In recent years, on social media there is no shortage of advertisements inviting viewers to join “international” exchange platforms to trade gold and foreign exchange (forex). Many of us have probably received calls from the employees of those platforms with the promise of trading in a global, transparent, highly profitable environment and being considerately supported for our best investment interests.
From the aforementioned coaxing along with the dreams of wealth in the future, many people have been pouring millions, even billions of Vietnamese dong into investing in such exchange platforms only to lose all their money. In fact, these platforms have been operating illegally, dried up investors’ money with sophisticated tricks such as setting up fraudulent orders, blocking account access, etc. In this article, Apolat Legal will provide the necessary legal knowledge for readers to understand why they should not join gold and forex exchange platforms in Vietnam.
1. Unlicensed gold and foreign exchange trading is against the laws
1.1. Law on gold trading on accounts (gold trading)
Pursuant to Decree No. 24/2012/ND-CP, except for the export and import of gold, the domestic buying and selling of raw gold by enterprises manufacturing gold jewelry, fine arts and enterprises whose business is trading gold jewelry, fine arts in accordance with the law, all other gold business activities, including gold trading on accounts, are only considered legal when licensed by the State.
Currently, there is no exchange platforms which is licensed by the State to trade gold on accounts. In addition, on 30th December 2009, the Government promulgated Decision No. 369/TB-VPCP to prohibit gold trading on domestic accounts. Therefore, if there is a platform advertising that it is fully licensed to conduct gold trading on accounts, that platform is definitely untrustworthy.
1.2. Law on foreign exchange
According to the provisions of the law on foreign exchange, only banks, non-banking credit institutions and foreign bank branches are allowed to trade and provide foreign exchange services11. Organizations that are allowed to provide such services do not include forex platforms. Thus, forex exchange platforms which are being massively promoted are operating illegally.
2. Participants will bear the consequences of the law
People who participate in gold and forex exchange platforms are often called traders. Traders will not be protected by the law when these platforms lose their money, but will also be subject to legal punishments. Although pursuant to the current law, the act of participating in the gold trading platforms has no specific sanction, for the act of forex trading, there will be the following sanctions:
2.1. A warning
– Selling and buying foreign currency between individuals if the value of foreign currency sold or bought is less than USD 1,000 (or equivalent value in another foreign currency);
– Selling or buying foreign currency at unlicensed currency exchange entities if the value of foreign currency sold or bought is less than USD 1,000 (or equivalent value in another foreign currency).
2.2. A fine ranging from VND 10,000,000 to VND 20,000,000
– Selling and buying foreign currency between individuals if the value of foreign currency sold or bought is from USD 1,000 to under USD 10,000 (or equivalent value in another foreign currency);
– Selling and buying foreign currency between individuals if the value of foreign currency sold or bought is less than USD 1,000 to (or equivalent value in another foreign currency) in case of any repeat or serial violation;
– Selling and buying foreign currency at an unlicensed currency exchange entity if the value of foreign currency sold or bought is from USD 1,000 to under USD 10,000 (or equivalent value in another foreign currency);
– Selling and buying foreign currency at an unlicensed currency exchange entity if the value of foreign currency sold or bought is less than USD 1,000 to (or equivalent value in another foreign currency) in case of any repeat or serial violation.
2.3. A fine ranging from VND 20,000,000 to VND 30,000,000
– Selling and buying foreign currency between individuals if the value of foreign currency sold or bought is from USD 10,000 to under USD 100,000 (or equivalent value in another foreign currency);
– Selling or buying foreign currency at an unlicensed currency exchange entity if the value of foreign currency sold or bought is from USD 10,000 to under USD 100,000 (or equivalent value in another foreign currency).
2.4. A fine ranging from VND 80,000,000 to VND 100,000,000
– Selling and buying foreign currency between individuals if the value of foreign currency sold or bought is equal to or greater than USD 100,000 (or equivalent value in another foreign currency);
– Selling or buying foreign currency at an unlicensed currency exchange entity if the value of foreign currency sold or bought is equal to or greater than USD 100,000 (or equivalent value in another foreign currency).
3. “International” does not mean good
In fact, when enticing people to join, gold and forex exchange platforms (usually claiming to be the platforms from countries such as Saint Vincent and the Grenadines, British Virgin Islands, etc.) will show the certificate of organization establishment or the enterprise with the names of these exchange platforms to prove that it is legally established and operating in those territories. Providing that these platforms operate legally, many traders have been “consoled”. However, traders should not rush to pour money into these exchange platforms due to the following reasons:
Firstly, those certificates may be completely invalid. When traders are presented with those certificates, can they actually how to verify that the certificates are true, and that this exchange platform is indeed an organization legally established abroad. In addition, despite being legally established, it does not mean that these platforms are licensed to operate as gold and forex exchange trading platforms. For instance, in Saint Vincent and the Grenadines, after receiving many complaints from foreign traders, they had to issue a warning that this country does not issue a license to operate gold and forex trading; enterprises of this nation are not prohibited from operating exchange platforms and may not be held responsible for any acts of fraud and deception related to these activities; and traders will not be protected by law.
Secondly, assuming that the exchange platform is legally established and licensed to operate the business of a gold and forex trading platform abroad, this does not mean that traders will be protected. As mentioned above, Vietnamese law will not protect traders, so their interests are completely dependent on foreign laws. The law of that country may not prosecute such exchange platform for defrauding foreigners, assuming this happens, the costs to protect interests will sometimes be extremely expensive, leading to the fact that Vietnamese traders give up bringing these exchange platforms to justice. The final consequence is that traders lose their investment money and can also not able to protect their own just interests.
From the aforementioned reasons, Apolat Legal hopes that all people will not join gold and forex exchange platforms in Vietnam.
Disclaimer:
This article is for general information only and is not a substitute for legal advice. Apolat Legal is a Vietnamese law firm with experience and capacity to advise on matters related to Investment. Please click here to learn more about our services and contact our lawyers in Vietnam for advice via email info@apolatlegal.com.
