Raja Krishnamurthy expresses grave concern about Hong Kong’s growing involvement in illicit financial activities

Washington: According to an official statement, Ranking Member Raja Krishnamoorthi and Chairperson John Moolenaar of the US House Select Committee on Chinese Communist Party (CCP) have expressed grave concerns about Hong Kong’s growing engagement in illegal financial activities, such as money laundering and sanctions evasion.

They emphasized the city’s expanding function as a financial center for the heavily sanctioned countries of China (PRC), Iran, Russia, and North Korea in a letter to US Treasury Secretary Janet Yellen.

The MPs said that Hong Kong’s role as a reliable international financial hub changed to that of a key participant in the PRC’s growing authoritarian axis in 2020 with the passage of the National Security Law, which placed the city under Chinese Communist Party (CCP) authority. According to the statement, this legislation and the recent enactment of the contentious Article 23 have caused Hong Kong’s autonomy to deteriorate, which has prompted the US government to review its long-standing policy toward the city.

Through the Hong Kong Policy Act, the US has historically granted Hong Kong privileged trading status and treated it differently from Mainland China. However, the parliamentarians noted that the current and previous US administrations have declared that Hong Kong no longer deserves this particular treatment due to the recent deterioration of its autonomy, the statement added.

The letter also highlighted the dangers Hong Kong’s financial industry poses, pointing out the city’s growing participation in illicit oil trade with Iran, re-exporting technology that has been prohibited to Russia, and overseeing “ghost ships” involved in commerce with North Korea. According to recent estimates, semiconductors and other high-tech equipment required for Russia’s conflict in Ukraine accounted for approximately 40% of Hong Kong’s 2023 exports to Russia that were on the US and EU sanctions lists.

The MPs demanded more monitoring and more robust steps to prevent money laundering and sanctions evasion, even though US authorities have previously taken action against several firms in Hong Kong.

They asked the US Treasury Department to provide them with an update on the status of US banking links with Hong Kong banks, the changes made to US regulations in response to Hong Kong’s evolving situation, and the steps being taken to reduce financial risks.

“We are deeply concerned about the role Hong Kong is playing in facilitating illicit financial activity,” the MPs said. “Your leadership in this matter is crucial to ensuring the integrity of international financial systems and upholding US national security interests.”

The US Treasury Department is coming under more and more pressure to put in place more robust measures to defend against the escalating potential of financial misbehavior from Hong Kong as the city continues to come under international attention. The results of these initiatives may have a significant impact on future US-Hong Kong ties and international banking practices.