State Bank of Vietnam co-hosts World Bank workshop and sets out upgrades to related-party transaction supervision

The State Bank of Vietnam, together with the World Bank, held a workshop in Hanoi on managing and supervising transactions with related parties, with Deputy Governor Pham Quang Dung framing related-party transactions as a high-risk and technically complex area of banking supervision. He highlighted that weaknesses in legal clarity and supervisory depth can leave scope for moral hazard, opaque cross-ownership and financial fraud, and argued for an integrated approach combining clear rules, technology, analytical capability and inter-agency coordination. The central bank pointed to recent legal and regulatory steps, including the 2024 amended Law on Credit Institutions, which strengthened the definition of related parties, set clearer lending limits, embedded the arm’s length principle, and reinforced disclosure duties and transparent governance requirements for credit institutions. It also referenced implementing rules such as Circular 13/2018 on internal control systems and Circular 22/2019 on prudential limits and safety ratios, which include restrictions on credit exposures and limits on capital contributions and share acquisitions, alongside supervisory expectations for stronger internal controls, internal audit and risk management over related-party dealings. Looking ahead, the State Bank of Vietnam said it is reviewing and upgrading sub-law instruments to better align with international standards, including the Basel Core Principles and Financial Action Task Force recommendations on ownership transparency, as well as practices in consolidated, risk-based and conduct supervision. The workshop sessions also covered practical supervisory cases and technology-enabled tools, including ownership-network analytics and SupTech, with discussion linking related-party oversight to anti-money laundering approaches focused on beneficial ownership transparency and licensing practices.