SBV proposes allowing foreign credit institutions to use local accounts for international payments

The State Bank of Vietnam (SBV) has proposed foreign credit institutions be allowed to use accounts opened at Vietnamese banks for international payment and money transfer services to facilitate international payment and promote financial integration.

The proposal is raised in a draft amendment to Circular 16/2014/TT-NHNN governing the use of foreign currency and Vietnamese đồng accounts by residents and non-residents at authorised banks. The draft is currently available for public comment.

Rapid changes in international trade, foreign investment flows and digital finance have exposed gaps in the existing regulations, according to the SBV.

One of the most notable proposed amendments would introduce regulations governing the use of foreign currency and Vietnamese đồng accounts opened by foreign credit institutions at authorised banks in Việt Nam.

The SBV said Vietnamese commercial banks must rely on correspondent banking networks with overseas lenders to process international payments for clients. Similarly, foreign financial institutions are increasingly seeking to open correspondent accounts at Vietnamese banks to support payment and transfer services for customers engaged in trade with Việt Nam.

However, existing regulations do not provide guidance on the use of correspondent accounts for payment and money transfer between commercial banks in different countries.

Under the draft, foreign credit institutions would be allowed to use such accounts both for international payment services on behalf of clients and for their own operational transactions.

The amendment aims to provide a clearer legal basis for cross-border settlement and better reflect current market practices, the SBV said.

Changes to regulations governing Vietnamese đồng income sources for non-resident organisations, individuals and foreign residents are also proposed under the draft.

Instead of requiring banks to verify that funds come from lawful income sources in Việt Nam, the revised wording would define them more broadly as income received from organisations and individuals in Việt Nam.

The SBV said the change is necessary, as banks face difficulties verifying documents for the large volume of Vietnamese đồng transactions conducted by foreigners, particularly through e-commerce platforms and online payment systems.

With the rapid growth of e-commerce, collection and payment services in Vietnamese đồng for foreign sellers on digital platforms are becoming increasingly common, the SBV said, adding that requiring supporting documents for every transaction creates operational challenges for banks.

However, the central bank stressed that controls would remain in place for outward remittances.

Under the draft, non-residents and foreign individuals seeking to purchase foreign currency using funds in their Vietnamese đồng accounts for transfer abroad would still need to provide documents proving the legality of the income source.