In light of the unprecedented imposition of financial sanctions on certain individuals and entities in Hong Kong and Mainland China by the US government (US Sanctions), the Hong Kong Monetary Authority (HKMA), in twocirculars2, set out its expectations for authorized institutions (AIs) and stored value facility (SVF) licensees respectively. In the circulars, whose contents are identical, HKMA clarifies the distinction between targeted financial sanctions applicable under Hong Kong law and unilateral sanctions imposed by foreign governments.

Whilst HKMA confirms that unilateral sanctions imposed by foreign governments have no legal status in Hong Kong and hence no obligation is created for AIs and SVF licensees under Hong Kong law, HKMA expects AIs and SVF licensees to assess carefully all risks involved based on a balanced approach and decides whether to continue to provide banking services to an individual or entity designated under a unilateral sanction, endeavouring to treat customers fairly.

Accordingly, each AI and SVF licensee will have to assess the risks and implement policies having regard to its own circumstances. If you require advice on the US Hong Kong Autonomy Act and the US Sanctions, please contact us.

Targeted Financial Sanctions Regime

Hong Kong fully implements targeted financial sanctions in compliance with the United Nations Security Council Resolutions, pursuant to the United Nations Sanctions Ordinance (Cap. 537) and the United Nations (Anti-Terrorism Measures) Ordinance (Cap. 575). Whilst HKMA does not maintain or issue any form of sanctions or designation list, it plays a supervisory role within the targeted financial sanctions regime in relation to the systems and controls put in place by AIs and SVF licensees for complying with these legal requirements.

Foreign Government Unilateral Sanctions

HKMA clarifies that unilateral sanctions imposed by foreign governments are not part of the international targeted financial sanctions regime and have no legal status in Hong Kong. That being the case, no obligation is created for AIs and SVF licensees under Hong Kong law.

That said, HKMA reminds AIs and SVF licensees of the need to establish and implement policies for their Hong Kong businesses that are informed by a thorough assessment of any legal, business and commercial risks involved, and based on a balanced approach. In assessing whether to continue to provide banking services to an individual or entity designated under a unilateral sanction which does not create an obligation under Hong Kong law, the board and senior management of the AI or SVF licensee should have particular regard to the treat customers fairly principles.


1 Hong Kong Monetary Authority (2020) 'Financial Sanctions (For AIs)', Circulars [online]. Available at: <https://www.hkma.gov.hk/media/eng/doc/key-information/guidelines-and-circular/2020/20200808e1.pdf> (Accessed: 11 August 2020)

2 Hong Kong Monetary Authority (2020) 'Financial Sanctions (For AIs)', Circulars [online]. Available at: < https://www.hkma.gov.hk/media/eng/doc/key-information/guidelines-and-circular/2020/20200808e2.pdf> (Accessed: 11 August 2020)