HK Financial Sector Reels From China's Anti-Sanctions Law

Global banks and other financial institutions in Hong Kong are scrambling to find out details of China's planned imposition of an anti-sanctions law on the city, and trying to understand how it could impact their operations in the financial hub, Alun John and Scott Murdoch reported for Reuters.

Photo Insert: The Hong Kong financial district

Beijing adopted a law in June under which individuals or entities involved in making or implementing discriminatory measures against Chinese citizens or entities could be put on a government anti-sanctions list.

Financial firms are closely watching a meeting this week of the National People's Congress Standing Committee, the highest organ of China's parliament, for signs on how and when similar legislation will be introduced in Hong Kong. Hong Kong leader Carrie Lam said on Tuesday she did not have an explicit timetable for its implementation.

The move came as the US government imposed several rounds of sanctions on Hong Kong and Chinese officials over Beijing's crackdown on the city's freedoms under sweeping national security legislation.

Under the planned law, if financial institutions in Hong Kong implement US sanctions, they may be exposed to legal risk in Hong Kong for doing so, financial sector executives and lawyers said.

"Many foreign multinational companies are asking about the impact of the anti-foreign sanctions law, especially international banks and financial institutions," said Shaun Wu, a Hong Kong-based partner at law firm Paul Hastings.

"It is significant because international banks and financial institutions may find themselves caught between a rock and a hard place."

Concerns have swirled over foreign financial institutions' prospects in one of their most lucrative markets since Beijing's implementation of the security law in the former British colony last year. The anti-sanctions law now raises the specter of financial firms getting caught in the crossfire as sparring between the world's two largest economies escalates.

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