The House Select Committee on the Strategic Competition between the United States and the Chinese Communist Party, composed of leaders from both parties in the United States House of Representatives, has raised concerns about Hong Kong becoming a center for money laundering and circumventing sanctions for countries like Russia, Iran, and North Korea. They are urging a reevaluation of Hong Kong’s continued access to good banking relations with the United States.
This committee, established in the 118th United States Congress, focuses on economic and security competition with the Chinese Communist Party, often calling for both parties to take tougher measures against the CCP.
In a letter addressed to U.S. Treasury Secretary Janet Yellen, the bipartisan leaders of the committee highlighted Hong Kong’s role in exporting controlled Western technology to Russia, setting up shell companies to purchase Iranian oil, managing “ghost ships” for North Korea, and engaging in other activities that violate U.S. trade controls.
The letter, signed by Republican Congressman John Moolenaar from Michigan and Democratic Congressman Raja Krishnamoorthi from Illinois, chairman and chief member of the committee respectively, is set to be publicly released on Monday, November 25th as reported by The Wall Street Journal.
The lawmakers have requested the Treasury Department to provide information on how they intend to combat money laundering and sanctions evasion through the Hong Kong financial system.
Both congressmen have previously collaborated extensively on CCP-related issues, including pressuring the Chinese owners of TikTok to sell the app, with Senator Marco Rubio, a nominee for Secretary of State chosen by former President Donald Trump.
The lawmakers stated, “Hong Kong has transformed from a trusted global financial center to a key role in an increasingly tight authoritarian axis comprising China, Iran, Russia, and North Korea. We must now question whether America’s long-standing policies towards Hong Kong, particularly in regards to its financial and banking sector, remain appropriate.”
Citing a study, the lawmakers pointed out that in 2023, nearly 40% of goods shipped from Hong Kong to Russia included high-priority items such as semiconductors usable in the Ukraine conflict.
A spokesperson for the Hong Kong government refuted the accusations of being a money laundering center, stating that Hong Kong possesses a robust law enforcement system to prevent the illegal transfer of strategic goods.
While Hong Kong holds a special status within China, an increasing exodus of foreign nationals as Beijing tightens its grip on the territory has raised doubts about Hong Kong’s position as a global financial center. The U.S. government continues to condemn Hong Kong authorities for cracking down on dissent under the strict national security law.
Despite these challenges, many Western banks still conduct some operations in Hong Kong.
On November 19th, a Hong Kong court sentenced dozens of pro-democracy advocates for subversion under CCP laws. The Biden administration called for their immediate unconditional release, while the Hong Kong government defended the “fair and open” verdict as being defamed.
On the same day, a financial summit hosted by the Hong Kong government attracted numerous global financial leaders, including David Solomon, chairman of Goldman Sachs, Jane Fraser, CEO of Citigroup, and Ronald O’Hanley, CEO of State Street. Leaders from HSBC, BNP Paribas, and other institutions also attended the meeting.
Banking leaders did not publicly discuss the court litigation during the summit’s panel sessions.
(Adapted from reporting by The Wall Street Journal)