Thursday, December 1, 2011
Transfer Money Out of Vietnam
People and companies that operate from countries with minimal capital control measures are used to transferring money out of their countries and receiving money from foreign parties reasonably quickly with minimal fuss, as long as the transfers are for legitimate purpose. Of course, in present circumstances, all countries with modern banking institutions have put in place regulatory measures to detect, identify and penalize potential money transfers of illegal nature (for example money laundering). People and companies that wish to transfer/receive money normally compare simple issues of cost, exchange rates, financial soundness of the institution and speed of transfer. Some may also consider more mundane issues such as convenience (does the institution have a branch nearby) and customer service (are staff in the institution helpful and courteous).
However, to transfer money out of a country with strict capital control measures is not as simple. A good example is Vietnam. Even when a Vietnamese resident/company has a perfectly legitimate reason to transfer money out of the country, it is procedurally troublesome, bordering on impossible. Many people who are new visitors to Vietnam and staying in the country for an extended period of time encounter this issue only when they need to to their family in their home country. What seems like a simple and perfectly legitimate money transfer rapidly turns into a bureaucratic nightmare. Vietnam banks, in accordance with regulatory requirement, will demand that the remitter produce documents to prove the source of the money, purpose of the transfer, etc. Even though the regulations are supposed to be applied uniformly across all banks, the remitter soon realize that different banks, different branches of the same bank, even different staff of the same branch, can somehow give different accounts of the procedure and documents required. Attempts to seek clarification or worse, complain against a bank staff to his/her management, are useless and only serve to make one more confused and frustrated. Attempting to via banks can be a real test of one's patience.
Physically carrying large amount of money out of Vietnam is also not possible. Even if one is willing to cast aside concern of fund safety to carry a large sum of money out of Vietnam, he has to first seek approval from relevant Vietnam authorities if the cash he intends to carry is more than USD7,000 (or its equivalent in another currency). This is a process that is even more troublesome than trying to transfer through banks. Attempting to bring more than USD7,000 (or its equivalent in another currency) out of Vietnam without necessary approval is a serious offence in Vietnam. People caught and convicted of this offence face heavy penalty.
Basically, Vietnam regulations make it highly difficult to officially transfer money out of the country. As a result, unofficial channels have grown to help people . Remitters who go through these unofficial channels incur significantly lower fees while receiving much more favorable exchange rates. Naturally, these unofficial channels are discreet about their service. The service providers are known only to a core group of regular customers and they usually only accept new customers introduced by existing customers. The service providers are cautious of accepting new customers as they do not want to be unwittingly involved in any money laundering activities. They know clearly they exist to assist people and companies with legitimate needs , not to help criminals launder money.
Such unofficial channels have proven to be useful and important to Vietnam residents (be it Vietnamese citizens or foreigners) and companies operating from Vietnam. As long as Vietnam continue to impose capital control measures in their current form, these unofficial channels will play a valuable role in facilitating business transactions and should be welcomed by all as a viable alternative to official channels.
The author has extensive experience (more than 10 years) doing business in Vietnam.