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Hong Kong’s financial institutions could face especially aggressive sanctions from the United States if President Donald Trump loses the election against Joe Biden in November, an international sanctions expert warned on Thursday.
Hong Kong’s Home Rule Act, which came into effect in July in response to the national security law that Beijing imposed on Hong Kong, allows Washington to sanction individuals and financial institutions it believes helped erode the city’s autonomy. .
Elizabeth Rosenberg, director of the energy, economics and security program at the Center for a New American Security, made her remarks Thursday during a webinar conducted by the University of Hong Kong law school.
Trump … [could] create the opportunity for some terrifyingly aggressive actions like the grenade you throw as you walk out the door
Elizabeth Rosenberg, Center for a New American Security
US Secretary of State Mike Pompeo has until October 12 to present the list of sanctioned individuals to Congress. Treasury Secretary Steve Mnuchin is also required to submit a list of non-US financial institutions that have knowingly conducted “significant transactions” with individuals.
“[The treasury list] It could come, if Biden is elected, in the period of President Trump’s failure, who might feel particularly upset and frustrated and has a bone to pick with China or Hong Kong, and create the opportunity for some terribly aggressive actions like the grenade strips when You walk out the door, ”Rosenberg said.
The treasury department has between 30 and 60 days after the state department acts to publish its list, but Trump is not required to impose sanctions on those listed.
Rosenberg, a former senior adviser to the US Treasury Department who helped develop and implement sanctions on countries like Iran, Libya and Syria, said it was difficult to know what the list would look like, given Trump’s “terribly unpredictable” nature. administration.
But it said it could be extended beyond the 11 Hong Kong and Chinese officials already sanctioned in August under an executive order, including Hong Kong leader Carrie Lam Cheng Yuet-ngor, to include people who worked closely with them. or that you were financially linked to them. as well as the financial participations that act on its behalf.
Lam has said that the US sanctions would only be inconvenient and would not intimidate her. She also dismissed the effect of the sanctions, citing her lack of US assets or interest in visiting the country.
The United States imposes sanctions on the chief and assistant prosecutor of the International Criminal Court
Under the executive order, sanctioned individuals or entities would have their U.S.-based assets blocked, and Americans and businesses would generally be prohibited from dealing with them.
Benjamin Kostrzewa, a lawyer specializing in international business law who also participated in the webinar, said the real danger came from sanctions on financial institutions unrelated to the United States.
“Right now, many banks are considering what that looks like, and the Hong Kong Home Rule Act and executive order do not define what will be considered a ‘significant transaction’ with those people or material support. So everyone should evaluate that, ”he said.
Under US sanctions, as well as intense tensions between the US and China, Hong Kong banks and financial institutions, such as HSBC, are finding it necessary to carry out the difficult maneuver to satisfy both parties.
Banks and financial institutions could struggle to satisfy both sides in the US-China trade war. Photo: AP
One ray of hope, Kostrzewa said, would be that the sanctions allow for flexible interpretation, and regulators are likely to give banks the space to comply with both sets of laws, or have discretionary application.
However, he cautioned that Hong Kong could also take the maximalist approach to law enforcement, as could the United States.
“If that’s the case, it will force banks and other institutions to choose between complying with the laws of China and Hong Kong, or complying with the application of US sanctions,” he said.
