On August 7, 2020, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced the imposition of sanctions on 11 prominent Hong Kong and People’s Republic of China (PRC) officials for taking actions that, in the view of the US government, undermined Hong Kong’s autonomy and restricted fundamental freedoms of people in Hong Kong. The officials include Hong Kong’s Chief Executive Carrie Lam, Hong Kong’s Secretary for Justice, the Secretary for Security, the Commissioner of the Hong Kong Police Force, and Chinese officials responsible for Hong Kong affairs, among others.
OFAC named the officials as Specially Designated Nationals (SDNs) pursuant to Executive Order (EO) 13936, entitled The President’s Executive Order on Hong Kong Normalization. Section 4 of the EO authorizes sanctions called for by Congress in the Hong Kong Human Rights and Democracy Act of 2019 and the Hong Kong Autonomy Act (HKAA).
As a result of the designations, all property and interest in property of the SDNs must be blocked (frozen) when in the United States or within the possession or control of a US person. US citizens and green card holders and US-domiciled companies are generally prohibited from transactions or dealings, directly or indirectly, with SDNs as well as entities owned 50% or more by one or more SDNs. This includes financial transactions processed through US banks. Note that the general prohibitions and blocking requirements under EO 13936 do not apply to foreign subsidiaries of US companies, but would apply to foreign branches of such companies.
(For a detailed summary of the sanctions provisions of EO 13936 please see our recent client advisory here.)