The Hong Kong government, via Acting Secretary for Commerce and Economic Development Dr Bernard Chan and in response to a query from lawmaker, the Hon. Kenneth Leung, issued a press release on 23 January 2019, publishing figures on the number of sanctions investigations and related enforcement actions undertaken by the Hong Kong government on potential breaches of United Nations Security Council (UNSC) sanctions over the past five years, as well as detailing staffing levels dedicated to such investigations.
The press release confirms that the governmental departments enforcing the United Nations Sanctions Ordinance (Cap 537) (the "Ordinance"), comprise i) the Hong Kong Police Force (HKPF) and ii) the Customs and Excise Department (C&ED"). It states the workload of 69 staff in HKPF and 47 staff in C&ED includes enforcement review and action arising out of the Ordinance. A more detailed breakdown of manpower for each duty concerned was not available, however.
In terms of the investigations figures, investigations by HKPF are confirmed to be up from three in 2014 to 201 in 2018, and those by the C&ED increased from 10 to 99 during the same period. Whilst there has been a clear rise in the number of sanctions investigations, the figures do not explain why there has been such an increase in investigations. The press release also confirms that there have no prosecution cases brought under the Ordinance to date.
Notwithstanding the lack of prosecutions, the press release confirms that 'Hong Kong has a robust system to implement sanctions imposed by the UNSC' and that the agencies' investigation efforts act as a deterrent to potential violators. In that regard, the press release notes that a number of Hong Kong-registered companies have been struck off and certain vessels have been denied entry into Hong Kong waters, and that these actions are deterrents to those considering using Hong Kong as a base to violate UNSC sanctions. The press release also confirms the agencies actively investigate all suspected violations of UNSC sanctions, following up 'without fear or favour' and would institute prosecution where there were sufficient evidence.
The press release stresses that it is the Hong Kong government's job to uphold the sanctions imposed by UNSC, namely in respect of the 14 places and two organisations as denoted by the UNSC, and flagged that, whilst countries are able to impose unilateral sanctions against certain places, the Hong Kong government 'does not have the responsibility nor the authority to enforce these unilateral sanctions or investigate related cases'1.
These comments are particularly pertinent in light of the recent arrest of Huawei's Chief Financial Officer Sabrina Meng Wanzhou at the request of US authorities on allegations of the company's dealings with UNSC-sanctioned Iran, through a Hong Kong shell company. Hong Kong's Deputy Secretary of Commerce and Economic Development Bureau Vivian Sum Fong-Kwang recently told legislators that 'Hong Kong is not obliged to enforce sanctions imposed by the United States', and 'the city government would only act on sanctions ordered by the UN Security Council, and would not enforce unilateral sanctions by individual jurisdictions, including the US or the European Union2'. It is not yet clear whether the allegations against Meng Wanzhou and Huawei could fall under the UNSC restrictions.
Additional sanctions-related media coverage for the Hong Kong government came in the form of a Hong Kong-registered vessel having been detained by South Korean authorities in November 2017 for alleged transfer of oil to the Democratic People's Republic of Korea, also subject to the UNSC-sanctions regime. The case is now the subject of judicial review proceedings, due to be heard in early 2019.3
Evidently there has been an increasing effort by the Hong Kong government to tackle potential breaches of UNSC sanctions over the past five years. Given the increased focus on sanctions enforcement, both at home and internationally, and particularly in light of the ongoing case involving Huawei, there will no doubt continue to be increased scrutiny on the Hong Kong government's actions in the sanctions space. It is likely the government will continue to increase its efforts in deploying deterrent tactics and strengthening its enforcement capabilities and, given the number of UNSC sanctions investigations has been significantly trending upwards, Hong Kong could at some point also see the first prosecution case brought under the Ordinance.