Vietnam Intensifies Anti-Money Laundering Reforms Amid FATF Grey List Pressure

Vietnam’s anti-money laundering (AML) efforts have entered a decisive and highly scrutinized stage as the government moves to close the deficiencies highlighted by the Financial Action Task Force (FATF). Since the country’s inclusion on the FATF grey list in 2023, international attention has focused sharply on its financial institutions, digital asset exchanges, and regulators, all of which are under pressure to prove that their compliance reforms go beyond symbolic measures. The State Bank of Vietnam, together with its Department of Anti-Money Laundering, is tightening enforcement across both traditional banking and emerging fintech sectors to avert reputational and economic repercussions.

Being placed under FATF’s “increased monitoring” category requires Vietnam to demonstrate tangible progress on implementing 17 action points that span critical areas such as beneficial ownership transparency, customer due diligence, virtual asset regulation, and supervision of politically exposed persons. The challenge lies not in policy design but in converting these commitments into verifiable enforcement outcomes, particularly in markets expanding faster than regulators can oversee.

Vietnam’s rapid digital transformation has generated fertile conditions for both financial innovation and criminal exploitation. Blockchain ventures, digital wallets, and trading platforms have proliferated in Ho Chi Minh City and Hanoi, drawing a young, tech-savvy investor base and international participants. However, this surge has amplified AML risks as unregulated intermediaries and offshore entities can easily facilitate laundering through crypto-to-fiat conversion schemes. FATF’s evaluation found major deficiencies in Vietnam’s oversight of virtual asset service providers and inconsistencies in suspicious transaction reporting, findings that now define the roadmap for the nation’s AML overhaul.

In response, the government has introduced an updated legislative framework, anchored by amendments to the 2022 Law on Anti-Money Laundering and new implementing guidance under Circular 09. These measures aim to harmonize Vietnamese standards with FATF’s Recommendation 15, which governs virtual assets and their service providers. The State Bank’s draft circular standardizes how exchanges, wallet providers, and token issuers are treated—as reporting entities obligated to conduct customer identification, monitor transactions, and maintain records.

Inter-agency cooperation has become increasingly structured. The State Securities Commission and the Vietnam Blockchain and Digital Assets Association are now jointly assessing the risk exposure of crypto assets. This coordination signals the government’s acknowledgment that financial integrity must evolve in step with technological innovation. Under the current roadmap, five domestic digital trading platforms are slated to operate under a licensed regime by 2030, each required to prove adherence to AML and counter-terrorist financing protocols.

The National Assembly has passed resolutions assigning specific mandates to ministries within the broader AML/CFT action plan. The Ministry of Public Security is expanding financial intelligence capacity, while customs and tax authorities are heightening surveillance of cross-border fund flows. These reforms extend beyond financial services to sectors such as real estate, precious metals, and online gaming—areas identified as potential channels for illicit finance.

Vietnam’s grey list status is far from symbolic; it directly affects its access to international financial networks. Grey-listed jurisdictions face enhanced due diligence from global banks, leading to higher transaction costs and longer processing times. Correspondent banking relationships may weaken, restricting liquidity and the efficiency of international payments. The private sector feels these effects acutely, with exporters and investors facing elevated scrutiny from foreign compliance desks. Consequently, removing Vietnam from the FATF grey list has become both an economic and regulatory imperative.

The rapid expansion of digital assets has further complicated the AML landscape. FATF’s core concern lies in the anonymity and speed of cryptocurrency transactions. Vietnam’s growing community of crypto investors has embraced digital assets as speculative instruments, yet many platforms continue to operate without licensing or effective identity verification. Investigations have uncovered layering techniques involving crypto wallets, offshore exchanges, and peer-to-peer transfers—tactics that allow illicit funds to move beyond the reach of traditional monitoring systems. Law enforcement has traced several cases where local exchanges served as gateways between fiat and stablecoins such as Tether, followed by cross-border transfers through decentralized networks. These structures mirror classic laundering typologies but with enhanced complexity and instantaneous execution.

The overlap between cybercrime and AML compliance has become increasingly pronounced. Fraudulent token offerings, “rug pull” scams, and online investment frauds have multiplied, and when illicit proceeds are converted into crypto assets, they often transit through Vietnam’s expanding fintech ecosystem before cashing out. The State Bank’s financial intelligence unit has identified these transaction flows as high-risk, underscoring the urgent need for more sophisticated suspicious transaction reporting and analytical capabilities.

Another longstanding weakness involves beneficial ownership transparency. Corporate registries often lack detailed data on the ultimate shareholders behind fintech ventures and offshore-funded platforms. Without accurate beneficial ownership information, regulators face blind spots in tracing control structures within ostensibly legitimate enterprises. FATF evaluators noted that while Vietnam has legislated ownership disclosure requirements, their enforcement remains fragmented, particularly for foreign-linked entities.

To address this, authorities are moving to centralize beneficial ownership data through an integrated national register that will link with the forthcoming National AML Data Center. This system will enable automated screening of corporate entities against sanctions and watchlists—a step toward real-time, data-driven supervision modeled on advanced financial jurisdictions. Still, the effort hinges on improved inter-ministerial data sharing, a long-standing challenge in Vietnam’s bureaucratic structure.

True reform, however, depends on enforcement rather than legislation. Vietnam’s record of prosecuting AML-specific cases remains uneven. While the country has successfully pursued large corruption cases under domestic criminal law, few suspicious transaction reports have resulted in convictions, a shortfall highlighted by FATF during its most recent review. Many banks continue to approach compliance as a box-ticking exercise, relying on manual monitoring and static risk models. Training disparities and uneven financial literacy, particularly in rural regions, have further weakened frontline detection capabilities.

The State Bank has sought to correct this through on-site inspections and mandatory enterprise-wide risk assessments, requiring institutions to document how their AML risks are mitigated. Yet the financial intelligence unit continues to operate under resource constraints, with limited personnel and technical infrastructure compared to the scale of the nation’s financial system. Cross-border cooperation with foreign FIUs has improved but remains largely case-specific, lacking automated data exchange mechanisms.

Political will has emerged as the critical variable in sustaining reform momentum. Vietnam’s leadership recognizes that remaining on the grey list carries geopolitical costs—dampening investor confidence, complicating trade negotiations, and reinforcing perceptions of weak governance. By contrast, regional peers such as Malaysia and Thailand have strengthened their AML frameworks, raising the competitive pressure on Hanoi.

The focus on digital assets embodies both the challenge and the opportunity of Vietnam’s current reform drive. The government aspires to position the country as a digital finance hub, but that ambition depends on building international trust. Officials have promoted a “clean innovation” strategy—encouraging blockchain development while embedding stringent compliance standards. By integrating AML expectations into the regulatory framework for digital assets, Vietnam aims to demonstrate to FATF that it can balance innovation with integrity.

Nevertheless, several obstacles persist. Independent oversight of reform progress remains limited, and civil society groups have called for greater transparency in enforcement statistics and prosecution data. FATF evaluators will ultimately judge success based on measurable outcomes, not legislative pledges. Failure to demonstrate progress in the next review cycle could extend Vietnam’s grey list tenure—or even risk elevation to the high-risk category.

The path to removal from enhanced monitoring is challenging but achievable. Vietnam’s national AML/CFT strategy outlines clear milestones aligned with FATF’s evaluation timeline, including deadlines for legal amendments, risk assessments, and cross-agency coordination. Authorities intend to submit a progress report emphasizing the establishment of beneficial ownership registries, risk-based supervision, and regulation of virtual asset service providers.

For the financial sector, the transformation must be cultural as well as procedural. Compliance can no longer be treated as an administrative formality—it requires advanced analytics and automation. Banks are expected to adopt AI-driven transaction monitoring, streamline suspicious activity reporting, and establish independent compliance units with direct oversight from senior management.

The broader test lies in unifying the country’s fragmented AML ecosystem, which spans banks, securities firms, insurers, and payment providers regulated by different agencies. To address this, a national coordination council under the Prime Minister’s office has been established to review progress quarterly and ensure full alignment with FATF’s expectations.

Vietnam’s removal from the grey list will ultimately depend on FATF’s International Cooperation Review Group, which will assess both technical compliance and real-world effectiveness. Successful precedents from countries like the Philippines and Morocco suggest that strong political coordination and transparent communication can expedite delisting. Vietnam appears to be following this model through expanded collaboration with international partners on technical assistance and capacity-building programs.

Ultimately, the success of Vietnam’s AML reforms will be measured not by the number of laws passed, but by the resilience of its financial system against abuse. The expansion of the digital asset market represents both a risk and an opportunity: if Vietnam can prove that its controls prevent laundering without stifling innovation, it may turn its grey list challenge into a milestone of credibility and reform maturity.

By fLEXI tEAM