U.S. Treasury warned Hong Kong banks on tech exports to Russia
Officials, others pressed to comply with curbs on shipments of 'dual-use' goods
HONG KONG -- U.S. Treasury officials quietly visited Hong Kong last month to urge the central bank, financial institutions, law firms, consultancies and industry groups to do more to curb the flow of advanced American-made technology from the city into Russia.
The meetings in mid-June came just days before U.S. Secretary of State Antony Blinken visited Beijing, where he said Washington has "ongoing concerns" that Chinese companies are providing technology that Russia could use in its war against Ukraine.
Three officials from the Treasury Department's terrorist financing and financial crimes department held meetings on June 15 and 16 in Hong Kong asking banks and regulators to help identify U.S. high-tech items from being shipped to Russia via Hong Kong, several sources with direct knowledge of the matter told Nikkei Asia. Representatives from HSBC, Standard Chartered, Bank of China Hong Kong, the Hong Kong Monetary Authority (HKMA) and the Association of Certified Anti-Money Laundering Specialists (ACAMS), an industry group, attended the meeting, two sources said. The Treasury officials also visited security partner the United Arab Emirates, where commercial activities are alleged to be fueling Russia's war machine, they added.
The meeting underscores Washington's concerns that U.S.-made chips are still finding their way into Russia, despite sanctions imposed following the invasion of Ukraine. Hong Kong has become a major hub of high-value exports of chips to Russia, through small trading routes with the help of mainland China, a Nikkei Asia investigation recently found. The Treasury officials told attendees that they should strengthen their due diligence when encountering transactions related to items on the export control list, the sources said.
"It was very substantive. [The officials] were looking for compliance, but it very much felt like they were readying some enforcement actions" on financial firms, said a person who attended the meetings. Neither the U.S. Consulate in Hong Kong nor the Treasury Department responded to requests for comment. ACAMS said it is "not able to comment on any closed door meetings."
Documents, including a list of 38 items designated "high priority dual-use goods," were shared with the participants. An item is deemed to be "dual use" if it can be used in both civilian and military applications.
"The majority of sensitive dual-use items sent to Russia were of Chinese origins, followed by Taiwan, the EU, Malaysia, the U.S. and Israel. Most of the Chinese goods were sent directly to Russia, as were some third-country-origin goods. Some items, however, were shipped via hubs including Turkey, the EU, the Maldives, and the UAE," the documents, seen by Nikkei Asia, read.
"We request that firms, financial institutions, and government regulators work to prevent the shipment or transshipment of the following types of goods to Russia or Russia-linked firms," it said.
The goods listed range from semiconductor devices to airplanes, helicopters and drone parts. It is an expanded version of a list in a joint alert co-published by the Treasury Department and the U.S. Department of Commerce on May 19 that included nine items identified as critical to Russia's weapon systems. The U.S. made the list based on Russian weapon system components recovered from the battlefield in Ukraine. Items were assigned a harmonized system (HS) code that the U.S. said can be found on trade documents such as commercial invoices, packing slips, airway bills, sea bills and other supporting trade documents. But identifying the codes through bank transactions is quite challenging, as not all items can be easily matched, said a source familiar with the meetings.
Standard Chartered declined to comment, while a spokesperson for the HKMA said it does not comment on individual meetings. Bank of China Hong Kong did not respond to requests for comment.
The week before the meetings took place, Robert Kaproth, deputy assistant secretary of the U.S. Treasury for Asia, traveled to Hong Kong to meet with private- and public-sector figures, Nikkei Asia earlier reported.
Kaproth met with asset managers, hedge funds and banks who are members of the Asia Securities Industry and Financial Markets Association (ASIFMA) on June 9, according to three sources with direct knowledge of the matter.
They discussed China's economy and international companies setting up dual hubs in Hong Kong and Singapore, according to one of the sources. Kaproth left for the mainland to prepare for the meetings between the U.S. Secretary of State Antony Blinken and Chinese officials, another source said.
ASFIMA declined to comment. U.S. Treasury Secretary Janet Yellen, who earlier this year warned of "severe" consequences if China provided material support to Russia, is traveling to Beijing to meet with senior Chinese officials.
Source:
Non paywall source:
Tssk, Chinese autorities allowing western politicians to maraud through our streets enforcing their unilateral hegemonical sanctions and rules is another issue I do not like. A Chinese politician should try the same and the newspapers would scream murder and coercion.
