On 28 February 2019, the State Bank of Vietnam (the "SBV") issued Circular No.02/2019/TT-NHNN ("Circular No. 02"),amending Circular No. 23/2014/TT-NHNN ("Circular No. 23") dated 19 August 2014 of the SBV, on guidelines for the opening and use of payment accounts opened at payment services providers.

Circular No. 02 takes effect from 01 March 2019, repealing Circular No.32/2016/TT-NHNN dated 26 December 2016 of the SBV on amendments to Circular No. 23 ("Circular No. 32"), as amended by Circular No. 02/2018/TT-NHNN dated 12 February 2018 of the SBV.

Previously, Circular No. 23allowed for organisations being non-legal entities, such as representative offices, NGOs and funds, to open payment accounts, and the legal representative of such an organisation would be the account holder. However, under Circular No. 32, non-legal entities were no longer allowed to open payment accounts, causing issues and raising a number of concerns for the business communities in Vietnam. These communities have repeatedly held discussions with the relevant State authorities, including the SBV and the Ministry of Justice, in an effort to find a solution to this issue. Ultimately, Circular No. 02hasbeenissued as a solution.

A broad overview of some key provisions of Circular No. 02 areas follows:

1. The right of non-legal entities to open payment accounts and be account holders in accordance with Vietnamese law

Under Circular No. 32,only legal entities are allowed to open payment accounts. Circular No. 02 reverts back to the same position under Circular No. 23,providing that all organizations legally established and operating under Vietnamese laws and regulations, including legal and non-legal entities, are entitled to open payment accounts at banks or foreign bank branches in accordance with the laws and regulations, while allowing organizations opening the corporate account to be the account holders.

As such, under Circular No.02, non-legal entities are allowed to open and be the holders of payment accounts, so long as they are legally established and operating in accordance with Vietnamese laws

2. Transitioning from Circular No. 32 to Circular No. 02

For payment accounts opened before 01 March 2017, Circular No. 02requires banks and foreign bank branches to coordinate with organisations being non-legal entities to change the account holders as the organization without having to sign another account opening and use agreement, unless otherwise requested by the customers.

Under Circular No. 32, banks and foreign bank branches must cooperate with organisations being non-legal entities to re-sign the account opening and use agreement to convert the payment account into an individual payment account, corporate payment account, or shared payment account; or to close the account by no later than 01 March 2019.Under Circular No.02, if this conversion has been performed, banks and foreign bank branches must notify the customers on the possible agreement and change the name of the account holder in accordance with a written request from the customer.

3. Retaining other provisions of Circular No. 32

Other than the points discussed above, Circular No. 02 retains most provisions under Circular No. 32, including: removing chief accountant's and person in charge of the accounting's right to authorise another person for the use of the account amendments to the procedures and documentations for opening of payment accounts; banks and foreign bank branches' responsibility to receive trace request and complaints from customers and timeline for handling trace requests and complaints; and removing signs of fraud and breach of law as a circumstance under which a payment account can be frozen

Should you like to discuss any queries or concerns in relation to any of the above, please do not hesitate to contact us.

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