Recently, U.S. government agencies have issued a warning to American companies about the increasing risks associated with operating in Hong Kong. It is now comparable to those in mainland China.
Releasing an updated business advisory on Friday, the advisory cautions that the risks previously associated with China are now similarly present in Hong Kong.
Why This Advisory?
According to the advisory, businesses in Hong Kong might encounter legal, regulatory, operational, financial, and reputational risks, including heightened scrutiny, potential financial penalties, and legal repercussions for perceived breaches of the NSL or SNS Ordinance.
The advisory also points, out that the companies may face conflicting jurisdictional requirements related to sanctions compliance. It may also incur civil or criminal penalties under U.S. law for non-compliance.
Further, the advisory also notes the erosion of fundamental freedoms and human rights protections in Hong Kong, which are exacerbated by the National Security Law (NSL) and the March 2024 Safeguarding National Security Ordinance (SNS Ordinance or “Article 23”).
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These laws, along with actions by Chinese and Hong Kong authorities, such as imposing bounties, could adversely impact businesses in terms of staff, finances, legal compliance, reputation, and operations.
Meanwhile, despite Hong Kong being part of China, it retains a distinct common law system for commercial and civil disputes, a separate currency, and independent regulatory structures.
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It continues to have its own customs territory, monetary policy, and representation in international organizations such as the Asia-Pacific Economic Cooperation, the Financial Action Task Force, and the World Trade Organization.
However, Businesses in Hong Kong may also face retaliation or countermeasures from China for adhering to U.S. and other international sanctions. Even though, Hong Kong recognizes UN sanctions, it does not acknowledge it.
(With Inputs From ANI)
