US Regulators and Hong Kong Banks Discuss Sanctions on Russia

In Hong Kong, U.S. Treasury officials engaged Chinese and foreign banks, emphasizing compliance with new Biden administration sanctions on Russia’s military sector amidst global efforts to increase pressure on Moscow following its invasion of Ukraine.

Andrea Gacki, the director of the Treasury Department’s Financial Crimes Enforcement Network, led two meetings involving representatives from Chinese and Western financial institutions, as well as the Hong Kong chapter of the Association of Certified Anti-Money Laundering Specialists.

Notable attendees included executives from Bank of China, Industrial and Commercial Bank of China, Bank of Communications, CMB Wing Lung Bank, UBS, Citigroup, JPMorgan Chase, Goldman Sachs, Morgan Stanley, Deutsche Bank, Barclays, and BlackRock.

Participants discussed the implications of a December executive order subjecting foreign financial institutions to secondary sanctions for aiding Russia in evading sanctions. Focus was on transactions involving sanctioned individuals linked to Russia’s military industry or dual-use items under U.S. export controls.

While the U.S. Treasury did not comment, Citi declined to respond, and other banks remained silent upon request.

This follows earlier efforts in June, where U.S. Treasury officials met with Hong Kong financial institutions, urging vigilance in identifying U.S. high-tech items transiting through Hong Kong to Russia. HSBC, in September, heightened compliance by suspending remittance services for Russian corporate clients.

Globally, the U.S. has been firm in penalizing entities engaging with sanctioned individuals, extending warnings to businesses worldwide. In November, firms in the UAE, China, and Turkey faced sanctions for supplying military-related goods to Moscow.

The Biden administration continues to restrict Russia’s access to technology and defense equipment, targeting routes often passing through friendly territories. Hong Kong, identified as a significant hub for high-value chip exports to Russia, is under scrutiny.

Deputy Secretary Wally Adeyemo plans to brief European and Japanese financial institutions this month on the executive order’s implications.

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