Client Alert Vietnam’s New Penal Code Criminalizes Insurance Fraud To Protect Insurers’ Interests Recent Developments Effective from 1 July 2016, the New Penal Code1 criminalizes insurance fraud and holds both violating individuals and commercial legal entities liable. It has been reported that situations giving rise to fraud in the insurance industry have become increasingly common and complex in Vietnam. Moreover, the old regulations are incomplete and insufficiently stringent to effectively prohibit, sanction and prevent fraud in the insurance industry. Thus, this development will hopefully form an effective legal basis to contribute to the protection of insurers’ interests, as well as the development of the insurance market in Vietnam in general. Specific Regulations Provided by the New Penal Code 1. Those who commit one of the following acts appropriating insurance proceeds valued from VND20,000,000 (approx. US$920)2 and less than VND100,000,000 (approx. US$4,600) or causing damage valued from VND50,000,000 (approx. US$2,300) and less than VND200,000,000 (approx. US$9,200), shall be subject to a fine from VND30,000,000 to VND100,000,000 (approx. US$1,380 - US$4,600) or non-custodial reform for up to three (3) years: (a) Being in collusion with the beneficiary of insurance proceeds to illegally settle indemnification or make payments of insurance proceeds; (b) Forging documents, intentionally falsifying the information to refuse to indemnify and pay insurance proceeds when an insured event occurs; (c) Forging documents, intentionally falsifying the information in the documentation and dossier requesting indemnification and payment of insurance proceeds; and 1 Penal Code No. 100/2015/QH13 passed by the National Assembly of Vietnam on 27 November 2015 (the “New Penal Code”). 2 Interbank exchange rate dated 30 December 2015: 1US$ = VND21,890. Insurance Vietnam Baker & McKenzie (Vietnam) Ltd. 12th Floor, Saigon Tower 29 Le Duan Blvd District 1 Ho Chi Minh City Socialist Republic of Vietnam Tel: +84 8 3829 5585 Fax: +84 8 3829 5618 Baker & McKenzie (Vietnam) Ltd. Hanoi Branch Office Unit 1001, 10th Floor Indochina Plaza Hanoi 241 Xuan Thuy Street Cau Giay District, Hanoi Socialist Republic of Vietnam Tel: +84 4 3825 1428 Fax: +84 4 3825 1432 January 2015 2 Vietnam | January 2016 (d) (d) Intentionally causing damages to one’s own health and properties in order to benefit from an insurance policy, unless otherwise provided by law. 2. In the event of a crime committed in one of the following circumstances, the offenders shall be subject to a fine from VND100,000,000 to VND300,000,000 (approx. US$4,600 - US$13,800) or between one (1) and three (3) years of imprisonment: (a) In an organized manner; (b) Employing treacherous and dangerous tricks; and (c) Appropriating an amount of insurance proceeds which are between VND100,000,000 and under VND500,000,000 (approx. US$4,600 - US$23,000); (d) Causing damage of between VND200,000,000 and under VND1,000,000,000 (approx. US$9,200 - US$46,000); and (e) Dangerous recidivism. 3. In the event that a crime is committed in one of the following circumstances, the offenders shall be subject to between three (3) and seven (7) years of imprisonment: (a) Appropriating an amount of insurance proceeds valued at VND500,000,000 (approx. US$23,000) or more; and (b) Causing damage valued at VND1,000,000,000 (approx. US$46,000) or more. 4. The offenders shall also incur a fine of between VND10,000,000 and VND100,000,000 (approx. US$460 - US$4,600), and/or a ban from holding certain posts, practicing certain occupations or doing certain jobs from one (1) to five (5) years. 5. If an offender is a commercial legal entity (e.g., a company), the offender shall be subject to the following: (a) Committing one of the acts provided in Item 1 above and appropriating an amount of money valued between VND200,000,000 and under VND1,000,000,000 (approx. US$9,200 - US$46,000) or causing damage valued of between VND400,000,000 and under VND2,000,000,000 (approx. US$18,400 - US$92,000), shall incur a fine of between VND200,000,000 and VND1,000,000,000 (approx. US$9,200 - US$46,000); (b) Committing one of the acts provided in Items 2(a), (b), (c) or (d) above and appropriating an amount of money valued between VND1,000,000,000 and VND3,000,000,000 (approx. US$46,000 - US$138,000) or causing damage valued between VND2,000,000,000 and VND 5,000,000,000 (approx. US$92,000 - US$230,000), shall incur a fine of between VND1,000,000,000 and VND3,000,000,000 (approx. US$46,000 - US$138,000); Vietnam | January 2016 3 Should you wish to obtain further information or want to discuss any issues raised in this alert with us, please contact: Fred Burke +84 8 3520 2628 firstname.lastname@example.org Dang Chi Lieu +84 4 3936 9341 email@example.com Oanh H. K. Nguyen +84 8 3520 2629 firstname.lastname@example.org Nguyen Thanh Hai +84 4 3936 9606 email@example.com www.bakermckenzie.com This client alert provided by Baker & McKenzie (Vietnam) Ltd. is intended to provide our clients, and other interested parties, with an overview of the recent legal changes in the relevant area for information purposes only. The information contained in this client alert does not constitute legal advice or legal opinion, and should not be regarded as a substitute for detailed advice in individual cases. The information, as referred to in this client alert, is based on the laws, regulations, notifications, practice and policy at the time of its production. The laws, regulations, notifications, practice and policy may change from timeto-time and, therefore, the use of this client alert must be taken with due care. You are strongly advised that no use should be made of the information in this client alert without prior consultation with Baker & McKenzie (Vietnam) Ltd.. No portion hereof may be reproduced or transmitted, by any means, without the prior written permission from Baker & McKenzie (Vietnam) Ltd.. All rights reserved. Baker & McKenzie (Vietnam) Ltd. is a member of Baker & McKenzie International, a Swiss Verein with member law firms around the world. In accordance with the common terminology used in professional service organizations, reference to a “partner” means a person who is a partner, or equivalent, in such a law firm. Similarly, reference to an “office” means an office of any such law firm. ©2016 Baker & McKenzie (Vietnam) Ltd. All rights reserved. This may qualify as “Attorney Advertising” requiring notice in some jurisdictions. Prior results do not guarantee a similar outcome. (c) Committing a crime and appropriating an amount of money valued at VND3,000,000,000 (approx. US$138,000) or more, or causing damage valued at VND5,000,000,000 (approx. US$230,000) or more, shall incur a fine of between VND3,000,000,000 and VND7,000,000,000 (approx. US$138,000 - US$322,000); and (d) A violating commercial legal entity shall also be banned from conducting its business, or from operating in certain sectors or areas, or from mobilizing capital for a period of between one (1) to three (3) years.