Conditions for an economic organization to do business as a foreign currency exchange agent

Posted date: 09/12/2020

My company does business in accommodation services with 4-star hotels ranked by the state management agency on tourism. My company’s hotels often have foreigners staying and they often need to exchange foreign currency. I want to ask about the conditions to be met if my company wants to do business as a foreign currency exchange agent? Will I be penalized if I exchange currency without registration? Looking forward to hearing from you soon.

FDVN’s Opinions:

Thank you very much for submitting questions to FDVN Law Firm (FDVN). After studying relevant legal regulations, FDVN has some opinions for your consulting request as follows:

First, the conditions for performing foreign currency exchange agency activities:

It is regulated in Decree No. 89/2016/ND-CP on requirements applicable to business entities acting as currency exchange agents or providing foreign currency receipt and payment services that “A business entity is entitled to act as a currency exchange agent only after it is issued with a certification of registration of currency exchange agent by the State bank of Vietnam.”

Accordingly, only after being granted the Certificate of Currency Exchange Agent Registration by the State Bank of Vietnam can your company carry out the foreign currency exchange agent operation. And the conditions for the State Bank of Vietnam to consider and grant a certificate of registration of currency exchange agent are specified in Article 4 of Decree No. 89/2016/ND-CP:

[1]. It has its currency exchange agent located in one or more of the following locations:

a) Tourist accommodation establishments ranked at least 3 stars by a tourism authority;

b) International checkpoints (road, air, water);

c) Prize gaming facilities for foreigners which are licensed as prescribed by law;

d) Ticket offices of the airlines, maritime, foreign travel, and international ticket offices of Vietnam airlines;

e) Tourist areas, shopping malls, and supermarkets where many foreigners visit and go shopping.

[2]. The procedures for foreign exchange operations must be available; methods for ensuring security and safety during the foreign exchange process must be adopted; the notice of exchange rates and the signboard specifying the name of the authorizing credit institution and the name of the foreign exchange agent must be available at the transaction location;

[3]. It is authorized by the credit institution to act as a currency exchange agent.

According to the information provided by you, your company has met condition [1] on the foreign currency exchange location, so it is considered and issued the Certificate by the State Bank of Vietnam. Foreign currency exchange agent registration Your company needs to meet the additional conditions [2], [3] as cited and analyzed above. Besides, one economic organization is only allowed to act as one foreign currency exchange agent for an authorized credit institution.

Second, the provisions on handling foreign currency exchange without permission.

If your company has not been considered and issued the Certificate of Foreign Currency Exchange Agent Registration by the State Bank of Vietnam before you have carried out this activity, depending on the nature and level of the act, you shall be administratively sanctioned or liable to a related criminal liability, specifically:

[1]. Regarding the level of administrative sanctions:

Under the provisions of Article 23 Decree No. 88/2019/ND-CP providing for penalties for administrative violations in the monetary and banking sector, selling and buying foreign currency at an unlicensed currency exchange entity will be fined with a fine range up to 20,000,000 VND

In addition, these acts are also subject to an additional penalty which is “Foreign currency or VND cash shall be confiscated if any of the violations” under the provision of Point a, Clause 9, Article 23 of this Decree.

[2]. About criminal liability:

According to Article 206 of the Criminal Code 2015 is amended and supplemented in 2017 on the crime of violating regulations on banking activities, other activities related to banking activities: “A person who deliberately commits any of the following acts that cause a loss of from VND 100,000,000 to under VND 300,000,000 for another person shall be liable to a fine of from VND 50,000,000 to VND 300,000,000 or face a penalty of 06 - 36 months' imprisonment:

...

i) Illegally trading in gold or foreign currencies;”

Therefore, in order not to have to be sanctioned for administrative violations or possibly criminal liabilities related to foreign exchange trading activities, you need to carry out full procedures to be considered and issued the foreign currency exchange agent registration certificate by the State Bank of Vietnam.

Above is the advisory opinion of FDVN regarding your consultation request on the basis of researching legal provisions. Hopefully, the advice of FDVN will be useful to you.

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