Money laundering through telecommunication scratch cards: Due to lax management?

The Ministry of Public Security said that the trillion-dong gambling ring led by Phan Sao Nam and Nguyen Van Duong, up to 97% of the total gambling money went through intermediary payment gateways,Of which, top-up from telecommunication cards and game cards accounts for 97% and telecommunication enterprises (Viettel, Vinaphone, Mobifone) enjoy 15.5 - 16.3% of that, equivalent to about 1,402 billion VND.

So is there any loophole in the management of the authorities that allows money from telecommunication cards to become a means of payment for gambling and network operators to earn thousands of billions as the Ministry of Public Security reported above?

Telecom scratch card managementloose

The police agency stated, "The benefits of telecommunications businesses when providing services for this gambling activity are not small. The loose management of the issuance and use of telecommunications scratch cards makes it easy for scratch cards to become a means of payment for non-telecommunications services, creating conditions for subjects to take advantage of building a payment system for online gambling activities."

The investigation agency also said that payment intermediary gateways play an important role in organizing online gambling activities, but management is still very loose, allowing payment intermediary businesses such as VNPT EPAY, Ngan Luong, Home Direct, and Digital Entertainment to easily provide services for the Rikvip/Tip.club card game for gamblers to participate in gambling for a long time.

Investigation shows that it is difficult to organize gambling activities through games on a large scale like Rikvip without payment intermediary gateways and scratch cards. Gambling money from scratch cards accounts for 97% of the total amount of gambling money through payment intermediary gateways.

Mr. Vu Hoang Lien - Chairman of the Vietnam Internet Association said that currently, scratch cards are only considered a means of payment for services. However, this is only true if used to pay for phone bills. If used to pay fees for other service providers and buy other goods, then scratch cards must be considered a financial means (a form of virtual currency) and managed as a financial means.

"Because the role is not properly assessed, there is no management of the process from issuance to consumption of scratch cards or virtual money through intermediaries. This is a loophole for subjects to take advantage of to do bad things," Mr. Vu Hoang Lien assessed.

In Vietnam, recently, a series of e-wallets have been born with a financial model that allows you to top up phone cards (such as Viettel, Vinaphone, Mobifone scratch cards) into your wallet for use, with a discount of about 20% (top up 1 million card money, get 800,000 VND). This can also be considered an important factor in creating an "illegal financial ecosystem" for illegal activities such as money laundering, tax evasion, and online gambling. The reason is that when electronic transactions are encrypted, they will become a method of exchanging electronic items, not controlled by any financial institution.

It is necessary to strictly manage both the issuance and use of scratch cards.

According to Mr. Vu Hoang Lien, on the bank side, finance needs to be managed right from the process of issuing scratch cards, game cards (a form of virtual currency), the flow of value exchange from the time of issuance to consumers. Especially in the field of paid games, it is necessary to clearly identify which types of games individuals own value on the system, but have not been managed as individuals own money on the system, leading to tax losses.

Regarding the Ministry of Information and Communications (MIC), Mr. Vu Hoang Lien recommended "there needs to be a technology system to control this type of virtual currency from issuance to transfer and final consumption, especially to manage the users."

"The Ministry of Information and Communications needs to have sanctions so that network operators, including Viettel, Vinaphone, and Mobifone, must be responsible. First of all, it is the responsibility to consumers to avoid cases where their money is spent for the wrong purposes. With their partners, network operators must be responsible for complying with the law, in a healthy manner, and bringing benefits to society. The Ministry of Information and Communications not only needs to manage but also needs to have a better reconciliation process from the issuance stage to the consumption of scratch cards. If this can be done, it will greatly support the tax authorities as well as the state in preventing subjects from carrying out bad activities," Mr. Vu Hoang Lien emphasized.

Many experts believe that, in order to ensure the health of electronic payment activities and prevent money laundering, the authorities need to coordinate to inspect the activities of intermediary payment units (e-wallets) that are accepting the form of depositing money by scratch cards. If this model continues to exist easily, it will create dangerous consequences and be a loophole for money laundering crimes./.