Vietnam's Mass Bank Account Deactivation: A Compliance Case Study

Compliance Hub

12 Oct 2025 — 11 min read

How 86 Million Accounts Were Frozen Over Digital ID Non-Compliance

Executive Summary

In September 2025, Vietnam implemented one of the most aggressive financial compliance actions in recent history, deactivating over 86 million bank accounts that failed to meet new biometric authentication requirements. This unprecedented move, affecting approximately 43% of all bank accounts in the country, represents a watershed moment in digital identity regulation and offers critical lessons for compliance professionals worldwide.

Key Facts

86 million bank accounts deactivated starting September 1, 2025
Part of Project 06, a comprehensive digital transformation initiative launched in 2022
Mandatory biometric authentication using facial recognition or fingerprints
113 million accounts remain active after verification (plus 711,000 organizational accounts)
Foreign residents particularly affected due to in-person verification requirements
Fraud cases dropped 59% after implementation of biometric requirements

Background: Vietnam's Digital Transformation Journey

Project 06: The Foundation

Launched in 2022, Project 06 (officially titled "Developing an Application for Population Database, Digital Identification and Authentication for the National Digital Transformation from 2022-2025, with a Vision to 2030") represents Vietnam's comprehensive strategy to modernize its digital infrastructure.

Core Objectives:

Create a unified digital identity system for all 101 million Vietnamese citizens
Transition to a cashless society by promoting digital payments and reducing cash dependency
Combat financial fraud by eliminating duplicate, inactive, and fraudulent accounts
Align with international standards set by the OECD and Bank for International Settlements
Position Vietnam for OECD membership through modernized financial infrastructure

The Scale of the Problem

Before the cleanup initiative, Vietnam's banking system faced significant challenges. With a population of approximately 101 million, the country had amassed roughly 200 million bank accounts—nearly two accounts per citizen.

Many of these accounts were:

Inactive or dormant for extended periods
Duplicates created by the same individuals
Used for fraudulent activities, scams, or money laundering
Created with incomplete or unverified identity information

Critical Incident: In May 2025, authorities uncovered an AI-powered money laundering ring that used fake facial scans to bypass security measures, laundering an estimated 1 trillion Vietnamese dong (approximately $39 million USD). This incident underscored the urgent need for more robust identity verification systems.

Regulatory Framework

Key Legislation

Vietnam's digital identity requirements are governed by several key regulatory instruments:

Decree 59/2022/ND-CP (October 20, 2022)

Established the legal framework for e-ID accounts and biometric data collection
Set authentication level requirements
Defined e-ID for Vietnamese citizens, foreigners, and organizations

Decree 69/2024/ND-CP (July 1, 2024)

Replaced Decree 59
Expanded scope to include all foreign individuals and organizations
Added more detailed authentication level requirements
Mandatory activation of e-ID accounts within 7 days

Decision 2345/QĐ-NHNN (2023)

State Bank of Vietnam directive
Required biometric authentication for first-time mobile banking transactions
Set transaction thresholds requiring biometric verification

Circular 50/2024/TT-NHNN

Detailed implementation guidance for banking institutions
Specified biometric authentication procedures and compliance requirements

Law on Identification 2023

Replaced the 2014 Law on Citizen Identification
Specified biometric information collection including:
- Face images (mandatory)
- Fingerprints (mandatory)
- DNA and voice (voluntary or by law enforcement)

Authentication Levels

The Vietnamese e-ID system implements four distinct authentication levels:

Level 1: Single authentication factor without biometric information
Level 2: Two different authentication factors without biometric information
Level 3: Two or more authentication factors including one biometric element
Level 4: Multiple factors including biometric (face, fingerprint, voice, or iris), possession factor (ID card or digital device), and knowledge factor (password or PIN)

Implementation Timeline

2022

Project 06 launched. Integration of population database and e-ID infrastructure begins.

December 2024

State Bank of Vietnam issues orders requiring biometric updates for all accounts.

January 1, 2025

Transaction restrictions begin. Unverified accounts face limitations:

No online payments
No QR code transactions
No digital banking services

July 1, 2025

New decree takes effect. Biometric authentication requirements intensify:

Facial authentication mandatory for transfers over 10 million VND (~$379 USD)
Cumulative daily transfers over 20 million VND (~$758 USD) require biometric approval
Corporate accounts require legal representatives to verify biometrics or face service suspension

September 1, 2025

Full deactivation begins. Approximately 86 million accounts closed or suspended for non-compliance with biometric requirements.

Compliance Requirements

For Individuals

To maintain access to banking services, Vietnamese citizens and foreign residents must complete biometric verification through one of two methods:

Method 1: NFC Chip-Based Identity Card

Use the chip-based national ID card with embedded facial image and fingerprint data
Scan card at bank branch or authorized verification point
Data automatically cross-referenced with national population database

Method 2: VNeID Mobile Application

Download the official VNeID app (developed by Ministry of Public Security)
Complete live facial recognition scan through the app
Provide fingerprint data via smartphone biometric sensor
Link bank accounts to verified digital identity

Note: Over 61 million Vietnamese citizens use VNeID to access government services, with the app being used more than 29 million times monthly as of June 2025.

For Financial Institutions

Banks and payment intermediaries face comprehensive compliance obligations:

System Upgrades: Implement biometric verification capabilities across all banking channels (mobile, online, branch)
Database Integration: Establish secure connections to the National Population Database for real-time identity verification
Customer Verification: Complete biometric validation of all existing customer records
- By August 2025: 120.9 million individual customer records validated
- By August 2025: 1.2 million organizational accounts validated
Transaction Monitoring: Implement automated biometric authentication triggers for transactions exceeding specified thresholds
Account Deactivation: Suspend services for non-compliant accounts according to specified timelines
Reporting Requirements: Maintain detailed records of verification status and submit regular compliance reports to State Bank of Vietnam

Impact Analysis

Positive Outcomes

Vietnam's aggressive implementation has yielded measurable security improvements:

Fraud Reduction:

59% reduction in fraud and theft cases involving individual accounts
52% decrease in accounts receiving illicit funds
Significant disruption of money laundering operations

Financial System Modernization:

113 million verified active accounts linked to authenticated identities
Enhanced KYC (Know Your Customer) compliance
Improved alignment with international banking standards
Integration with 18 ministries, 1 state-owned enterprise, 3 telecommunications companies, and all 63 provincial localities

Digital Payments Growth:

Mobile payment transactions increased 39.82% year-over-year (Q1 2025)
QR code transactions surged 81.64% year-over-year
Nearly 10.4 million Mobile Money accounts established
86.97% of citizens aged 15+ now have bank accounts

Challenges and Concerns

Foreign Residents:

In-person verification required with no remote options
Many expats forced to fly back to Vietnam to prevent account closure
Example: Foreign contractors unable to access HSBC accounts without physical presence

Financial Exclusion Risks:

Elderly citizens may struggle with technology requirements
Rural populations with limited access to verification infrastructure
Those without smartphones or NFC-enabled ID cards face barriers

Privacy Concerns:

Biometric data controlled by national police (Ministry of Public Security)
Centralized database creates single point of failure
Concerns about government surveillance and data misuse
Potential for biometric data breaches

Operational Challenges:

VNeID app experiencing delays and errors
Language barriers for foreign users
Inconsistent app performance
Many services still require physical documents despite digital ID availability

Lessons for Compliance Professionals

1. Phased Implementation Is Critical

Vietnam's multi-year rollout demonstrates the importance of gradual implementation:

2022-2024: Infrastructure development and voluntary adoption
January 2025: Transaction restrictions begin
July 2025: Enhanced requirements take effect
September 2025: Full enforcement and account deactivation

This phased approach allowed institutions and individuals time to prepare, though critics argue the timeline was still aggressive.

2. Clear Communication Is Essential

The State Bank of Vietnam conducted extensive public awareness campaigns:

Annual "Cashless Day" events since 2019
Press conferences explaining requirements
Multiple deadline announcements
Partnership with banking institutions for customer outreach

However, gaps remained—particularly for foreign residents who lacked clear guidance on remote verification options.

3. Technology Infrastructure Must Be Robust

Vietnam invested heavily in infrastructure:

National Population Database integration
VNeID mobile application development
Biometric authentication systems at all bank branches
Secure data transmission networks

The system has processed over 120 million biometric validations, demonstrating technical capacity at scale.

4. Balance Security with Accessibility

While fraud rates dropped significantly, the aggressive enforcement created hardships:

Foreign residents unable to access funds
Elderly citizens struggling with digital requirements
Rural populations lacking infrastructure access

A more graduated enforcement approach with hardship exemptions could have mitigated these issues.

5. International Coordination Matters

Vietnam's initiative has implications beyond its borders:

Foreign bank account holders affected
International money transfers disrupted
Cross-border business operations impacted

Better coordination with international banks and foreign embassies could have eased the transition.

Global Context and Trends

Similar Initiatives Worldwide

Vietnam is not alone in implementing biometric banking requirements:

India's Aadhaar System

World's largest biometric ID program with 1.3+ billion enrollees
Links fingerprints, iris scans, and facial photos to unique ID numbers
Mandatory for banking, government services, and mobile phone activation

China's Social Credit System

Integrates facial recognition with financial services
Mandatory biometric authentication for online payments
Digital yuan (CBDC) tied to digital identity

European Union's Digital Identity Wallet

EU Digital Identity Wallet planned for all member states by 2026
Will include biometric authentication capabilities
Focus on user control and privacy protection

Kenya's Huduma Namba

Biometric national ID system launched in 2019
Required for banking, mobile money, and government services
Faced legal challenges over privacy concerns

The CBDC Connection

Vietnam's initiative is widely viewed as preparation for a Central Bank Digital Currency (CBDC):

Cashless society infrastructure being established
Digital identity system creates framework for digital currency
State Bank of Vietnam is member of Bank for International Settlements (BIS), which promotes CBDCs
Officials discussed digital transformation at Davos 2025

Implications for Organizations

For Financial Institutions Operating in Vietnam

Immediate Actions Required:

Ensure all biometric systems are operational and tested
Complete verification of all customer accounts
Implement automated transaction monitoring for threshold requirements
Establish clear processes for account reactivation
Maintain detailed compliance documentation

Ongoing Obligations:

Regular system audits and penetration testing
Staff training on biometric verification procedures
Customer support for verification issues
Coordination with State Bank of Vietnam on compliance reporting

For Multinational Corporations

Employee Banking Considerations:

Expat employees must complete biometric verification in-person
Plan for verification trips during onboarding
Consider corporate accounts with proper legal representative verification
Maintain backup payment methods for employees

Operational Risk Assessment:

Payment processing dependencies on verified accounts
Supply chain finance implications
Vendor payment capabilities
Emergency fund access procedures

For Compliance Departments

Key Takeaways:

Digital identity requirements are accelerating globally - Prepare for similar mandates in other jurisdictions
Biometric data governance is critical - Develop policies for biometric data handling and storage
Cross-border implications are complex - Map international operations against emerging digital ID requirements
Technology readiness is non-negotiable - Ensure systems can integrate with government digital identity platforms
Customer communication is essential - Develop clear, multilingual guidance for diverse customer bases

Looking Forward: 2025-2030 Vision

Vietnam's digital transformation roadmap extends to 2030 with ambitious goals:

Phase 1: Completion (2025)

Universal chip-based ID card adoption
VNeID application available to all citizens
Integration across all government services
Banking sector full compliance

Phase 2: Expansion (2026-2027)

Border control biometric authentication at all entry points
Healthcare system integration (electronic health records linked to e-ID)
Tax system full integration with digital identity
Educational institution access via e-ID
Integration of criminal record certificates into VNeID

Phase 3: Full Digital Economy (2028-2030)

80-90% of adults with digital signatures and e-ID accounts
Comprehensive cashless payment infrastructure
Open identity platform connecting public and private services
Advanced AI-powered fraud detection
Potential launch of Central Bank Digital Currency (CBDC)

Recommendations for Compliance Teams

Short-Term (0-6 months)

Assess Exposure: Identify all operations, accounts, and employees affected by Vietnam's requirements
Verify Compliance: Ensure all Vietnamese bank accounts have completed biometric verification
Document Processes: Create clear procedures for maintaining compliance
Train Staff: Educate relevant personnel on requirements and verification processes

Medium-Term (6-18 months)

Monitor Developments: Track regulatory changes and enforcement patterns
Evaluate Technology: Assess biometric authentication capabilities for your organization
Review Privacy Policies: Update data protection policies to address biometric data handling
Engage Stakeholders: Communicate requirements to affected employees, customers, and partners

Long-Term (18+ months)

Strategic Planning: Incorporate digital identity requirements into global compliance strategy
Technology Investment: Build or acquire capabilities for biometric authentication and digital identity verification
Policy Development: Create comprehensive frameworks for digital identity governance
Scenario Planning: Prepare for similar mandates in other jurisdictions

Conclusion

Vietnam's deactivation of 86 million bank accounts represents a pivotal moment in the global evolution of digital identity and financial compliance. While the initiative has achieved significant fraud reduction and financial system modernization, it has also highlighted critical challenges around accessibility, privacy, and international coordination.

For compliance professionals, this case study offers essential insights:

The trend toward mandatory biometric authentication is accelerating globally. Organizations must prepare for similar requirements in other jurisdictions, building technological capabilities and governance frameworks now.

Security and accessibility must be balanced. While robust identity verification reduces fraud, overly aggressive enforcement can create financial exclusion and operational disruptions.

International coordination matters. As financial systems become increasingly interconnected, unilateral digital identity mandates can have far-reaching cross-border implications.

Privacy and surveillance concerns are legitimate. Centralized biometric databases create risks that must be addressed through strong data protection frameworks and oversight mechanisms.

As Vietnam moves forward with its vision for a fully digital economy by 2030, the global compliance community will be watching closely. The lessons learned—both positive and cautionary—will shape how other nations and organizations approach the complex intersection of digital identity, financial security, and individual rights in the years ahead.

Additional Resources

State Bank of Vietnam: Official guidance and compliance updates
Ministry of Public Security: VNeID application and registration information
VNeID App: Available on iOS and Android app stores
National Public Service Portal: Integrated e-ID services
Bank for International Settlements: International standards and guidance

This article is based on publicly available information as of October 2025. Organizations should consult legal counsel and local authorities for specific compliance guidance.