In the News: Hong Kong Sanctions; Shortened Negative Lists; and Securities Licenses

                                                   Hong Kong Stock Exchange

US proposes sanctions on financial institutions, officials over Hong Kong

The United States is ramping up its response to Hong Kong's controversial national security law (NSL) as a new bill threatening sanctions on foreign officials and entities moves one step closer to becoming law. On June 25, the Hong Kong Autonomy Act passed the Senate. The bill proposes to sanction individuals and entities that "materially contributed to China's failure to comply with the Joint Declaration or the Basic Law" and financial institutions that "knowingly conducted a significant transaction with such identified individuals and entities." The following day, Secretary of State Mike Pompeo announced visa restrictions against Chinese officials, although the names of the officials were not disclosed. China responded on June 29 with visa restrictions on U.S. officials who "behave egregiously" in relation to Hong Kong.

The bill was passed by the Senate relatively quickly, around a month since it was introduced in late May. Section 5 stipulates a reporting requirement for the Secretary of State to identify individuals and entities for sanctions within 90 days of the law coming into effect. The Secretary of Treasury will then identify financial institutions for sanctions "[n]ot earlier than 30 days and not later than 60 days" after the identification of the targeted individuals and entities. This clarification of the timeline for the identification of financial institutions was added to the bill during the revision process.