11 September 2024 - Last week, the U.S. Departments of State, Agriculture, Commerce, Homeland Security, and Treasury jointly released an updated Hong Kong Business Advisory, warning U.S. businesses about risks to their operations and activities in Hong Kong. The last one was published in July 2021.
The advisory warns of heightened risks from the China imposed National Security Law (NSL) which came into effect in 2020, and the Safeguarding National Security Ordinance (SNS Ordinance or “Article 23”) which was introduced in March of this year.
The advisory highlights risks for business operating in Hong Kong which “may negatively affect businesses’ staff, finances, legal compliance, reputation, and operations” and extraterritorial applications of the national security laws.
The advisory highlights the following:
Businesses operating in Hong Kong, as well as individuals conducting business on such companies’ behalf, are subject to the broad and vague provisions of the NSL and the SNS Ordinance.
Businesses should be aware that the extraterritorial application of the SNS Ordinance could impact businesses and individuals outside Hong Kong.
Businesses operating in Hong Kong face potential legal, regulatory, operational, financial, and reputational risks, including of increased scrutiny, potential financial penalties, and legal actions for perceived violations of the NSL or the SNS Ordinance.
Businesses operating in Hong Kong may face conflicting jurisdictional requirements and liability in connection with sanctions compliance efforts. Failure to adhere to U.S. sanctions can result in civil and criminal penalties under U.S. law.
The Committee for Freedom in Hong Kong Foundation (CFHK Foundation) supports the updated Business Advisory and laments that such advisories are required for a city that was once of the most free and open business environments in the world.
Jon Stivers, U.S. Director, CFHK Foundation said:
“The U.S. is taking steps to protect American citizens and American business from the reach of the CCP and the Hong Kong authorities. It’s sad that the warnings and risks from Business Advisories seem to keep growing and getting stronger. 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.”
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