22 July, 2024 – Today the Committee for Freedom in Hong Kong (CFHK) Foundation released a new report on Hong Kong’s leading role in facilitating the transfer of funding and restricted technology to Russia, Iran, and North Korea - three countries that the international community has sanctioned for their actions that threaten global security and stability.
In a report titled “Beneath the Harbor: Hong Kong’s Leading Role in Sanctions Evasion”, author Samuel Bickett details growing trade between Hong Kong and sanctioned countries and the city’s key role in providing Russia dual-use technology for its war effort.
Through detailed analysis and investigation using publicly available data collected by C4ADS, a Washington, D.C.-based global security nonprofit, as well as corporate records and other open-source data, we highlight how Hong Kong is being used to undermine U.S. and international sanctions and export controls that were designed to deny sensitive technology and funding to these three countries.
Hong Kong until recently was considered a top-tier global financial center, its influence rivalled only by New York and London. Governed by rule of law, its compliance with international standards made it a trusted partner to the world. But all that has changed, and Hong Kong’s emergence as a global center for illicit finance and trade reflects deliberate government policy. Hong Kong Chief Executive John Lee’s statement in October 2022 that the territory would not enforce global sanctions on Russia gave a green light to illicit operators to set up shop in the city. We found that many have done so, from Russian tanker owners to Iranian exporters of drone technology.
Our report examines how the Hong Kong government’s regulatory environment facilitates sanctions evasion by allowing easy concealment of corporate ownership and rapid creation and dissolution of companies. Slow and inconsistent enforcement of international sanctions has allowed evaders to adapt and continue their operations in Hong Kong with relative impunity.
The report was authored by Samuel Bickett, a Hong Kong human rights lawyer, researcher, and advocate.
Samuel Bickett, Hong Kong human rights lawyer and advocate, said:
“The sheer breadth of Hong Kong’s sanctions evasion uncovered in our research, coupled with the ease with which the city’s pre-existing corporate infrastructure has been exploited to support these illicit activities, highlights a significant and urgent global security threat. The U.S., E.U., and their allies must equip their sanctions and export control agencies with the necessary resources and political support to target Hong Kong banks, corporate services firms, and other enablers of sanctions evasion networks directly to disrupt the illicit networks at their core.”
Shannon Van Sant, Advisor to the Committee for Freedom in Hong Kong Foundation:
"Hong Kong's leaders say they will not enforce global sanctions. It is another sign of the city withdrawing from international norms and rule of law that keep the world safe and secure. Our report shows how Hong Kong's role as a transshipment center to autocratic and sanctioned regimes is growing. The U.S. and the international community must consider and act on the policy recommendations in this report."
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