Circular No. 29/2018/TT-NHNN guiding the confirmation and management of escrow funds for multi-level marketing enterprises

 CIRCULAR

Guidelines for confirmation and management of escrow funds of multi-level marketing enterprises

Pursuant to the Civil Code 2015;

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 and the Law Amending and Supplementing Certain Articles of the Law on Credit Institutions dated November 20, 2017;

Pursuant to Decree No. 40/2018/ND-CP dated March 12, 2018 issued by the Government on the management of multilevel marketing activities;

Pursuant to Government Decree No. 16/2017/NĐ-CP dated February 17, 2017 on the functions, tasks, powers, and organizational structure of the State Bank of Vietnam;

At the proposal of the Payment Department Director;

The Governor of the State Bank of Vietnam issues this Circular guiding the confirmation and management of escrow funds of multi-level marketing enterprises.

Article 1. Scope of Regulation

This Circular guides the confirmation and management of escrow funds of multi-level marketing enterprises.

Article 2. Applicability

1. Commercial banks and foreign bank branches established and operating legally in Vietnam.

2. Multi-level marketing enterprises (hereinafter referred to as enterprises).

3. Agencies, organizations, and individuals related to the escrow of multi-level marketing enterprises.

Article 3. Deposit of escrow funds and confirmation of escrow funds of enterprises

1. When there is a need to deposit escrow funds at a commercial bank or foreign bank branch (hereinafter referred to as the receiving bank), the enterprise and the receiving bank shall conclude an escrow agreement.

The escrow agreement includes the following main contents: Name, address, and legal representative of the enterprise; Name, address, and legal representative of the bank (or bank branch) receiving the escrow; Amount of escrow; Purpose of the escrow; Interest rate on escrow deposits; Method of interest payment on escrow; Use of escrow funds; Withdrawal of escrow funds; Settlement of the escrow account; Responsibilities of the parties involved, and other relevant contents in accordance with the provisions of the law.

2. The enterprise completes the account opening procedures for the escrow account according to the guidance of the receiving bank and deposits the escrow amount (in cash or by transfer) into the escrow account in accordance with Clause 2, Article 50 of Decree No. 40/2018/NĐ-CP dated March 12, 2018 of the Government on the management of direct selling activities (hereinafter referred to as Decree No. 40/2018/NĐ-CP).

3. After receiving the full escrow amount as stipulated in Clause 2, Article 50 of Decree No. 40/2018/NĐ-CP, the receiving bank records the escrow amount in the escrow account in Vietnamese currency, issues a Confirmation of Escrow to the enterprise according to Model No. 17 attached to Decree No. 40/2018/NĐ-CP.

4. When there is a change in the information about the enterprise on the Confirmation of Escrow such as name, address, business registration certificate or investment certificate, legal representative, escrow amount, the enterprise submits a written request to the receiving bank to adjust the information according to the Appendix issued together with this Circular and related documents concerning the requested adjustment (certified copy or copy extracted from the original book or copy accompanied by presentation of the original for verification). The enterprise must be responsible for the authenticity of the information provided to the receiving bank.

If the information proposed for adjustment in the enterprise's request matches the related documents concerning the requested adjustment, the receiving bank issues a new Confirmation of Escrow to the enterprise according to Model No. 17 attached to Decree No. 40/2018/NĐ-CP replacing the old Confirmation of Escrow.

5. In case the enterprise changes its registered capital and has a need to adjust the escrow amount, the receiving bank and the enterprise shall amend or supplement the escrow agreement or conclude a new escrow agreement and deposit the escrow amount in accordance with Clause 3 of this Article.

Article 4. Management of Business Deposit Money

The receiving bank shall manage the business deposit money in accordance with the provisions of Clause 5 and Clause 6, Article 50 of Decree No. 40/2018/NĐ-CP.

Article 5. Interest Rate on Deposit Money

The interest rate on deposit money shall be agreed upon between the business and the receiving bank in the deposit agreement, ensuring compliance with the regulations on interest rates for deposits in Vietnamese dong issued by the State Bank of Vietnam during each period.

Article 6. Withdrawal of Deposit Money

1. When there is a need to withdraw deposit money as stipulated in Clause 1, Article 51 of Decree No. 40/2018/NĐ-CP, the business must provide the original notification from the Ministry of Industry and Trade regarding the return of the application dossier in cases where the issuance of the direct selling activity registration certificate is refused; or the original document from the Ministry of Industry and Trade approving the business to withdraw deposit money due to termination of direct selling activities or having deposited at another bank or branch.

2. The receiving bank shall allow the business to withdraw deposit money in accordance with the provisions of Clause 5, Article 50 and Clause 4, Article 51 of Decree No. 40/2018/NĐ-CP.

Article 7. Handling of Deposited Amounts

1. Upon receipt of the document from the Ministry of Industry and Trade requesting the withdrawal of the business's deposit money to handle cases as stipulated in Clause 1, Article 53 of Decree No. 40/2018/NĐ-CP, the receiving bank shall withdraw the deposit money for direct selling participants or according to the decision of the competent authority imposing penalties.

2. In cases where the amount in the business's deposit account is insufficient to cover the required payment as per the document from the Ministry of Industry and Trade, the receiving bank must notify the Ministry of Industry and Trade (Competition and Consumer Protection Department) and process according to the response from the Ministry of Industry and Trade.

Article 8. Responsibilities of the Receiving Bank

1. Guide businesses and comply with all regulations concerning the opening of deposit accounts, paying interest on deposit balances, and managing the business's deposit accounts in accordance with this Circular and relevant laws.

2. Issue a Deposit Confirmation Certificate to the business after the business has completed the deposit in accordance with Clause 3, Article 50 of Decree No. 40/2018/NĐ-CP and when the business updates information on the Deposit Confirmation Certificate as stipulated in Clause 4, Article 3 of this Circular.

3. Provide confirmation documents and notify the Ministry of Industry and Trade in accordance with the provisions of Decree No. 40/2018/NĐ-CP and this Circular.

4. Report on the deposit situation of businesses when requested by the State Bank of Vietnam and competent authorities.

Article 9. Responsibilities of Relevant Units under the State Bank of Vietnam

1. The Payment Department is responsible for monitoring and summarizing the deposit situation of businesses at receiving banks; guiding and resolving issues arising during the implementation of this Circular.

2. Banking Inspection and Supervision Departments, State Bank branches in provinces and centrally-administered cities have the responsibility to inspect and supervise the management of business deposit money at receiving banks in accordance with this Circular and relevant laws.

Article 10. Effective Date

1. This Circular takes effect from January 18, 2019.

2. For deposit money that direct selling businesses have deposited in accordance with Decree No. 110/2005/NĐ-CP dated August 24, 2005 of the Government on the management of direct selling activities and Decree No. 42/2014/NĐ-CP dated May 14, 2014 of the Government on the management of direct selling activities, the management, withdrawal, and use of deposit money at receiving banks shall be carried out in accordance with Decree No. 40/2018/NĐ-CP and this Circular.

Article 11. Implementation Organization

The Chief of the Office, the Chief of Banking Inspection and Supervision, the Director of the Payment Department, Heads of relevant units under the State Bank, Directors of State Bank branches in provinces and centrally-administered cities; Chairmen of the Board of Directors, Chairmen of the Board of Members, General Managers (Directors) of commercial banks, foreign bank branches; Chairmen of the Board of Directors, Chairmen of the Board of Members, General Managers (Directors) of businesses are responsible for implementing this Circular./.