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Wrong side of the right way
By Son Nguyen
Thursday,  Oct 25, 2018,21:20 (GMT+7)

Wrong side of the right way

By Son Nguyen

Criticisms and skepticisms are overwhelming following a decision by Can Tho City’s government this week to slap a heavy fine on a resident for exchanging a US$100 bill at an unauthorized money changer although all related sides agree that the punishment is in strict compliance with prevailing regulations. Calls for amendments to the rule are surfacing like ripple effects across the society, as people from all walks of life are of a consensus that legal provisions contained therein are unenforceable. Simply put, it is wrong.

The news broke when it was learned this Tuesday that Can Tho City had issued a decision imposing a fine as much as VND90 million, or roughly US$4,000, on a local resident identified as Nguyen Ca Re for selling the U.S. banknote at Nhan Dat Jewelry Thao Luc Shop in Ninh Kieu District. The gold trader itself was also imposed a fine of VND180 million for the illegal act, plus nearly VND90 million on other business violations.

The man says that he was given US$100 by a friend of his, and exchanged it for VND2.26 million early this year, only to be caught by the police as he was exiting the shop. He said he used to sell dollars at the gold shop several times in the past, without knowing that his act was illegal, and without noticing whether the shop was an authorized forex agent or not.

In the decision handed over this week, Re was fined the hefty sum stated above, plus VND2.26 million confiscated. The decision refers to Decree 96/2014-ND-CP issued by the Government, which sets a fine of VND80 million to VND100 million on anyone found exchanging foreign currencies at an unauthorized dealer.

In a press briefing on Wednesday, Can Tho Police asserted that they strictly abided by prevailing regulations to advise the city government on imposing the fines. Such a point is also echoed by other officials and experts.

Nguyen Duc Kien, vice chair of the National Assembly Economic Committee, says on Vnexpress news website that the act by Re was illegal, and Can Tho was right when handling the violation. “When people violate regulations, they must be sanctioned,” Kien is quoted by the news site. Many lawyers also say in legal terms there is nothing wrong with the decision, but they also say it is ironical.

“This is unprecedented and ironical, and provides much food for thought,” says an expert in Dan Viet. All people exchanging any type of foreign currency at an unauthorized agent are violating the law, but in reality, nine out of ten money dealers are unauthorized, says the media outlet.

At issue is the unintentional violation of the people when exchanging money at a certain venue, without knowing whether such an agent is authorized or not.

It turns out to be a matter of luck, says Thoi bao Kinh te Sai Gon Online. “If Re had done so at an authorized agent, he would not have been punished. It was bad luck he did so unknowingly at an illegal money changer, and faced a huge fine of VND90 million,” says the news site.

In fact, the people care the least about whether a money changer is authorized or not, and simply drop by a gold shop to do the transaction, Lao Dong reports, citing numerous people who have randomly sold dollars at various venues. They say it is lucky for them not to have been caught in the act, otherwise “I will have to sell my house to pay the fine.”

Do Hoai Linh, a financial expert, remarks in Dan Viet that the people tend to change money at gold shops and forex counters at the market for convenience, as they find it bothersome to do all the paperwork at a bank to change money.

Many lawyers say given the hefty fine imposed in this case, it is time relevant agencies amend regulations to keep people from unintentional violations.

Lawyer Nguyen Van Hau, vice chair of the HCMC Bar Association, says on Vnexpress that it is difficult for people to recognize whether a money changer is licensed or not. “They simply go to the nearest shop to change money,” says the lawyer. Therefore, amendments to legal regulations regarding forex activities are necessary to deal with unintentional violations like Re’s.

Lawyer Tran Minh Hai of HCMC-based law firm Basico says while the punishment is based on legal grounds, it is an ironical enforcement of law in Vietnam, says Vnexpress. Hai recalls a recent lawsuit when two entities were at odds over their forex dealings. In the court case, the two enterprises set goods prices in a foreign currency that was converted to Vietnam dong to make the payment, which the lawyer says was in violation of the Foreign Exchange Ordinance. However, the two were not subject to fines though their payment was multiple times the sum of US$100 in Re’s case.

Lawyer Nguyen Van Duc from Can Tho City comments that while the punishment is not at all wrong, this rule still needs to be revised so that it can be accepted in reality. The key aim of forex management is to control corporate entities dealing in money, not individuals with trivial sums, he suggests in Lao Dong.

Referring to the so-called “legislative spirit”, Thoi bao Kinh te Sai Gon Online says Decree 94 issued by the Government is meant to control the economic order in the banking-financial field, and primarily targets corporate entities rather than individuals. “Article 24 used as the basis for imposing the fine on Re dominantly controls ‘supply of settlement and money transfer services related to foreign loans or borrowings; guarantee for non-resident entities, foreign direct investment into Vietnam and Vietnam’s outbound investment,’” notes the online paper. The provision related to Re’s violation, which is titled “exchange of foreign currency at unauthorized agents” therefore should be understood in the legislative spirit by lawmakers targeting entities.

According to the paper, overseas remittances to Vietnam total nearly US$10 billion a year, and a sizeable part of it is donated to relatives, so it is quite normal when they sell hundreds of dollars at gold shops. Such activities are not of commercial nature and therefore not damaging to the economic order, so harsh punishment will lead to social injustice as in this case.

Even Can Tho government also finds it overly harsh, and in the press conference on Wednesday, Tran Van Duong, spokesman for the city’s police, said he thought there should be leniency. Nguyen Ca Re as the object of the punishment can submit an application to the municipal government for reduction or exemption of the fine, he noted.

In fact, in the country, the informal forex market has long existed, with huge volumes of foreign currencies traded day in day out. However, no fines have ever been levied on individuals. The unprecedented punishment, though legal, can be seen as a wrong side of the right enforcement.

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