Financial News
Written by: Lin Leqian and Hu Xueneng
2020-08-10 15:55
Last update date: 2020-08-10 15:55The US government announced sanctions on 11 Hong Kong and Mainland officials last Friday (7th), including Chief Executive Carrie Lam Cheng Yuet-ngor and others. The market is concerned about whether financial institutions can continue to handle related businesses. Although the HKMA stated earlier that unilateral sanctions imposed by foreign governments are not part of the international targeted financial sanctions regime and have no legal effect in Hong Kong, many banks and insurance companies have sanctions policies that prohibit direct or indirect sanctions from sanctioned targets. Any transaction, including HSBC Holdings (0005), Standard Chartered Group (2888) and DBS Bank, etc.
Standard Chartered: Sanctions policy may be stricter than permitted by regulations
The sanctions policy statement on the Standard Chartered Bank website states that it will strictly abide by all relevant economic sanctions laws that are legally binding on the group and its business. Any violation of sanctions will adversely affect the group’s reputation, business operations and future development. , It will also weaken the relationship between the Group and regulatory agencies, so Standard Chartered's sanctions policy may be stricter than permitted by laws and regulations. Among them, the sanctioned targets are designated by any one or more of the United Kingdom, the European Union, the United States or the United Nations as sanctions targets or targets.
However, the policy statement was updated last year and stated that it will never involve any direct or indirect transactions with the sanctioned targets. At that time, the United States still did not sanction Carrie Lam and others.
HSBC and Hang Seng Bank stated that HSBC will screen global customers and their global transactions in accordance with the sanctions lists of the United Nations, the European Union, the United Kingdom, the United States and Hong Kong, and prohibit business dealings with individuals or institutions on the sanctions lists. (Profile picture)
HSBC: Screening customer transactions according to the US sanctions list
HSBC and Hang Seng Bank (0011) stated that HSBC will screen global customers and their global transactions in accordance with the sanctions lists of the United Nations, the European Union, the United Kingdom, the United States and Hong Kong, and prohibit business transactions with individuals or institutions on the sanctions lists, and block or Refuse to trade, and will report to regulators.
According to DBS Bank, based on the sanctions lists issued by the United Nations, the European Union, and the United States (including the United States Office of Foreign Assets Control (OFAC)), as well as all applicable local regulatory sanctions lists in the jurisdictions where DBS Bank and its affiliates operate. Customers and transactions are reviewed, and commercial activities, personal transactions, and customer relationships that may directly or indirectly violate applicable sanctions laws are prohibited or restricted.
Insurance company: Violation of US law or sanctions will not be insured
As for insurance companies, it has recently been circulating online that the insurance company AXA has sent letters to customers, referring to the new exclusion clause "Sanctions Liability Limitations and Exclusion Clauses." AXA responded to "Hong Kong 01" stating that since 2015, relevant clauses have been added to the policy contract in phases, and the letter is to inform customers that this clause will be added to the policy. The travel insurance terms of FWD and AIU also stated that if the compensation may violate US law or be sanctioned, it will not be insured.
Xu Jiajian said that if Hong Kong Bank violates the U.S. sanctions policy, it is believed that the U.S. usually imposes fines before failing to comply, and it may take other administrative measures to interfere with its U.S. business, but "the bank shouldn't go to this point." )
Analysis expects that the bank will not take the risk of not accepting the fine after being fined
Associate Professor Xu Jiajian of the Department of Economics at Crimson University in the United States said that the United States announced the sanctions list, and it is believed that Hong Kong banks with operations in the United States will be nervous. Although the specific implementation of the sanctions, such as whether the family members and subsidiaries of the sanctioned targets are affected, has not yet been clearly stated, but it is believed that these banks will take risk avoidance as the principle and do more preventive work, including reviewing the past The practice of the United States to enforce sanctions. He believes that the outside world will understand that these banks face sanctioned targets and "do nothing to do," and it is best to sever all customer relationships with them to ensure safety.
As for the sanctioned targets, Xu Jiajian predicts that their funds may be placed in some mainland banks that have no overseas connections. Also, because the sanctioned targets are small and most of them are officials, unless the scope of sanctions is extended to more members of the Executive Council and the business community People, banks may lose big customers, otherwise the business of these banks will be little affected.
He also pointed out that if Hong Kong Bank violates the U.S. sanctions policy and believes that the U.S. usually imposes a fine first and then fails to comply, it may take other administrative measures to interfere with its U.S. business. However, "the bank shouldn’t go to this point and do it secretly. It has taken a risk, and if it develops to this stage, it will count."
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