Prevent criminals from “bogus” businesses

Officers of Zone 4th SaiGon Seaport Customs Branch use sniffing dog to inspect imports and exports. Photo: T.H

Haunting “bogus” enterprises

At the end of April, HCM City Police successfully tackled a transnational crime ring, activities of “money laundering”, “illegal transportation of currency across borders”, and prosecuted series of business directors.In order to illegally transfer currency abroad, foreign suspects have directed suspects in Vietnam to establish many “bogus” with names similar to the partner company's name to open foreign and domestic accounts. As a result of the investigation, the police determined that the subjects of the ring had directly or hired individuals to establish more than 250 bogus companies to open company accounts; opened more than 700 personal accounts to illegally remit currency abroad.

These suspects provided the account number of the “bogus” companiesfor victims to remit currency. When receiving the money from foreign currency accounts, the suspects implemented procedures to exchange the currency to VND and then remitted it to the accounts of other individuals in Vietnam.

The suspects repurchase legal entities established by other suspects or collected ID cards/Citizen identification cards of many individuals, then took advantage of the open policy in business registration to establish “bogus” companies to illegally trade value-added invoices (VAT), and concealed their identity and background. To outsmart the detection of the competent agencies, the suspects and their accomplices falsely declared the purchasing price of goods to be nearly equal to the selling price. During investigation, the enforcement agencies identified that many enterprises bought invoices from the ring to use in financial, accounting, and tax reporting activities, violating the law.

Earlier, at the end of 2023, an illegal invoice trading ring worth tens of thousands of billions of VND, involving many businesses across the country, was tackled by Da Nang Police City. The city’s Policy detected N.T.M.H (residing in Ngu Hanh Son district, Da Nang city) established six companies with the purpose of illegally selling invoices with large volume. In order to outsmart the competent force, H. legally purchased 716 input VAT invoices (worth more than VND165 billion) from 83 enterprises in HCM City and seized 154 stamps of businesses selling invoices, title stamps, business director's name stamps, and USB for digital signatures, mobile phones, computers, printers for illegal trading VAT invoices...

At the police station, the suspects initially admitted to establishing a total of 280 companies, selling 187,610 illegal invoices worth more than VND25,300 billion. Of which, pre-tax revenue wasVND23,200 billion; VAT amount of more than VND2,100 billion; illegal profits worth about VND500 billion. Currently, the Police Investigation Department of Da Nang City prosecuted 16 defendants for illegal trading invoice, arrested 12 defendants and prohibited four defendants from leaving their residence.

Closing legal loopholes

Many suspects not only set up “bogus” companies to illegally traded invoices and illegally transfer money abroad. Former officer of the Economic Police Department of HCM City Police Hoang Duy Tien was accused of establishing 47 companies to illegally import used machinery worth more than VND217 billion. Accordingly, during the work process, taking advantage of the State policy allowing the import of used machinery, equipment, and production lines to serve the production of the importing enterprise, Tien reached an agreement with goods owners to import the used products from Japan and China to Vietnam and hand it over to them to trade for profit. The goods owners must pay Tien VND78-90 million/container.

To implement smuggling, Tien hired employees to establish 47 companies that did not operate and only used legal entities to carry out procedures for import, customs clearance and trading of contraband goods. From September 2019 to May 2021, Tien and his accomplices used the legal status of 45/47 companies, opened 1,146 sets of customs declarations, and illegally imported 1,280 containers of goods to Vietnam, with a total value of more than VND217 billion. To hide his actions, Tien directed his employees to use a legal entity of different company.

According to the leader of the Business Registration Office - Department of Planning and Investment of HCM City, the business establishment registration is implemented in accordance with the provisions of Clause 1 and Clause 3, Article 4 of Decree No. 01/2021/ND-CP. “The business founder or enterprise self-declares the business registration dossier and is responsible before the law for the legality, truthfulness and accuracy of the information declared in the business registration dossier and reports. The business registration agency is responsible for the validity of the business registration dossier and is not responsible for violations of the law by businesses that occur before and after business registration.

According to the Ministry of Finance, because there is no mechanism to check, verify or authenticate the legal representative, information about the owner, the address and headquarters of the business, smugglers took advantage of the State's favorable regulations to commit violations, and when the Customs authorities discovered them, they escaped.

Over the past time, when the Customs authorities have discovered and conducted investigation and verification, they found out that the smugglers had established illegimate businesses by using ID cards of another person, even of a deceased person or fake ID cards, acting as a legal representative when establishing busineses, and address and headquarters cannot be identified, causing difficulties in investigation, verification and handling of violations. Some cases related to these businesses prosecuted by the Customs agency are often temporarily suspended when transferred to the Police investigation agency because the violators cannot be found.