Laws of Vietnam

DECREE No.18-CP OF FEBRUARY 24, 1997, OF THE GOVERNMENT ON HANDLING VIOLATIONS OF ADMINISTRATIVE REGULATIONS IN THE FIELD OF BANKING

THE GOVERNMENT

DECREES

Chapter I

GENERAL PROVISIONS

Article 1.- Scope and subjects of regulation:

1. The violations of administrative regulations on banking include acts of the organizations and individuals in violation of regulations on State management in the field of banking, which are not so serious as to warrant examination for penal liability.

2. The scope of sanctioning violations of administrative regulations in the field of banking is defined in detail in articles of Chapter II of this Decree.

All domestic and foreign organizations and individuals that violate administrative regulations in the field of banking within the Vietnamese territory shall be sanctioned in accordance with this Decree, unless where the international conventions which Vietnam has acceded to provide otherwise.

Article 2.- The principles and statute of limitation for the sanctioning of violations of administrative regulations:

1. The principle for sanctioning violations of administrative regulations in the field of banking shall comply with Article 3 of the Ordinance on the Handling of Violations of Administrative Regulations.

2. The statute of limitation for sanctioning violations of administrative regulations in the field of banking is 2 years from the date the act of violation is committed.

Article 3.- The application of the main sanctions, additional sanctions and other measures against violations of administrative regulations in the field of banking is as follows:

1. For each act of violation of administrative regulations, the offending individual or organization shall be subject to one of the following main sanctions:

a) Warning;

b) Fine.

2. Depending on the nature and seriousness of the violation, the offending individual or organization shall be subject to one or many of the following additional sanctions:

a) Stripping for a limited or unlimited time of the operating license in monetary, credit, payment, foreign exchange and banking fields;

b) Confiscation of evidences and instruments employed in the act of violation of administrative regulations;

c) Partial restriction to or ban on the activities related to the fields of monetary, credit, payment, foreign exchange and banking.

3. Apart from the sanctions specified in Items 1 and 2 of this Article, the offending individual or organization may be subject to one of the following measures:

a) Forcible compensation for the damage;

b) Forcible restoration to the original state which has been changed by the violation of administrative regulations.

Chapter II

ACTS OF VIOLATION OF ADMINISTRATIVE REGULATIONS IN THE FIELD OF BANKING, FORMS AND LEVELS OF SANCTION

Article 4.- The sanctions against organizations and individuals that violate regulations on operating permits or representative office license in the field of banking:

1. A fine from 8,000,000 VND to 10,000,000 VND against the misuse of the operating permit or representative office license for an unlicensed purpose by a foreign bank or financial company in Vietnam;

2. A fine of 10,000,000 VND to 15,000,000 VND against one of the following violations:

a) A credit organization fails to pay the fee for the operating license as required by the State Bank;

b) A credit organization starts its operation before completing all the formalities specified in its operating license;

c) Allowing other(s) to use its operating permit or representative office license;

d) Using a name or its operating permit or representative office license not in accordance with the relevant regulations;

e) Operating not in accordance with its operational statute or with a statute modified without the approval of the State Bank;

f) Operating not in accordance with the specification of the license issued by the State Bank.

3. A fine of 15,000,000 VND to 20,000,000 VND against one of the following violations:

a) Operating in banking without an operating license or with an expired license;

b) Tampering with the operating permit or representative office license;

c) Splitting, merging or affiliating a credit organization without the approval of the State Bank.

4. Additional sanctions:

a) Stripping for a period of 3 months the right to use the operating license for violations specified in Points (a) and (c), Item 2, of this Article;

b) Stripping permanently the right to use the operating license for violations specified in Point (b), Item 2, of this Article.

Article 5.- A fine of 20,000,000 VND to 25,000,000 VND against one of the following violations:

1. Moving the head office or opening/closing a branch or representative office without the approval of the competent agency;

2. An organization or individual licensed by the State Bank to operate in monetary, credit, payment and banking services that conduct their operations without a transaction office or with a transaction office not in accordance with the relevant regulations;

3. Changing the head office of the organization or branches or representative office, or the business location, without the authorization of the State Bank.

Article 6.- A fine of 25,000,000 VND to 30,000,000 VND against the acts of unauthorized splitting, merging or affiliating credit organizations without the approval of the State Bank.

Article 7.- Warning against one of the violations of the regulations on the objects of preferential lending:

1. Giving preferential loans to the wrong objects;

2. Violating regulations on the levels of preferential loans.

Article 8.- Sanctions against the violations of the regulations on recruiting and assigning employees; and on the managerial operations of credit organizations:

1. Warning against credit organizations which commit one of the following violations:

a) To employ personnel which are banned by law;

b) Not to reassign to new jobs the functionaries and employees who work in accounting, storing, fund keeping and credit sections and who have violated discipline.

2. A fine of 15,000,000 VND to 20,000,000 VND against one of the violations of the safety regulations on banking operation:

a) Accumulating capital in excess of the limit provided for in the license;

b) Lending out not in compliance with the regulations of the State Bank;

c) Not complying with the regulations on ensuring the payment capability of the customers as required by the State Bank;

d) Violating legal provisions on capital contribution, joint venture and stock purchase;

e) Transferring stocks at variance with the provisions of law;

f) Violating legal provisions on financial deductions for establishing funds;

g) Using funds to pay dividends or transfer overseas at variance with the regulations of the State Bank.

3. Application of other measures:

a) To restrict or ban one of the related operations for the repeat of a violation described in Points (a), (b), (c) and (d), Item 2, of this Article;

b) To forcibly restore to the original state which has been changed by the violations specified in Points (e), (f) and (g), Item 2, of this Article.

Article 9.- Sanctions against violations of regulations on credit operation:

1. Warning against one of the following violations:

a) Not to maintain the credit documents as prescribed by the State Bank;

b) To renew overdue debts in more than the number of times prescribed by the State Bank.

2. A fine of 15,000,000 VND to 20,000,000 VND against one of the following violations:

a) Not to comply fully or properly with the lending conditions set by the State Bank;

b) To violate one of the provisions on collecting and paying profit, collecting fees and commissions and fines as provided for by the State Bank;

c) Not to conduct checks before, during and after the lending as prescribed by the State Bank;

d) Not to terminate the lending or take appropriate measures to recover the loan after discovering that the borrowing party is using the loan for wrong purposes.

Article 10.- Sanctions against one of the violations against the regulations of the State Bank on collateral, mortgage and guaranty for lending:

1. Warning against one of the following acts of violation:

a) To observe not properly the regulations on scopes and objects of collateral, mortgage and guaranty for bank lending as prescribed by the State Bank;

b) To observe not properly or fully the regulations of the State Bank on the forms of collateral, mortgage and guaranty for bank lending;

c) To observe not properly the regulations on the amount of loan compared to the value of the collateral, mortgage and guaranty as provided for the State Bank.

2. A fine of 25,000,000 VND to 30,000,000 VND against one of the following violations:

a) To accept collateral or property mortgage for lending not in compliance with the regulations of the State Bank;

b) To observe not properly or fully the regulations on obligations of the depositor and recipient of collateral, mortgage and guaranty for loan set by the State Bank;

3. Application of the additional sanctions and other measures:

a) To put partial restriction on or ban one of these operations: credit, guaranty or mortgage in case of repeat of a violation defined in Clause 2 of this Article;

b) Forcible compensation for damage in case of repeat of one of the violations defined in Points (a), (b) and (c), Item 1 of this Article.

Article 11.- A fine of 30,000,000 VND to 40,000,000 VND against one of the following violations of the regulations on guaranty and re-guaranty:

1. To conduct the loan guaranty and re-guaranty and guaranty for deferred-payment LC’s without observing fully the conditions set by the State Bank;

2. Failure to put aside or put aside not fully the amount of money required for the guaranty fund as regulated by the State Bank;

3. To provide guaranty or re-guaranty not in compliance with the provisions of the authorized levels as prescribed by law;

4. Other measures: to restrict or ban one of these operations: credit; guaranty, re-guaranty and guaranty for deferred-payment LC’s in case of repeat of a violation defined in Items 1, 2 and 3 of this Article.

Article 12.- Sanctions against violations of the regulations on foreign borrowing and payment:

1. A fine of 40,000,000 VND to 50,000,000 VND against an enterprise which takes direct foreign loans and commits one of the following violations:

a) Not observing or observing improperly the regulations on presenting documents signed with a foreign party to the State Bank or guaranteeing banks;

b) Not reporting or reporting not fully as required by the Government or the State Bank on the lending situation at, or the use of foreign loans by, the dependent enterprises and units.

2. A fine of 50,000,000 VND to 70,000,000 VND against organizations which take or pay back foreign loans not through the channel of the banking system as required by law.

Article 13.- Sanctions against violations of the regulations on import and export of gold and silver:

1. A fine of 15,000,000 VND to 20,000,000 VND against one of the following violations:

a) Exporting or importing gold and silver without a license;

b) Exporting or importing gold and silver at variance with the provisions of the license;

c) Buying, selling or transferring the license for exporting or importing gold and silver;

d) Importing gold through consignment of an enterprise which is not satisfying the conditions set by the State Bank;

e) Not reporting the result of consignment import of gold as prescribed by the State Bank.

2. Application of additional sanctions or other measures:

a) Confiscating the goods in case of a violation defined in Points (a), (b) and (d), Item 1, of this Article;

b) Stripping the license for a period up to 3 months in case of a violation defined in Point (c), Item 1, of this Article;

c) Restricting or banning the import of gold and silver in case of a violation defined in one of the points in Item 1 of this Article.

Article 14.- Sanctions against violations of the State regulations on control of foreign exchange:

1. Warning against failure to post publicly the exchange rates of foreign currencies as prescribed by the State Bank.

2. A fine of 5,000,000 VND to 8,000,000 VND against one of the violations of the regulations of the State Bank on exchange rates for selling and buying foreign currencies and for payment in foreign exchange.

3. A fine of 10,000,000 VND to 15,000,000 VND against one of the following violations:

a) Buying, selling and receiving foreign currencies without a license of the State Bank;

b) Lending and paying in foreign currencies not in compliance with the regulations of the State Bank;

c) Not depositing the received foreign currencies at a State Bank as required by law;

d) Not abiding by the regulations of the State Bank on the state of foreign currencies.

4. A fine of 40,000,000 VND to 50,000,000 VND against an economic organization which opens or uses an overseas bank account in foreign currencies without the permission, or not in line with the permission, of the State Bank.

5. Application of additional sanctions:

a) Stripping the right to use the license for a period of up to six months in case of a repeat of a violation of the provision of Item 2 of this Article.

b) Confiscating the involved foreign currency for a violation of the provisions in Point (a) of this Article.

Article 15.- Sanctions against an enterprise which is established and operates under the Law on Foreign Investment in Vietnam and which violates the legal regulations on management of foreign exchanges:

1. A fine of 15,000,000 VND to 20,000,000 VND for the failure to submit periodical reports as required by the State Bank on the operation of the overseas bank accounts;

2. A fine of 40,000,000 VND to 50,000,000 VND against one of the following violations:

a) Not observing properly the regulation of depositing and using capital and revenues in foreign exchange in accounts at the Bank as required by law;

b) Taking foreign loans without the approval of the State Bank;

c) Using foreign exchange bank accounts not in compliance with the provision of law.

3. A fine of 80,000,000 VND to 100,000,000 VND against an organization or individual that transfers foreign exchange overseas not in line with the provision of the State Bank.

4. Application of additional sanctions: restricting or withdrawing the license on operations in foreign exchange in case of the repeat of a violation of the provision of Items 1 and 2 of this Article.

Article 16.- Sanctions against violations of the regulations on payment:

1. Warning against one of the following violations:

a) Violation of the regulations of the State Bank on opening bank accounts for customers;

b) Violation of the timing of payment for customers;

c) Improper observance of the regulation of the State Bank on the procedures for payment and money transfer.

2. A fine of 15,000,000 VND to 20,000,000 VND against an organization or individual that commits one of the following violations:

a) Issuing checks in excess of the balance of the checking account;

b) Tampering with payment documents;

c) Making payment or transfer in checks which under State Bank regulation have expired their validity;

3. Application of additional sanctions and other measures for violations defined in this Article:

a) Confiscating the evidences and instruments involved in the violations defined in Points (a), (b) and (c), Item 2, of this Article;

b) Forcible restoration of the original state with regard to the violations defined in Point (a), Item 2, of this Article.

Article 17.- A fine of 8,000,000 VND to 10,000,000 VND against one of the violations of the regulations on reporting and keeping documents of banking operations:

1. Reporting not in time as required by the State Bank;

2. Not submitting in full the reports or making reports not in the forms required by the State Bank;

3. Disclosing secrets about the following reports and documents:

a) The balance of accounts and the statistics on cash volume and balance of deposits made by customers;

b) The control samples of signatures and electronic codes of holders of accounts used in payment.

Article 18.- Sanctions against the acts of hindering the work of inspection, control and recommendation of the Inspector:

1. Warning against one the following violations:

a) Delaying, evading or refusing to produce documents, dossiers, statistics and data requested by the Inspecting organization or team, or using tricks to counter the Inspectors who are carrying out their duty;

b) Not implementing the recommendations made by the Inspection team after having accepted them.

2. A fine of 15,000,000 VND to 20,000,000 VND against one of the following violations:

a) Hiding or tampering with documents and books, or replacing evidences which are being under investigation;

b) Unauthorized removing and moving, or employing other acts, to change the sealing of stores, funds, safes of money, gold and gemstones, accounting documents, credit dossiers, guaranty dossiers or evidences under seal or temporary seizure, which acts have not caused damage.

Chapter III

JURISDICTION AND PROCEDURES FOR SANCTIONING VIOLATIONS OF ADMINISTRATIVE REGULATIONS IN THE FIELD OF BANKING

Article 19.- The jurisdiction in sanctioning violations of administrative regulations in the field of banking:

1. The Governor of the State Bank has the powers:

a) To issue warnings;

b) To impose a fine up to 100,000,000 VND;

c) To administer additional sanctions and other measures defined in Items 2 and 3, Article 3, of this Decree.

2. The General Inspector of the State Bank has the powers:

a) To issue warning;

b) To impose a fine up to 20,000,000 VND;

c) To administer additional sanctions and other measures stipulated in Item 2, Item 3 of this Decree.

3. The Chief Inspector at the provincial or municipal branch of the State Bank has the powers:

a) To issue warnings;

b) To impose a fine up to 10,000,000 VND;

c) To confiscate evidences and instruments used in the violations of the administrative regulations;

d) To administer other measures difined in Point (b), Item 3, Article 3, of this Decree.

Article 20.- In case the personnel with the vested power in handling violations of administrative regulations is absent, his/her deputies shall have the powers defined in Article 19 of this Decree.

Article 21.- The order and procedures for handling violations of the administrative regulations in the field of banking shall comply with Articles 45, 46, 47, 48, 49, 50, 51, 52 and 53 of the Ordinance on the Handling of Violations of Administrative Regulations.

Article 22.- The forcible implementation of the Decisions on handling of violations of administrative regulations shall be conducted in accordance with Article 55 of the Ordinance on the Handling of Violations of Administrative Regulations.

Article 23.- The complaints, denunciation and the handling of the complaints and denunciations of violations of administrative regulations in the field of banking shall comply with Articles 87, 88, 89 and 90 of the Ordinance on the Handling of Violations of Administrative Regulations and the provisions of the Ordinance on Complaints and Denunciations.

Article 24.- The handling of cases involving personnel with competence to handle violations of administrative regulations in the field of banking:

The personnel with competence to handle violations of administrative regulations in the field of banking who condone and cover up violators, fail to mete out sanctions or handle not in accordance with the provisions of law, or handle the violations in excess of their competence, shall, depending on the seriousness of their violations, be disciplined; subject to examination for penal liability if their violations contain criminal factors; and subject to forcible material compensation for the damage caused by their violations as provided by law.

Chapter IV

IMPLEMENTATION PROVISIONS

Article 25.- The Ministers, the Heads of the ministerial-level Agencies, the Heads of Agencies attached to the Government, the Presidents of the People’s Committees of the provinces and cities directly under the Central Government, shall have to implement this Decree.

This Decree takes effect from the date of its signing. All the earlier provisions which are contrary to this Decree are now annulled.

The Governor of the State Bank shall have to provide guidance for the implementation of this Decree.

On behalf of the Government

For the Prime Minister

Deputy Prime Minister