The “5% Revenue” Hammer: The Impact of New Sanctions on Personal Data Protection

In our ongoing series “Personal Data Protection & Compliance with Decree 13/2023/NĐ-CP,” we’ve explored Vietnam’s current legal framework and the existing forms of penalties for personal data violations. However, a much larger financial “hammer” awaits organizations and businesses that fail to comply: the upcoming Draft Law on Personal Data Protection (PDPL) and the Draft Administrative Sanctions Decree (CASD) in the field of cybersecurity and personal data protection. These documents are expected to bring about a significant “revolution” in ensuring data privacy in Vietnam.

 

The Draft Administrative Sanctions Decree (CASD): Potentially Staggering Financial Penalties

To effectively implement the PDPL, the Vietnamese government is actively developing the Draft Administrative Sanctions Decree (CASD) in the field of cybersecurity and personal data protection. This draft is expected to be issued after the PDPL is passed, completing Vietnam’s legal system for data protection.

The most notable and potentially impactful proposal in the Draft CASD is a fine of up to 5% of the total revenue from the preceding financial year in Vietnam for violating organizations and businesses. This is a substantial figure, akin to the European Union’s GDPR (General Data Protection Regulation), where fines can reach up to 4% of global turnover or 20 million Euros, whichever is higher.

Such a revenue-based penalty indicates Vietnam’s serious and determined approach to personal data protection, placing significant pressure on businesses. Even a minor violation could lead to immense financial damages, forcing businesses to fundamentally reassess their data management and protection strategies.

 

Beyond Fines: A Suite of Severely Strict Ancillary Sanctions

In addition to significant financial penalties, the Draft CASD also proposes a series of ancillary sanctions that can directly and severely impact your business operations. These penalties are designed not only to deter but also to ensure thorough remediation and restore public trust:

  • Revocation or suspension of business licenses for 1 to 3 months: This penalty directly affects a business’s legal ability to operate, potentially leading to a temporary halt or complete cessation of operations for a specified period.
  • Confiscation of objects and means used for administrative violations: This results in asset loss and operational disruption when tools and equipment related to the violation are seized.
  • Temporary or indefinite suspension of personal data processing for 1 to 3 months: For most businesses in the digital age, personal data processing is the backbone of all operations (marketing, sales, customer care, operations). A suspension could mean immediate operational paralysis, loss of revenue, and significant customer dissatisfaction.
  • Compulsory irreversible deletion of personal data: This is a technically complex and absolute requirement. It’s not just about hitting “delete”; it demands secure, unrecoverable data deletion methods across all systems, backups, and even with third-party processors. This could lead to the permanent loss of valuable business information, customer history, or critical research data.
  • Compulsory restitution or forfeiture of illegal gains: Aims to strip away any benefits obtained from the violation, sending a strong message against illicit data monetization.
  • Compulsory public apology in mass media: Causes severe reputational damage, long-term erosion of trust, and negative public relations.

 

Preparing for the New Era: Boosting Awareness and Proactive Action

These impending sanctions are not just a warning; they’re a powerful reminder of the critical importance of complying with personal data protection regulations. A 5% revenue fine, coupled with potential license revocation or operational suspension, could push any business into an extremely difficult, even bankrupt, situation.

To face these challenges and turn them into opportunities to build trust, organizations need to focus on the following key areas:

  1. Understand the Data Lifecycle and Responsibilities: End-toto-end responsibility, from collection, storage, processing, and sharing to deletion, must be strictly compliant. Implementing Data Protection Impact Assessments (DPIAs) and Cross-Border Data Transfer Impact Assessments (DTIAs) isn’t just a checkbox; it’s a continuous risk management tool.
  2. Invest in Robust Cybersecurity and Incident Response Planning (IRP): Data breaches can occur unexpectedly, and the 72-hour notification requirement is very strict. Businesses need 24/7 monitoring capabilities, early threat detection, and a well-rehearsed incident response plan that includes forensic capabilities and clear communication protocols. Insufficient security measures will be a primary basis for applying sanctions.
  3. Implement Verifiable Data Management and Deletion Solutions: The requirement for “compulsory irreversible deletion of personal data” isn’t simple file deletion. It demands specialized technical solutions and transparent processes to ensure data genuinely disappears from all systems and backups, including those held by third parties.
  4. Ensure Operational Resilience and Business Continuity: The risk of “temporary suspension of data processing” means businesses must assess their dependency on personal data processing and have contingency and business continuity plans to mitigate damages if a suspension order is applied.
  5. Build Internal Legal & Compliance Expertise: Navigating complex regulations requires a deep understanding of the law, the development of transparent internal policies, and regular staff training on data protection awareness and procedures.

 

Conclusion: Transforming Risks into Competitive Advantages

The impending severe sanctions are a stark wake-up call. However, they also present an opportunity for Vietnamese businesses to elevate their data governance capabilities, strengthen the trust of customers and partners, and thereby build a sustainable competitive advantage in the digital economy.

Investing in cybersecurity and data compliance now not only helps businesses avoid severe penalties but also builds a reliable and professional brand image.

Disclaimer: This publication is intended for general informational purposes only. It should not be construed as professional legal advice for any specific case, organization, or inpidual.