Coming clean on money laundering

The market is determined to get its house in order despite a dip on news of the initiative

The Ministry of Finance has just issued Circular  148/2010/TT-BTC to guide anti-money laundering measures in equities, insurance and electronic gambling games. The circular regulates that all equities transactions worth VND200 million ($10,200) per day for individuals and VND500 million ($25,600) for institutions will be placed under supervision.

“The trades will be kept in records which can be sent to regulators if requested. Doubtful cases will be reported to regulators within 48 hours,” according to the circular, effective 45 days after the signing date of September 24.

The circular also specifies that reactivating of trading accounts which see no transaction after one year as suspicious cases if there is no sound reason for reactivation.

Suspicious cases also include unusual trading of retail or institutional investors in one trading or several sessions, put-through trading without sound reasons, trading financed by investment funds operating in high money laundering areas.

Market analysts said while the market sentiments were weak and macroeconomic news was not positive, the issuance of this circular made the country’s stock market less attractive.

“Investors dumped stocks after hearing such news,” PetroVietnam Securities Incorporated (PSI) analysts said in a note to clients. On October 20, the VN-Index plunged 2.65 per cent on concerns over the new money laundering regulation.

A Ho Chi Minh City Securities Corporation (HSC) analyst said this was the first time a new anti-money laundering regulation was applied on Vietnam’s stock markets.

“Like most new regulations it is a question of getting used to it but at the moment investors feel like their cup of woe is overflowing,” said Fiarch Mac Cana, HSC’s head of research.

Market observers said that it was difficult to supervise such trading values as the market’s total value was worth around VND1,000 billion ($51 million) and each securities firm had to have staff to do such jobs, which caused higher cost burdens to them.

In a related development, the circular also regulates that individuals pay insurance fees at VND200 million a day are considered as huge value and have to be closely watched.

another news, the circular also regulates that individuals pay insurance fees at VND200 million a day are considered as huge value and have to be closely watched.