Vietnam Cracks Down on Gold Market Irregularities: Major Dealers Face Scrutiny

The Vietnamese government has declared a 'zero-tolerance' approach to irregularities in its gold market, with the Government Inspectorate (Thanh tra Chính phủ) explicitly naming major gold trading firms Mi Hồng and Bảo Tín Mạnh Hải for alleged involvement in smuggling, fraud, tax evasion, market manipulation, illegal business practices, and hoarding. This was revealed in the inspection results report on the compliance with policies and laws in gold trading activities, signed and issued by Deputy Inspector General Lê Tiến Đạt on August 8. According to the report, these companies committed serious violations of regulations concerning gold trading, tax obligations, anti-money laundering, and e-commerce. Bảo Tín Mạnh Hải was found to have violated regulations by accepting deposits for gold bar purchases without immediate delivery and understating value-added tax (VAT) due to incorrect calculation of purchase costs. Deficiencies were also noted in its anti-money laundering efforts, including failure to report large transactions and inadequate customer risk classification. Similarly, Mi Hồng allegedly failed to report the cessation of gold bar trading at some branches, violated e-commerce and anti-money laundering regulations, and underpaid personal income tax from capital transfers. Mi Hồng, a long-standing and popular gold shop in Ho Chi Minh City, had multiple branches extending from the city to Tiền Giang and Bến Tre provinces. Recently, domestic gold prices have seen abnormal fluctuations, with the difference between domestic and international prices reaching up to VND 30 million per tael at one point. However, this gap has narrowed to around VND 4-5 million due to market movements involving major gold and precious metals companies like Phú Nhuận (PNJ) and SJC. In July, the market was further shaken by the arrest of the director of PNJ's appraisal company (P-Lab) on charges of diamond smuggling. The situation became more chaotic when investigators announced that 3,400 smuggled diamonds had entered SJC's retail system for sale. SJC is one of Vietnam's most popular gold brands, and this incident impacted the gold market. At one point, long queues formed at SJC stores in Ho Chi Minh City for gold sales, while people also lined up at Mi Hồng branches to buy gold. Following the Government Inspectorate's findings, law enforcement agencies have been urged to coordinate with the State Bank to take 'zero-tolerance' action against these violations. SJC was also found to have violated accounting regulations by improperly provisioning for gold bar inventory depreciation and understating VAT. PNJ and DOJI were also cited for underpaying VAT due to inaccurate declarations of the cost of goods purchased. Furthermore, the Government Inspectorate has transferred information to the Ministry of Public Security regarding seven individuals who sold undeclared raw gold valued at approximately VND 2.084 trillion (around $82 million USD). These individuals are suspected of having unusually large transaction volumes and values inconsistent with their reported incomes. The inspection agency has also requested the Ministry of Public Security to investigate and handle six enterprises that allegedly underdeclared taxes and retained earnings, with an estimated amount of VND 93.733 billion (around $3.7 million USD). The conclusion revealed that incorrect VAT declarations in the trading of gold jewelry and art have been widespread for years, leading to an estimated tax shortfall of VND 28.4 billion (around $1.1 million USD).