Hong Kong's SFC Privately Clears Way for Compliance with U.S. Sanctions
Hong Kong’s SFC has privately told institutions that they can comply with U.S. sanctions without facing automatic reprisals under the jurisdiction's national security law.
Hong Kong’s Securities and Futures Commission has privately told financial institutions that they can comply with U.S. sanctions without facing automatic reprisals under the jurisdiction’s new national security law, the Financial Times reported.
The counsel comes in response to legal concerns that a clause in the security law would trigger harsh penalties against companies that “collude” with a foreign government’s sanctions on Hong Kong, the newspaper said. In response to the implementation of the controversial law in June, the United States blacklisted Chinese and Hong Kong officials, including the city’s leader, Carrie Lam.
The events, attorneys warned at the time, appeared to place financial institutions in the quandary of having to obey opposing laws.
The securities regulator has since quietly assured global banks that they are unlikely to run into legal trouble by complying with U.S. sanctions, according to the FT, which cited two individuals with direct knowledge of the matter. SFC officials suggested that the clause in question was intended to target those who proactively sought sanctions against the city rather than entities that passively complied with U.S. blacklists.
The officials cautioned that the SFC did not have jurisdiction over the law’s enforcement, however.
“[Banks] are not too worried any longer about a conflict with the [security law],” one of the individuals told the FT.
Yet financial institutions operating in Hong Kong remain uneasy about how future guidance on the security law could impact their legal and compliance departments, according to the report.
“I don’t think the Hong Kong government knows [what to publish], probably because consent from Beijing is missing,” a businessperson involved in industry discussions told the newspaper.