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Paying Chinese Partners in USD via a Third-Party Bank

6 min readFLAT LAW FIRM
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Paying Chinese Partners in USD via a Third-Party Bank: When It Is Lawful, When It Is Risky

"A Chinese partner asks to be paid in USD to its Hong Kong/Singapore account, via an intermediary bank in a third country — is that allowed?" Almost every Vietnamese business importing from China faces this question. The answer turns on a crucial distinction many confuse: an intermediary bank is very different from a third-party beneficiary.

Contents

1. Context: why Chinese partners often request this

Chinese businesses often request payment to USD accounts in Hong Kong or Singapore, or via intermediary banks, because: China's FX controls tightly manage USD flows; the parent runs a treasury center in a third country; or simply to optimize fees and transfer speed. For Vietnamese businesses, what matters is not "why they want it" but "can my files prove the transaction's legitimacy."

2. Vietnam's foreign-exchange framework

  • The 2005 Foreign Exchange Ordinance (amended 2013) is the foundational FX-management instrument.
  • Circular 32/2013/TT-NHNN (amended by Circular 16/2015/TT-NHNN) restricts foreign-exchange use within Vietnam's territory — the principle being that no transaction inside Vietnam may use foreign exchange as payment means, except permitted cases.

Key point: the restriction applies to transactions within Vietnam's territory. Cross-border payments to foreign partners for lawful goods/services import-export go through licensed banks under FX regulations — paying USD to a Chinese partner is therefore lawful in principle, with complete files evidencing the transaction.

3. Core distinction: intermediary bank vs third-party beneficiary

Intermediary/correspondent bank: just the "pipeline" moving money through the international payment system. Example: the Vietnamese bank routes USD via an intermediary in New York/Singapore to the Chinese partner's account. The ultimate beneficiary remains the contract counterparty — normal banking business with no special legal issue.

Third-party beneficiary: funds go to a different legal entity's account — not the contracting partner (e.g., a Hong Kong subsidiary, a Singapore parent, or a "designated" company). This is what banks scrutinize: they demand legal basis proving the beneficiary's link to the contract and apply stricter AML/KYC checks.

Confusing the two causes most trouble: many businesses think "via a third-party bank" is routine, when they are actually paying a third-party beneficiary.

4. Three risks of paying a third-party beneficiary

Risk 1 — Bank rejects the transaction. Licensed banks must enforce FX controls and anti-money-laundering. If files don't prove the third-party beneficiary's relation to the contract (collection mandate, parent–subsidiary relationship, tripartite agreement), the bank may refuse — and usually will refuse rather than take the risk.

Risk 2 — AML and international sanctions. Money flowing through multiple entities and countries is a money-laundering red flag. If the beneficiary touches sanctioned regions/persons, the transaction can expose the bank and the business to liability.

Risk 3 — Commercial disputes. Money paid to the third party but the main partner denies receipt (or the third party doesn't forward it) — the Vietnamese business is stuck: money gone, goods not shipped, struggling to prove it "paid the partner" under the contract.

5. Payment document checklist

  • [ ] Foreign trade contract with the Chinese partner (stating payment currency and terms).
  • [ ] Commercial invoice.
  • [ ] Customs declaration (for goods), transport and insurance documents.
  • [ ] For third-party beneficiaries: the partner's payment instruction letter or a tripartite agreement evidencing the collection mandate.
  • [ ] Documents proving the beneficiary–partner relationship (business licenses, group chart — for parent/subsidiary).
  • [ ] Readiness to explain the transaction's origin if the bank requests more (AML/KYC).

6. Safe structuring options

  1. Prefer paying the contracting partner directly. If the partner holds a USD account in its own name (even in Hong Kong/Singapore), this is cleanest — the intermediary bank is just technical plumbing.
  2. If third-party payment is unavoidable: put the payment instruction in the main contract (not just a side email), naming the beneficiary's name, account, bank, and relationship to the partner; require written confirmation that payment to the third party counts as payment to the partner.
  3. Test small first: with new partners, run a small-value trial transaction to test the full banking process before moving large sums.
  4. Consult the bank first: pre-send sample files to the licensed bank to confirm completeness — far cheaper than a frozen transfer order.

Contract clauses that prevent payment disputes. Three clauses repay their drafting cost many times over: (1) a precise payment-terms clause naming the currency, the bearing of banking charges (OUR/SHA/BEN), and the value date; (2) a sanctions/force-majeure allocation clause for the scenario where correspondent banks freeze or delay transfers; and (3) a notice clause requiring the Chinese counterparty to confirm receipt-side banking details in writing before each material payment — verbal or WeChat-confirmed account changes are a classic fraud vector.

7. FAQs

Q: Can a Vietnamese company pay USD to a Chinese partner?

A: Yes, for cross-border payments for lawful import/export of goods and services. The foreign-exchange restrictions in Circular 32/2013/TT-NHNN apply to transactions within Vietnam's territory; international payments to foreign partners go through licensed banks under FX regulations.

Q: How does an intermediary bank differ from a third-party beneficiary?

A: An intermediary/correspondent bank is just a link moving money through the payment system — the ultimate beneficiary remains the Chinese partner named in the contract. A third-party beneficiary means funds go to a different legal entity's account (not the contracting partner) — banks then demand clear legal basis (contract, payment instructions, tripartite agreement) and stricter AML/KYC checks.

Q: What are the risks if a Chinese partner asks for payment to a third-country account?

A: Three main risks: (1) the Vietnamese bank may reject the transaction if files don't prove the beneficiary's link to the contract; (2) AML risk — money-laundering red flags, international sanctions violations; (3) commercial risk — paying a third party while the main partner denies receipt, spawning disputes.

Q: What files are needed to pay USD to a Chinese partner?

A: Foreign trade contract, commercial invoice, customs declaration (for goods), transport/insurance documents, plus — for third-party beneficiaries — a payment instruction letter or tripartite agreement evidencing the collection mandate. The licensed bank may request additional AML/KYC documents.

8. When to work with a lawyer

Work with a lawyer when: a Chinese partner demands third-party-beneficiary payment and payment-instruction/tripartite terms need drafting; a bank rejects or freezes a transfer and files need review and explanation; or a high-value multi-country structure needs AML risk assessment. FLAT Law Firm advises international payments and FX for Vietnam–China transactions — hotline 0988424851.

References

  • 2005 Foreign Exchange Ordinance (No. 28/2005/PL-UBTVQH11), amended 2013.
  • Circular 32/2013/TT-NHNN (amended by Circular 16/2015/TT-NHNN).
  • Cross-checked via thuvienphapluat.vn and ASL Law analyses as of drafting (28/9/2026).

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