A foreign exchange counter is an entity permitted by the State to conduct cash foreign currency exchange activities. Is it permissible to establish a foreign exchange counter? What are the rights and obligations upon being granted a license for the establishment of a foreign exchange counter? In the following article, NPLaw provides information related to licenses for establishment of foreign exchange counters under current regulations.

I. Understanding of licenses for establishment of foreign exchange counters

1. What is a license for establishment of a foreign exchange counter?

Pursuant to Clause 1 Article 2 of Circular No. 07/2012/TT-NHNN, foreign currency is defined as the currency of another country or territory, the euro, or other common currencies used in international and regional payments. According to Clause 10 Article 4 of Decree No. 63/1998/NĐ-CP on foreign exchange management, a foreign exchange counter is an organization permitted by the State Bank of Vietnam to conduct cash foreign currency exchange activities.

A foreign exchange counter may be directly operated by a credit institution licensed to conduct foreign exchange activities or may be operated through authorization to another entity acting as an agency. 

2. Is the establishment of the foreign exchange counter permitted?

Article 4 of Circular No. 11/2016/TT-NHNN provides transitional provisions applicable to individuals who were granted licenses for the establishment of foreign exchange counters prior to the effective date of this Circular, as follows:

  • Individuals who had been granted licenses for the establishment of foreign exchange counters by the State Bank of Vietnam in accordance with Circular No. 07/2001/TT-NHNN dated August 31, 2001 of the Governor of the State Bank of Vietnam guiding the implementation of the Regulation on management of currencies of countries sharing land borders in border areas and border-gate economic zones of Vietnam, promulgated together with Decision No. 140/2000/QĐ-TTg dated December 8, 2000 of the Prime Minister, prior to the effective date of this Circular, are permitted to continue conducting foreign currency exchange activities.

Accordingly, individuals who were granted licenses for the establishment of foreign exchange counters prior to August 13, 2016 are allowed to continue their foreign currency exchange activities.

Pursuant to Point a Clause 2 Article 5 of Circular No. 11/2016/TT-NHNN:

  • As from the effective date of this Circular, the following provisions shall cease to be effective: Section 6 of Circular No. 07/2001/TT-NHNN dated August 31, 2001 of the Governor of the State Bank of Vietnam guiding the implementation of the Regulation on management of currencies of countries sharing land borders in border areas and border-gate economic zones of Vietnam, promulgated together with Decision No. 140/2000/QĐ-TTg dated December 8, 2000 of the Prime Minister.

Accordingly, as from August 13, 2016, regulations governing foreign exchange counters operated by individuals are no longer effective. Therefore, under current regulations, licenses for the establishment of foreign exchange counters may no longer be granted to individuals.

II. Legal regulations on licenses for establishment of foreign exchange counters

1. Conditions for issuance of the license for establishment of the foreign exchange counter

Pursuant to Subsection 1 Section 5 of Circular No. 07/2001/TT-NHNN regulating foreign exchange counters operated by banks:

  • Depending on the conditions and capacity of the banks, the General Director (Director) of such banks may decide on the establishment of foreign exchange counters in border areas and border-gate economic zones to conduct transactions of purchasing and selling Vietnamese Dong against currencies of countries sharing land borders, and shall take full responsibility for such decisions and for the business results of the foreign exchange counters.

The purchasing and selling of other foreign currencies shall be conducted in accordance with the operational regulations of foreign exchange counters promulgated by the Governor of the State Bank of Vietnam and other relevant regulations on foreign exchange management.

  • Banks licensed to establish foreign exchange counters in border areas and border-gate economic zones of a particular province are responsible for notifying the provincial branch of the State Bank of Vietnam in such a border province of the location and number of foreign exchange counters for purposes of management, inspection, and supervision.

2. Rights and obligations upon being granted the license for establishment of the foreign exchange counter

Pursuant to Subsection 4 Section 6 of Circular No. 07/2001/TT-NHNN (with certain phrases replaced by Clause 3 Article 1 of Circular No. 29/2015/TT-NHNN), the following provisions apply:

Rights and obligations of individuals granted licenses for the establishment of foreign exchange counters:

  • Individuals are entitled to independently determine the exchange rates for purchasing and selling Vietnamese Dong against currencies of countries sharing land borders;
  • They are obliged to register their business, pay taxes, fees, charges, and other State budget revenues in accordance with law;
  • They take full responsibility before the law for their business results and all of their acts;
  • They must locate the foreign exchange counter at the location specified in the license; they are not permitted to purchase or sell currencies other than those of countries sharing land borders as specified in the license; they must notify the provincial branch of the State Bank of Vietnam in the relevant border province upon any change of location or termination of business operations; and they may only conduct business after having been issued a business registration certificate;
  • They must maintain accounting records to monitor transactions of purchasing and selling Vietnamese Dong against currencies of countries sharing land borders;
  • They must submit periodic reports to the provincial branch of the State Bank of Vietnam in the relevant border province in accordance with Point 1 Section VII;
  • They must strictly comply with other relevant regulations on foreign exchange management;
  • They are subject to inspection and examination by the provincial branch of the State Bank of Vietnam in the relevant border province and by competent State authorities, and are obliged to provide information and facilitate inspection and examination upon request.

Accordingly, under previous regulations, individuals granted licenses for the establishment of foreign exchange counters enjoyed the above rights and were subject to the corresponding obligations.

III. Questions regarding licenses for establishment of foreign exchange counters

1. Who is eligible to be granted the license for establishment of the foreign exchange counter?

Pursuant to Article 4 of Circular No. 11/2016/TT-NHNN on transitional provisions applicable to individuals who were granted licenses for the establishment of foreign exchange counters prior to the effective date of this Circular:

  • Individuals who had been granted licenses for the establishment of foreign exchange counters by the State Bank of Vietnam in accordance with Circular No. 07/2001/TT-NHNN dated August 31, 2001 of the Governor of the State Bank of Vietnam guiding the implementation of the Regulation on management of currencies of countries sharing land borders in border areas and border-gate economic zones of Vietnam, promulgated together with Decision No. 140/2000/QĐ-TTg dated December 8, 2000 of the Prime Minister, prior to the effective date of this Circular, are permitted to continue conducting foreign currency exchange activities.

Accordingly, individuals who were granted licenses for the establishment of foreign exchange counters prior to August 13, 2016 are allowed to continue their foreign currency exchange activities. However, as from August 13, 2016, regulations governing foreign exchange counters operated by individuals are no longer effective. Therefore, under current regulations, licenses for the establishment of foreign exchange counters may no longer be granted to individuals.

2. What are the processing time and costs for issuance of the license for establishment of the foreign exchange counter?

Pursuant to Point a Clause 2 Article 5 of Circular No. 11/2016/TT-NHNN on implementation provisions:

As from the effective date of this Circular, the following provisions shall cease to be effective:

  • Section 6 of Circular No. 07/2001/TT-NHNN dated August 31, 2001 of the Governor of the State Bank of Vietnam guiding the implementation of the Regulation on management of currencies of countries sharing land borders in border areas and border-gate economic zones of Vietnam, promulgated together with Decision No. 140/2000/QĐ-TTg dated December 8, 2000 of the Prime Minister.

Accordingly, as from August 13, 2016, regulations governing foreign exchange counters operated by individuals are no longer effective. Therefore, under current regulations, licenses for the establishment of foreign exchange counters may no longer be granted to individuals.

IV. Consultancy and implementation services related to licenses for establishment of foreign exchange counters

One of the reputable law firms providing legal services related to licenses for the establishment of foreign exchange counters is Ngoc Phu Law Company Limited. When using our services, clients will receive dedicated support from highly qualified specialists and experienced lawyers. Clients will be advised on procedures for resolving matters related to licenses for the establishment of foreign exchange counters. Should you require assistance with matters related to licenses for the establishment of foreign exchange counters in order to protect your lawful rights and interests, please contact NPLaw for timely support via the following contact details: