Illicit Hong Kong

We campaign for stronger policy action to respond to Hong Kong’s rise as a global hub for sanctions evasion, destabilising the world from Ukraine to North Korea to Iran.

Hong Kong plays a central role in facilitating the transfer of money and restricted technology to Russia, Iran, and North Korea, three countries that the international community has sanctioned for their destabilising actions. The Hong Kong government’s regulatory environment, which provides for easy concealment of corporate ownership and rapid creation and dissolution of companies, has facilitated sanctions evasion. Slow and inconsistent enforcement by Western governments has allowed those actors to continue their operations with relative impunity. Hong Kong’s emergence as the top global node for illicit finance and trade also reflects deliberate government policy. In October 2022, Hong Kong Chief Executive John Lee said the territory would not enforce U.S. sanctions, and for years, the government has openly flouted its legal obligation to enforce the UN’s North Korea sanctions against evaders within its borders.

academic freedom and university autonomy in hong kong

How is Hong Kong helping Russia evade U.S. sanctions?

Eight months after Russia invaded Ukraine, shipments of technology categorised by the United States and European Union as the highest priority to Russia for its war effort, such as advanced semiconductors and communications equipment, had nearly doubled from prewar levels. They included products from U.S. companies such as Intel, Analog Devices, Apple and Texas Instruments – despite efforts by the U.S. government to stop sales of sensitive goods by U.S. companies to Russia. By the end of 2023, nearly 40 percent of the cargo shipped from Hong Kong to Russia was made up of these “Common High Priority Items.”

What will curb Hong Kong’s growing role as a source of sanctions evasion and illicit finance that sows global instability?

The United States, Canada, and the European Union have the legal authority to issue what’s called “secondary sanctions” that target Hong Kong and Chinese companies, banks, and individuals who do business with sanctioned companies. They should use this authority against the Hong Kong and Chinese banks, logistics firms, and corporate services agencies that provide the infrastructure for illicit trade with Russia, Iran and North Korea. The U.S. should also designate Hong Kong a Primary Money Laundering Concern (“PLMC”), a tool that would permit the Treasury Department to require U.S. financial institutions to disclose the beneficiaries of accounts opened by Hong Kong individuals. The U.S. should give the Treasury, Commerce, and State departments all the resources they need to do the job, and the U.S., EU, and their allies should increase enforcement and penalties against manufacturers and distributors of sensitive technologies.

How is Hong Kong helping Iran evade U.S. sanctions?

Hong Kong has spent years building its economic ties to Iran. Leaked emails the CFHK Foundation analysed from the Iranian petrochemical company Sahara Thunder revealed relationships with Hong Kong companies that sought to facilitate ship-to-ship transfers of Iranian oil, which would then be taken to foreign ports where its Iranian origin could be masked. Other Hong Kong companies have supplied the Western parts that Iran needs to produce drones – which have increasingly appeared on battlegrounds in Ukraine, Yemen, and elsewhere.

How is Hong Kong helping North Korea evade U.S. sanctions?

Hong Kong has long been a hub for managing vessels and money flows that North Korea relies on to prop up its regime. The CFHK Foundation reviewed more than a decade of UN Security Council reports on the country’s efforts to evade international sanctions. Hong Kong repeatedly appeared in these reports as the key hub for efforts to mask the fleet of “ghost ships” that conduct ship-to-ship transfers at sea with North Korea of banned oil and resources. For example, a Hong Kong-owned and -managed ship, the New Konk, was discovered to be sailing throughout the area using a series of laundered false identities to transfer goods to and from North Korea. The Hong Kong government has ignored repeated Security Council calls for action against ghost ships and their owners.

“Hong Kong is on a downward path from its peak as a global business and finance center. The world is waking up to new realities. Executives need to make hard choices about their investments and their staff and the risks they are willing to take.”

– Jonathan Stivers, CFHK Foundation’s U.S. Director

Our Impact

In July 2024, the CFHK Foundation published a report, “Beneath the Harbor: Hong Kong’s Leading Role in Sanctions Evasion.” In November 2024, the report’s author, Sam Bickett, testified before the Canadian Parliament’s Standing Committee on International Trade. In November 2024, Ranking Member Raja Krishnamoorthi and Chairman John Moolenaar of the House Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party wrote to Treasury Secretary Janet Yellen, asking for a briefing from Treasury Department officials to “understand how the Treasury intends to further combat the facilitation of money laundering and sanctions evasion through Hong Kong’s financial system.” Their letter cited research from the CFHK Foundation “Beneath the Harbor” report. We continue to advocate for the U.S. to issue secondary sanctions targeting those who do business with sanctioned companies, including Hong Kong and Chinese banks, logistics firms, and corporate services agencies that provide the infrastructure for illicit trade with Russia, Iran, and North Korea. We also campaign for the U.S. to designate Hong Kong a Primary Money Laundering Concern (“PLMC”), and advocate for Congress to increase resources and coordination across government departments responsible for sanctions and export control enforcement.

Read Report

Work We've Done on Illicit Hong Kong

Joint Statement: Finance Executives Should Withdraw from Hong Kong Global Financial Summit

November 14, 2024

By attending, they signal tacit support for an authoritarian regime on the same day that democracy leaders face prison sentences


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We campaign for stronger policy action to respond to Hong Kong’s rise as a global hub for sanctions evasion, destabilising the world from Ukraine to North Korea to Iran.

“Hong Kong is on a downward path from its peak as a global business and finance center. The world is waking up to new realities. Executives need to make hard choices about their investments and their staff and the risks they are willing to take.”

Our Impact

Work We've Done on Illicit Hong Kong

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