Vinhomes Central Park in HCM City (Source: vinhomecity.vn) Hanoi (VNS/VNA) - The Ministry ofConstruction has recently requested the Departments of Construction incities and provinces to urge enterprises in the real estate sector to reportsuspicious transactions and cash transactions worth 300 million VND (13,000 USD)and above.
This is in line with the ministry’s strengthenedefforts to prevent money laundering and terrorist financing.
The international Financial Action Task Force(FATF) has recognised the real estate sector as a high-risk sector for moneylaundering due to the high value of assets, high proportion of cashtransactions, price fluctuation and non-transparent companies and trusts orthird parties that act as legal owners.
In Vietnam, the prevention of laundering ofillicit money in real estate is stipulated in the 2012 Law on Anti-MoneyLaundering, Decree 116/2013/ND-CP dated October 4, 2013 and Circular No35/2013/TT-NHNN dated November 11, 2014.
Both financial and non-financial sector partiesare required to effectuate the rules but so far only financial institutions,especially commercial banks, have seriously implemented them. Non-financialorganisations such as realty companies and real estate trading floors have aloose rein.
A recent report to the Prime Minister by the HCMCity Real Estate Association (HoREA) has expressed some concerns about thedevelopment of the real estate sector in the city in 2019, one of which was awarning of money laundering in high-end and luxury housing segments.
According to CBRE’s market report in 2018, in thehigh-end and luxury segment, the purchase for investment purpose accounted for61 percent, up 11 percent over 2017, while the transaction for short-terminvestment and accommodation establishment made up 13 percent and 26 percent,respectively, down from 15 percent and 35 percent in 2017.
Secondary investors also increased significantlylast year. "The strong increase in the number of secondaryinvestors in the high-end and middle-level housing segments with transactionsfor investment, speculation and value hedging purposes may also be abused formoney laundering, which easily leads to bubbles in the real estatemarket," HoREA said.
The proportion of secondarybusiness investors in the mid-end housing segment was about 20-30 percentwhile in the affordable housing segment was about 10 percent, it added.
According to Nguyen Van Dinh, vice chairman and generalsecretary of the Vietnam Association of Realtors, combating moneylaundering in the realty sector is crucial but implementation would not be easy.
“In many countries, cash payments are strictlycontrolled; most transactions were done through bank transfers. In Vietnam, thehabit of using cash when buying property makes anti-money laundering effortsmore difficult,” Dinh told baodatviet.vn.
The Government was accelerating its efforts inswitching to non-cash use and as long as we did this, such crimes could becontrolled, he said.
However, he also pointed out the lack of penaltiesfor firms which did not comply with the law also made the enforcement difficult.
"Therefore, State management must be strongerand there must be sanctions to handle all violations,” he suggested, addingthat local authorities must strengthen their supervision and management intheir localities.
Economist Nguyen Tri Hieu also said legal regulationsshould force high-value real estate transactions to go through banks and thenbanks would be responsible for verifying the source of the money and reportsuspicious deals to authorities.
In documents sent to construction departments inprovinces and cities, the Ministry of Construction has also asked propertyfirms, realtors and real estate trading floors to build and implement internalregulations on prevention of money laundering and terrorist financing inaccordance with the law.
Regulations should include customeridentification, risk management of money laundering and terrorist financingrisks, reviewing transactions and applying preventive measures againsthigh-risk customers.
They must also report suspicious transactions andcash transactions worth 300 million VND or more to the management authority.
These companies are asked to send their internalregulations to the ministry’s Department of Housing and Real Estate MarketManagement and Anti-Money Laundering Department under the State Bank of Vietnambefore September 1 this year.-VNS/VNA
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