AML in ASEAN: Where does Vietnam stand compared to other jurisdictions?

AML in ASEAN has emerged as a critical pillar for preserving financial integrity and fostering sustainable foreign direct investment.

Within the region, Singapore stands out as the clear leader, with Singapore AML laws and regulations providing a model of strict supervision and enforcement. Malaysia, Thailand, and the Philippines have each advanced their frameworks, though vulnerabilities exist in sectors such as tourism and gaming. Indonesia and Vietnam, meanwhile, are still developing their systems.

Vietnam AML regulations have improved in recent years through reforms, yet enforcement and institutional capacity continue to lag.

Against a backdrop where ASEAN’s FDI inflows reached record levels in 2023 and Vietnam alone attracted USD 15.4 billion in the first eight months of 2025⁽¹⁾, this article evaluates Vietnam’s AML standing among its ASEAN peers and its implications for attracting investment.

How are ASEAN AML regimes progressing?

ASEAN continues to attract record levels of foreign direct investment, with inflows reaching USD 230 billion in 2023⁽²⁾, the highest ever recorded. Among the factors driving growth is the growing emphasis on AML in ASEAN, which has become a decisive consideration for global investors assessing jurisdictional risk and long-term confidence.

Let’s examine several key examples across the area to understand how different AML regimes compare and where Vietnam stands in the landscape.

The FATF and APG framework

What is the FATF?

The Financial Action Task Force (FATF) sets the global benchmark for combating money laundering and terrorist financing. Its 40 Recommendations form the backbone of AML laws worldwide, and member states undergo periodic mutual evaluations to measure both technical compliance and effectiveness.

What is the APG?

In Asia, the AML work is carried out by the Asia/Pacific Group on Money Laundering (APG), a FATF-style regional body with over 40 member jurisdictions. They include all ASEAN countries. The APG conducts mutual evaluation reviews, publishes typology reports on emerging risks, and provides technical assistance to help members close gaps in their AML systems.

Most importantly, APG assessments not only evaluate whether laws are in place, but also assess whether countries achieve tangible results, such as successful prosecutions, asset recovery, and the effective use of financial intelligence.

In the case of Vietnam, APG reviews have been a critical driver of the positive changes. Particularly, the 2022 Mutual Evaluation Report⁽³⁾ highlighted shortcomings in enforcement, interagency coordination, and intelligence analysis, which in turn prompted the 2022 AML Law⁽⁴⁾  overhaul that came into effect in March 2023.

Similar dynamics apply across ASEAN: countries often refine legislation or enhance supervisory practices in direct response to APG findings, using these evaluations as a roadmap for improvement.

Singapore as the gold standard

Singapore represents the most advanced AML framework in ASEAN. In Singapore, AML regulations are administered by the Monetary Authority of Singapore (MAS), which applies a proactive, risk-based approach. The system combines strong supervisory engagement with technology-driven monitoring and step-by-step guidance for financial institutions.

Singapore’s consistency in updating rules and fostering a culture of compliance has earned it a reputation as a low-risk jurisdiction, bolstering its role as a global financial hub.

Malaysia, Thailand, and the Philippines for steady progress

As middle-income economies with growing financial sectors, Malaysia, Thailand, and the Philippines have each taken steps to improve their AML regimes.

Malaysia has invested heavily in its financial intelligence unit under Bank Negara Malaysia, which has improved coordination and reporting standards. Despite laws largely in line with FATF guidance, uniform enforcement across all sectors remains a challenge.

Thailand and the Philippines face vulnerabilities linked to their tourism-driven economies, and in Thailand’s case, the presence of casino-related activities. Both countries have recently broadened reporting requirements and monitoring of high-risk sectors. Regardless, sustained capacity building is needed to match the more mature AML systems.

Indonesia and Vietnam in transition

Indonesia and Vietnam represent rapidly developing economies where AML regulations are still evolving. Indonesia has responded to APG feedback by addressing informal finance risks and strengthening supervision across vulnerable sectors.

During the current phase, Vietnam’s AML regulations have transitioned from legislative reform to active implementation. After the 2022 Law on Anti-Money Laundering took effect, the government advanced further measures in 2025 to meet FATF and APG requirements.

These included enhanced guidelines for banks and non-financial institutions, a stronger focus on beneficial ownership transparency, and new supervisory tools to monitor high-risk sectors such as real estate and virtual assets⁽⁵⁾.

In addition, the State Bank of Vietnam has issued updates aligning domestic practices with FATF’s action plan to demonstrate tangible progress in prosecutions, asset recovery, and interagency cooperation.

These steps show Vietnam’s determination to move off the FATF Grey List. However, effectiveness in enforcement and coordination will remain the key tests of whether the reforms can translate into measurable outcomes.

Vietnam’s trajectory compared to ASEAN peers

Across ASEAN, Singapore is the benchmark with its mature regulatory system and enforcement culture. Malaysia, Thailand, and the Philippines continue to show steady progress, though gaps persist in supervision and consistency. Indonesia is also progressing, but at a very early stage.

Vietnam now sits in the middle of this spectrum. Yet, enforcement capacity and coordination still lag behind the regional leaders. The transitional status highlights the nation’s dual reality: a promising investment destination with growing credibility, but one where investors must be mindful of ongoing risks.

What is the APG ranking and assessment for Vietnam?

Vietnam’s progress on AML in ASEAN cannot be fully understood without examining how the APG has assessed the country. In this section, we will look into APG reviews to see the clearest picture of both technical strengths and practical weaknesses of Vietnam.

Background of the evaluation

The APG’s Mutual Evaluation Reports (MERs) serve as the main benchmark for judging how well a jurisdiction complies with international AML standards. Vietnam’s most recent MER was adopted in November 2021 and published in 2022⁽⁶⁾.

The review assessed Vietnam against the FATF’s recommendations, using two criteria:

• Technical Compliance (TC) to determine if a country’s laws comply with FATF standards.
• Effectiveness (Immediate Outcomes, IOs) to measure whether those laws produce tangible results such as prosecutions, asset confiscations, and intelligence use.

Key findings of Vietnam’s report

The APG Mutual Evaluation Reports revealed a mixed picture of Vietnam’s AML regime, with some progress in law-making but continuing weaknesses in practice.

Technical compliance (TC)

On the technical side, Vietnam has achieved alignment with many FATF recommendations, but several gaps remain. Many areas were rated Partially Compliant or Non-Compliant, such as:

• Beneficial ownership transparency: insufficient availability of reliable ownership data
• Supervision of DNFBPs: incomplete oversight of non-financial sectors
• Virtual assets: inadequate coverage of virtual asset service providers

Other technical deficiencies were identified in correspondent banking and due diligence for complex ownership structures.

Effectiveness (IOs)

Effectiveness remains a greater challenge, as laws have not consistently translated into results. In detail, there were:

• Low numbers of money laundering prosecutions and convictions
• Limited asset confiscation and recovery rates
• Weak use of financial intelligence in supporting investigations
• Uneven interagency coordination reducing case outcomes

Potential removal from the FATF grey list

Vietnam’s assessment culminated in placement on the FATF’s “Jurisdictions under Increased Monitoring,” commonly known as the Grey List. In June 2023, the FATF determined that Vietnam had strategic AML deficiencies requiring closer monitoring.

This designation requires the country to:

• Implement an Action Plan addressing the identified weaknesses.
• Submit regular follow-up reports to FATF and APG.
• Show demonstrable progress, such as more prosecutions, improved interagency coordination, and better supervision of DNFBPs and virtual asset providers.

In response, Vietnam introduced amendments, including Circular 09/2023⁽⁷⁾, Decree 19/2023/ND-CP⁽⁸⁾, and further updates in 2025, to address FATF concerns and work toward removal from the list.

Although Vietnam is making commendable progress, its system is still reactive and legislative, whereas jurisdictions like Singapore and Hong Kong have established a proactive and institutionalized culture of compliance.

Choosing AML-enhanced destinations in Asia

Foreign direct investment decisions increasingly hinge on the strength of a country’s AML framework, as investors weigh not only growth potential but also regulatory security.

The investor’s perspective

For multinational corporations and institutional investors, AML in ASEAN is more than a compliance requirement. It is a safeguard against reputational damage, financial penalties, and potential restrictions from global regulators.

Weak AML systems expose investors to higher due diligence costs and greater operational uncertainty, making jurisdictional choice a strategic decision rather than a procedural one.

Vietnam’s investment case

Vietnam remains one of the most attractive destinations for foreign direct investment in Southeast Asia, thanks to its political stability, competitive labor force, expanding middle class, and strong government support for international business.

While its placement on the FATF Grey List has required additional due diligence from investors, the country’s continued efforts show a clear intent to align with global standards. These reforms, alongside its robust economic fundamentals, reinforce Vietnam’s long-term potential as a key FDI hub in the region.

Asia’s wider advantage

Beyond ASEAN, global investors often look to established Asian hubs such as Singapore and Hong Kong, where AML laws are internationally recognized and enforcement is predictable. These jurisdictions provide a “compliance premium,” helping companies reduce regulatory uncertainty and reputational risk while building credibility with partners and regulators.

For many businesses, expanding into these hubs complements their regional strategy and creates a bridge between Southeast Asia’s growth markets and Asia’s global financial centers.

Vietnam’s progress on AML could eventually bring it closer to the level of Singapore and Hong Kong, strengthening its competitive edge and solidifying its role as a leading investment destination in Asia.

To conclude

In conclusion, Vietnam’s AML journey is evolving, with reforms showing a strong commitment to meeting international standards. Although its framework is not yet as mature as those of Singapore and Hong Kong, the country offers attractive growth prospects for investors seeking dynamic markets.

The key trade-off is clear: higher compliance considerations balanced against Vietnam’s long-term potential. Continued progress in enforcement will be essential for Vietnam to move off the Grey List and build up its appeal as a destination for high-quality FDI.

Looking ahead, staying informed will be vital. For the latest updates and practical guidance on Vietnam’s regulatory landscape, connect with BBCIncorp at service@bbcincorp.com. We are available for timely assistance.

References:

(1) https://en.nhandan.vn/infographic-viet-nams-registered-fdi-up-273-in-first-eight-months-post152830.html

(2) https://vntr.moit.gov.vn/news/asean-economic-community-2025-fdi-industrial-development-and-regional-integration

(3) https://www.fatf-gafi.org/en/publications/Mutualevaluations/Mer-vietnam-2022.html

(4) https://thuvienphapluat.vn/van-ban/EN/Tien-te-Ngan-hang/Law-14-2022-QH15-Anti-Money-Laundering/547270/tieng-anh.aspx

(5) https://www.vietnam-briefing.com/news/vietnams-new-enterprise-law-2025.html/

(6) https://www.fatf-gafi.org/content/dam/fatf-gafi/fsrb-mer/APG-Mutual-Evalutaion-Report-Vietnam-2022.pdf.coredownload.inline.pdf

(7) https://chinhphu.vn/?pageid=27160&docid=207830

(8) https://vanban.chinhphu.vn/?pageid=27160&docid=208451&classid=1&orggroupid=4

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