On October 17, 2024, the U.S. Department of the Treasury’s Office of Foreign Assets Control announced that it reached a $860,000 settlement with Vietnam Beverage Company Limited (“VBCL”), an alcoholic beverage company based in Vietnam. The settlement was made to resolve apparent violations of OFAC sanctions on the Democratic People’s Republic of Korea (“DPRK”) by two VBCL subsidiaries (“the Subsidiaries”) between 2016 and 2018. During this time frame, the Subsidiaries allegedly collected more than $1.1 million in payments from North Korean companies through U.S. financial institutions, including U.S. correspondent banks and a foreign branch of a U.S. financial institution, causing these intuitions to export financial services to North Korea in violation of DPRK sanctions. OFAC reported that the settlement amount was based on OFAC’s determination that, while the apparent violations were not voluntarily self-disclosed, they were non-egregious in nature.
According to OFAC, in 2017, VBCL acquired a majority ownership interest in several Vietnam-based alcoholic beverage companies that sold beer and spirits to customers around the world, including certain legacy customer in or connected to North Korea. According to OFAC, between April 2016 and October 2018, the Subsidiaries received a total of 43 wires through U.S. financial institutions from 15 different third-party companies located in Hong Kong, China, Turkey and others, that made payments on behalf of North Korean entities. At the time the apparent violations occurred, neither VBCL nor the Subsidiaries had a sanctions compliance program in place that monitored U.S. sanctions.
The apparent violations were reportedly discovered when the Subsidiaries underwent organizational changes in December 2019. When the new management team learned of the sales of alcoholic beverages to North Korea, the Subsidiaries were ordered to terminate further business dealings with North Korea. The discovery also prompted the Subsidiaries’ senior management to issue a compliance directive prohibiting business with sanctioned jurisdictions, including North Korea. The directive also required the Subsidiaries’ staff to screen sanctions lists before continuing its business with both renewing and prospective customers. Meanwhile, VBCL proactively informed OFAC of the Subsidiaries’ past sales to North Korea. VBCL also developed a sanctions compliance program based on OFAC’s May 2019 framework, mandated the creation of sanctions compliance teams, and hired an independent third party to conduct background checks on all customers. VBCL also arranged for the Subsidiaries to receive sanctions compliance training.
In arriving at the $860,000 settlement, the OFAC considered aggravating factors, including that the Subsidiaries’ senior management knew or should have known that they were doing business and receiving payments from DPRK entities. OFAC also considered mitigating factors, including VBCL’s substantial cooperation with OFAC investigators and the significant remedial measures s taken by VBCL and the Subsidiaries to address the apparent violations.
U.S. Department of Treasury Recent Action | OFAC Enforcement Release