To request the Head of the Inspection Team and members of the inspection team to report on issues related to the inspection content;

d) To request the inspected entity to report and explain to clarify issues anticipated in the conclusion (if necessary);

đ) To sign and issue the inspection conclusion;

e) Other rights and responsibilities as prescribed in this Circular and relevant laws.

2. Rights and Responsibilities of the Head of the Inspection Team

a) To organize and conduct inspections according to the Inspection Decision and inspection plan;

b) To lead the development of the inspection plan, submit it to the decision-making authority for approval; disseminate the inspection plan to the members of the inspection team;

c) To assign members of the inspection team to carry out inspection tasks;

d) To request the inspected entity to report, provide information, files, and documents and explain issues related to the inspection content;

đ) To collect, check, compare, and verify information related to the inspection content;

e) To report and seek guidance from the decision-making authority for issues and contents arising during the inspection that exceed their authority;

g) To report to the decision-making authority on the inspection results, draft inspection conclusions, and bear responsibility for the accuracy, honesty, and objectivity of the reports and draft conclusions;

h) To hand over the inspection file to the inspection unit no later than fifteen days from the date the decision-making authority signs and issues the inspection conclusion;

i) Other rights and responsibilities as prescribed in this Circular and relevant laws.

3. Rights and Responsibilities of Members of the Inspection Team

a) To perform inspection tasks assigned by the Head of the Inspection Team;

b) To request the inspected entity to provide information, files, and documents and explain issues related to the assigned inspection content;

c) To collect, check, compare, and verify information related to the assigned inspection content;

d) To propose to the Head of the Inspection Team to take necessary measures to ensure effective and lawful inspection activities;

đ) To report to the Head of the Inspection Team on the results of the assigned tasks and bear responsibility for the accuracy, honesty, and objectivity of the reported content;

e) Other rights and responsibilities as prescribed in this Circular and relevant laws.

Article 19. Rights and Responsibilities of the Inspected Entity

1. Rights of the Inspected Entity

a) To present explanations related to the inspection content;

b) Other rights as prescribed in this Circular and relevant laws.

2. Responsibilities of the Inspected Entity

a) To comply with the Inspection Decision issued by the inspection unit;

b) To send representatives with appropriate qualifications and responsibilities to participate in meetings with the inspection team;

c) To cooperate and facilitate the inspection team in performing their duties during the inspection process;

d) To promptly, fully, and accurately report, explain, and provide information, files, and documents related to the inspection content as required by the inspection team and bear legal responsibility for the accuracy and truthfulness of the provided information, files, and documents;

đ) To promptly and fully implement recommendations stated in the inspection conclusion and report on the implementation of such recommendations within the requested deadline;

e) To provide relevant files, information, and documents related to the anticipated inspection content when requested by the inspection unit to serve as the basis for issuing the Inspection Decision;

g) Other responsibilities as prescribed in this Circular and relevant laws.

Chapter III
IMPLEMENTING PROVISIONS

Article 20. Responsibility for implementation organization

The Director of the Office, the Head of the Banking Inspection, the Heads of administrative units under the State Bank, and the inspected entities as specified in this Circular shall be responsible for organizing the implementation of this Circular.

Article 21. Effective Date

This Circular takes effect from February 8, 2024./.