Preparing for the worst, banks in Hong Kong reviewing client lists as US preps sanctions over national security law
- Client lists examined periodically as part of compliance functions, but Hong Kong Autonomy Act has accelerated reviews
- Banks are examining prior American sanctions to game plan the potential path for any US actions, sources say
Global banks in Hong Kong are quietly combing through their client lists for people at risk as the United States prepares to move forward with sanctions against Chinese officials and possibly other individuals in the city over a controversial new national security law, according to people familiar with their thinking.
For big banks ranging from Citigroup and Goldman Sachs to HSBC and Standard Chartered, a lot is at stake.
If they are found to be doing business with blacklisted individuals, American lenders could face stiff penalties for running afoul of US sanctions and non-American banks could find themselves cut off from US dollar clearing and their top executives barred from travelling to the US under the recently passed Hong Kong Autonomy Act.
Those lenders also face the risk that complying with US sanctions would constitute a violation of the city’s wide-ranging national security law.
Mini vandePol, Asia-Pacific head of law firm Baker McKenzie's compliance and investigations group, said that the national security law, combined with the Hong Kong sanctions bill and a move by the US to rescind the preferred trading status of Hong Kong this week in response has led to “a significant increase in client queries”.
“The main questions are around how the different measures interact with one another, how the [national security law] will be implemented and in what circumstances will the government enforce breaches of the [law],” she said.
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What you should know about China's new national security law for Hong Kong