Can banks seize accounts for non-compliance with biometric requirements?

1. How Vietnam’s Project 06 Turned Biometric Rules into Mass Account Lockouts

Vietnam’s central bank and regulators implemented Project 06 and related decrees requiring banks to link active accounts to verified biometric identifiers — facial recognition or fingerprints — and set deadlines that triggered widespread enforcement beginning September 2025. The State Bank of Vietnam (SBV) reported deactivations affecting more than 86 million accounts, representing roughly 43% of accounts, by blocking access until customers completed biometric verification, a move regulators framed as “data cleansing” to bind accounts to digital identity and curb fraud ^{[3] [2]}. News analyses describe the action as permanent closures in some reports and deactivations in others: banks deactivated or closed accounts, but regulatory statements emphasize blocked access rather than immediate confiscation of funds, while independent reporting noted significant operational disruption, especially for elderly, foreign residents, or people without access to verification infrastructure ^{[1] [3] [2]}.

2. What "Seize" Means Here — Frozen Access, Not Automatic Confiscation

The terminology around “seize” or “close” in reporting conflates different legal and operational outcomes. SBV communications characterize the policy as deactivating accounts lacking required biometrics; balances remain in situ but are inaccessible until verification, and the stated aim was to link accounts to identities and cut fraud ^[2]. Media narratives calling this a mass “closure” reflect bank-side account suspension processes and in some cases permanent deletion of dormant or unverifiable accounts, which functionally removes access for the owner unless remedial steps are taken ^{[1] [3]}. The distinction matters legally and politically: suspension or closure for non-compliance under a regulatory program differs from judicial forfeiture or expropriation; the Vietnamese enforcement demonstrates state-directed access denial tied to identity rules rather than an immediate право to confiscate funds ^[2].

3. Fraud Reduction Versus Financial Exclusion — The Tradeoff Policymakers Emphasize

Authorities reported a substantial decline in fraud following enforcement, citing a 59% drop in reported fraud cases after biometric linking measures, which regulators use to justify the program as aligning with international standards and anti‑fraud goals ^[3]. At the same time, watchdogs, community groups, and reporting flagged significant risks of financial exclusion: elderly citizens, transient or foreign residents, and those lacking mobile devices or reliable internet faced barriers to completing biometric verification, with downstream impacts on livelihoods and access to wages, social transfers, and savings ^[3]. These competing outcomes reveal a policy tradeoff: biometric mandates can lower fraud but amplify exclusion and privacy concerns, and whether the net social welfare gain justifies mass deactivation depends on mitigation measures and access alternatives that reporting indicates were unevenly implemented ^[3].

4. Legal Context: Regulatory Mandates vs. Constitutional Protections Over Biometrics

Legal analyses of compelled biometrics in criminal investigations—primarily U.S. Fifth Amendment jurisprudence—do not directly control regulatory bank mandates; cases about forcing suspects to unlock phones with fingerprints address testimonial privilege and law‑enforcement compulsion, not administrative compliance with banking rules ^{[4] [5]}. The articles in the compile indicate that Fifth Amendment debates focus on testimonial versus physical evidence distinctions, and circuit splits reflect different outcomes in law‑enforcement contexts, leaving open how those principles would apply to administrative demands or private contractual terms in other jurisdictions ^{[5] [6]}. In Vietnam’s situation, the SBV’s regulatory authority and statutory framework under Project 06 drove compliance requirements, so constitutional protections discussed in criminal cases are parallel but not determinative for the administrative deactivation of accounts ^{[2] [4]}.

5. Broader Implications and Competing Agendas: Security, Inclusion, and Industry Stakes

The Vietnamese example signals a broader global tension: governments and banks pursue digital identity linkages to secure financial systems, while privacy advocates and consumer groups warn about exclusion and mass data collection. Reporting comes from state regulators, industry analysts, and independent outlets — each with incentives: regulators emphasize fraud reduction and international standards, industry voices may favor clearer identity rules to reduce risk, and civil‑society sources stress rights and access problems ^{[3] [2]}. Observers should note potential agenda signals in language — “data cleansing” and “align with international standards” frame the policy as administrative improvement, while “mass closure” rhetoric highlights social cost; the Vietnamese case shows that deactivating accounts for biometric non‑compliance is operationally feasible and legally implementable where law permits, but it raises unresolved questions about due process, remediation pathways, and privacy governance ^{[1] [3] [2]}.