Hong Kong fully implements targeted financial sanctions in compliance with the United Nations Security Council Resolutions (“UNSC Resolutions”), pursuant to the United Nations Sanctions Ordinance (Cap. 537) (“UNSO”) (its 12 subsidiary regulations) and the United Nations (Anti-Terrorism Measures) Ordinance (Cap. 575) (“UNATMO”).
Hong Kong does not implement sanctions above and beyond those imposed by the United Nations Security Council (“UNSC”). The Security Bureau maintains lists of designated individuals and entities under the UNATMO, which covers the UNSC Resolution 1373 relating to terrorism financing, while the Commerce and Economic Development Bureau (“CEDB”) maintains list of designated individuals and entities under the UNSO.
Before engaging in a business relationship or providing legal advice, members should ensure that they do not deal with designated individuals and entities sanctioned by the UNSC. Members are required to screen the names of their clients, their representatives, beneficial owner(s) and connected parties against the names (and aliases) of designated individuals and entities on a risk sensitive basis.
The Hong Kong Government or its regulators, including the Law Society, do not issue or maintain any form of sanctions or designated individuals and entities list but they do have a supervisory role within the targeted financial sanctions regime in relation to firms’ systems and controls for complying with these legal requirements.
Sanctions imposed by foreign governments are not part of the international targeted financial sanctions regime and have no legal status in Hong Kong. Therefore, no obligation is created on the firms under Hong Kong law to comply with other sanctions regimes. However, members must be aware of the extraterritorial application of other sanction regimes for example the Office of Foreign Assets Control - Sanctions Programs (US), the European Union Sanctions List (EU) and Her Majesty Treasury Sanctions List (UK). It is crucial for a firm to consider its operations and risks, its obligations under sanctions-related and existing money laundering and terrorist financing laws, and whether the provision of a firm’s legal services may have wider sanctions-related implications for its client.
The three most common types of measures imposed by the UNSC, these are:
As of August 2022, there were 12 countries and two organisations whose designated persons were subject to sanctions or other restrictions.
Targeted financial sanctions are aimed at specifically named individuals, groups, undertakings and entities collectively referred to as “designated persons” and are measures for asset freezing and prohibitions to prevent funds or other assets from being made available, directly or indirectly, for the benefit of specified designated persons who are sanctioned.
In practice, sanctions restrictions mean that a legal practitioner cannot:
The Security Bureau maintains lists of terrorists and terrorist associates under the UNATMO, while the CEDB maintains list of designated individuals and entities under the UNSO. The Consolidated UNSC Sanctions List contains all names of designated individuals and entities in one document. All lists are regularly updated, therefore member firms and sole practitioners that do not utilise automatic screening solutions should regularly check for Sanctions updates and name screen against the most up to date Consolidated UNSC Sanctions List.
Please click here to access the lists:
Lists of persons and entities subject to financial sanctions under the United Nations Sanctions Ordinance, Chapters 537 and its subsidiary legislation, please click here.
United Nations (Anti-Terrorism Measures) Ordinance, Chapter 575 - names of persons designated as terrorists or terrorist associates by the Committees of the United Nations Security Council, please click here.
The Consolidated United Nations Security Council Sanctions List (includes all individuals and entities subject to sanction measures), please click here.
The Security Bureau notifies the respective regulators, including the Law Society of Hong Kong, of any changes to the UN Sanction Lists and of any updates to the list of terrorists and terrorist associates maintained under the UNAMTO.
Members are legally obliged to report to the Joint Financial Intelligence Unit (“JFIU”) if they know or suspect that:
If, before providing legal services or during the relationship, a legal professional has identified a designated person or an association with such person or formed a suspicion that there may be a sanctions violation, they must:
Remember that even if you did not provide legal services and declined to act for the client, you are still required to report the case to JFIU. Not doing so is a criminal offence which may result in criminal prosecution or a monetary penalty.
Members should also consider submitting an STR to the JFIU if there is a suspicion of money laundering (“ML”), terrorist financing (“TF”) or proliferation financing (“PF”). There are offences under existing ML and TF laws that are relevant when dealing with sanctions-related matters:
|UNSO||Contravention of sanctions under the UNSO shall be punishable on conviction on indictment by an unlimited fine and imprisonment for a term not exceeding 7 years.|
|UNATMO||Contravention of the relevant provisions under the UNATMO shall be punishable on summary conviction by a fine of HKD100,000 and imprisonment for two years, or on conviction on indictment by an unlimited fine and imprisonment for 14 years.
Section 12(1) of the UNATMO requires a person to report his knowledge or suspicion of terrorist property to an authorized officer (e.g. the JFIU). Failure to make a disclosure under this section constitutes an offence under section 14(5). The maximum penalty upon conviction of this offence is a fine of HK50,000 and imprisonment for three months.
Commerce and Economic Development Bureau (Commerce, Industry and Tourism Branch)
The CEDB has overall responsibility in implementing the United Nations Sanctions in Hong Kong. Individuals or entities affected by targeted financial sanctions as a result of mistaken identification or confusion with individuals or entities on the relevant sanctions lists may submit written requests for clarification to the Commerce, Industry and Tourism Branch of CEDB, after requesting an explanation from the institution that froze the assets.
23/F West Wing
Central Government Offices
2 Tim Mei Avenue Tamar
Tel: 3655 5170
Trade and Industry Department
The Trade and Industry Department (“TID”) is responsible for implementing trade sanctions.
The TID maintains a list of circulars regarding the UNSO regulations related to trade. For details, please click here.
List of countries subject to United Nations Sanctions and scope of trade-related sanctions are available at the TID website, please click here.
Tower 3 Concorde Road
Tel: 2392 2922
The contents are intended to provide a general guide to the subject matter only and should not be treated as a substitute for specific advice concerning individual situations. While every effort has been made to ensure the accuracy of the content provided, it does not constitute legal advice and cannot be relied upon as such. The Law Society does not accept responsibility for liabilities arising from reliance upon the content provided.