Vietnam was relatively unscathed by the COVID-19 pandemic, which has allowed its government to focus less on recovery and more on spearheading ambitious economic, digital and social reforms. Indeed, the Southeast Asian nation had one of the world’s highest economic growth rates in 2020, at 2.9%, and it is projected to grow by 6.5% in 2021.1 Alongside its promising economic prospects, the traditionally agrarian and cash-reliant country is in the midst of a booming digital transformation. Although cash use remains high and many consumers are skeptical of e-commerce, Vietnam’s young and tech-savvy population, increasing internet connectivity and shifting consumer preferences have accelerated the country’s digitalization of economy and society. Indeed, Vietnam ranks fifth in the world for its digital evolution momentum on the 2020 Digital Intelligence Index (DII), developed by Tufts University’s Fletcher School and Mastercard.
The COVID-19 pandemic was particularly instrumental in driving Vietnamese towards digital payment solutions. E-commerce soared by 18% in 2020 from 20192 and contactless payments penetration was up 230% in the first quarter of 2021 compared to the same period in 2020.3 This trend is only expected to accelerate, with mobile transactions forecasted to grow by 300% between 2021 and 2025.4 The digital economy as a whole is projected to reach USD $52 billion by 2025.5
The Vietnamese government and banking sector have welcomed this surge in digitalization, which will attract more fintech and foreign direct investment funds, boost financial inclusion and help Vietnam to compete with other ASEAN and global markets. Banks have readily adopted digital solutions like biometric authentication and online banking, and the government has been especially eager to tap into 2020’s digital wave. On 03 June 2020, the government passed the “National digital transformation program to 2025, with orientation to 2030,” which aims to develop and support Internet of Things (IoT) infrastructure, digital government platforms and network security, with 70% of all customer transactions completed through digital channels by 2025.6 The 2021 digital agenda focuses on the development of artificial intelligence, online banking solutions, data protection and the regulation of cryptocurrencies. A regulatory sandbox for fintech is reportedly in the works. Going forward, the government must ensure that its regulatory framework keeps up with the rapid pace of digitalization and mitigates the risks that come with it.
Financial Regulatory Authorities
The State Bank of Vietnam (SBV) is the central bank of Vietnam.
The National Financial Supervisory Commission (NFSC) supports the Prime Minister in the supervision of the financial markets.
Policy, Laws and Regulations
Ministry of Finance Commissions Research Group on Cryptocurrencies, 30 March 2021
The Ministry of Finance commissioned a research group to study cryptocurrencies, with the goal of eventually developing legislative reform. The research group has been assigned with understanding the cryptocurrency industry, crafting legislation that takes into account its rapidly evolving landscape, recommending structural changes that create supervisory bodies and recommending measures to these bodies. In developing legislation, the research group will analyze crypto regulations from Japan, the EU and US. The group is composed of nine members from state agencies and is headed by Phạm Hồng Sơn, deputy chairman of the State Securities Commission. The issuance, supply and use of virtual currencies are currently illegal in Vietnam, and violations can incur fines of up to VND 300,000,000 (approximately USD $12,900) or imprisonment of up to three years.7 However, the possession of crypto assets is not explicitly prohibited, which has created uncertainty. A more comprehensive regulatory framework would be beneficial in allowing Vietnam to tax cryptocurrency holdings, clear up legal uncertainties and ensure that dealings in virtual currencies adhere to AML legislation.
The State Bank has been particularly adamant in cracking down on crypto ever since a high-profile 2018 crypto scam cost investors a total of approximately USD $658 million.8 In January 2021, the State Bank issued a directive to organizations issuing bank cards, intermediary payment service providers and representative offices of foreign banks, calling on them to monitor transactions to ensure they do not involve illegal activity, including cryptocurrency.9
Vietnamese Prime Minister promulgated the National Strategy on the Research, Development and Application of Artificial Intelligence until 2030, which outlines goals for 2025 and 2030. Targets for 2025 include boosting the number of AI startups and investment funds for the sector, alongside the widespread adoption of AI in public administration. Targets for 2030 include establishing Vietnam amongst the top four ASEAN countries and top fifty global countries for AI, the creation of three national centers for big data storage and high-performance computing, the creation of three national AI innovation centers and the application of AI towards encouraging economic growth. The plan further outlines goals for fifteen government ministries, including the State Bank. Overarching themes include bolstering public sector productivity, lowering costs and waiting times, and strengthening national security. Vietnam has already made significant strides towards the digitalization of government. In December 2020, the Vietnamese Ministry of Information and Communications inaugurated the national data portal, which will enable citizens’ digital access to documents, apps, services and tools supplied by government agencies.
Ministry of Public Security Releases Second Version of Draft Decree on Personal Data Protection, 09 February 2021
The Ministry of Public Security (MPS) released the second version of the Draft Decree on Personal Data Protection, the first version of which was issued in 2019. The new draft is more comprehensive and imposes stricter noncompliance measures. Like Europe’s GDPR, the decree has extraterritorial scope in that it would apply to all organizations and individuals that conduct activities related to the processing of Vietnamese’ personal data, even if the organization or individual is not physically located in Vietnam. Proposed regulations include the creation of a Personal Data Protection Committee (PDP Committee) to oversee compliance, a fine of up to 5% of total revenue generated in Vietnam for a repeat violation, notification of the data subjects of all personal data processing activities and obtaining data subjects’ consent before processing of personal data. Cross-border transfers of personal data may only be conducted if certain conditions have been met, including data subjects’ consent, the storage of the original data within Vietnam and written permission by the PDP Committee. The processing of sensitive personal data must be registered with the PDP Committee before the start of processing.
State Bank Issues Circular on Remote Onboarding and eKYC, 04 December 2020
The State Bank of Vietnam issued Circular 16, which enables remote onboarding (the “e-method”) for the opening of individuals’ payment accounts and eKYC. Banks and foreign banks’ branches (banking entities) that employ the e-method must include several steps in their procedures:
- Collection of information for the individual payment account opening dossier as required
- Verification of KYC information
- Warning to customers regarding prohibited acts during the opening and use of accounts by the e-method
- Require customers to sign the payment account opening and user agreement
- Inform customers about important account details such as activation date and transaction limit10
For the eKYC, banking entities may develop their own procedures as long as minimum standards are met, including adequate procedures for risk management, storing and preserving eKYC information. Banking entities must also take a risk-based approach to setting transaction limits, with a cap on debit transactions at VND 100 million (approximately USD $4,380) per customer per month. The threshold may be higher if banks conduct video calls to verify the customer’s identity. The circular went into effect 05 March 2021.
1. Dabla-Norris, Era and Yuanyan Sophia Zhang. “Vietnam: Successfully Navigating the Pandemic.” International Monetary Fund, 10 March 2021. https://www.imf.org/en/News/Articles/2021/03/09/na031021-vietnam-successfully-navigating-the-pandemic.
2. “Vietnam’s e-commerce market generates $11.8 billion in 2020.” VietNamNet, 26 January 2021. https://www.google.com/search?q=vietnam+net+news&rlz=1C1GCEB_enUS949US949&oq=vietnam+net+news&aqs=chrome..69i57j0i22i30l2.2799j0j7&sourceid=chrome&ie=UTF-8.
3. “Visa study finds Vietnamese consumers keen to adopt digital payments to adapt during COVID-19.” Visa, 28 April 2021. https://www.visa.com.vn/en_VN/about-visa/newsroom/press-releases/visa-study-finds-vietnamese-consumers-keen-to-adopt-digital-payments-to-adapt-during-covid-19.html.
4. Fintech and Digital Banking 2025 Asia Pacific. Backbase, February 2021. http://go.backbase.com/rs/987-MGR-655/images/Backbase_Fintech_%26_Digital_Banking_2025_APAC_2nd_Edition.pdf?utm_source=Organic&utm_medium=Website&utm_campaign=%5BOM%5D%20IDC%202025&_ga=2.57252578.951222327.1623849348-666338040.1623849348.
5. Boudreau, John and Xuan Quynh Nguyen. “Alibaba, Warburg Want Piece of Vietnam’s Online Boom.” Bloomberg, 01 June 2021. https://www.bloomberg.com/news/articles/2021-06-01/e-commerce-giants-take-aim-at-vietnam-s-booming-online-market.
6. “Vietnam National Digital Transformation Program Until 2025 And Direction Towards 2030.” Renovacloud. https://renovacloud.com/vietnam-national-digital-transformation-program-until-2025-and-direction-towards-2030/?lang=en.
7. “Cryptocurrency Trading Risks In Vietnam.” Lexology, 31 March 2021. https://www.lexology.com/library/detail.aspx?g=9b145865-da54-4036-9e4e-9bc95e873a79.
8. Meyer, David. “Vietnam Is Outraged Over a $658 Million Cryptocurrency Scam.” Fortune, 12 April 2018. https://fortune.com/2018/04/12/icos-cryptocurrency-scam-vietnam/.
9. Indochine Counsel. “Cryptocurrency in Vietnam.” Lexology, 18 January 2021. https://www.lexology.com/library/detail.aspx?g=893ff626-3bc9-4f96-be8d-bc22637b8a65.
10. “eKYC Allowed for Opening of Payment Accounts in Vietnam.” Indochine Counsel, December 2020. https://www.indochinecounsel.com/upload/news/SpecialAlert_eKYCAllowedforOpeningofPaymentAccountsinVietnam_Dec2020.pdf.
*DISCLAIMER: This information is OneSpan's interpretation of the compliance requirements as of the date of publication. Please note that not all interpretations or requirements of the applicable laws are well-settled and its application is fact- and context-specific. The information contained in this document should not be relied upon as legal advice or to determine how the law applies to your business or organization. We encourage you to seek guidance from your legal counsel with regard to law applying specifically to your business or organization and how to ensure compliance. This information is provided “as-is” and may be updated or changed without notice. OneSpan does not accept liability for the contents of these materials.
Last updated: November 2021