Lawmakers Question US Banking Relationship With Hong Kong

Two U.S. lawmakers reportedly want the country to rethink its banking relationship with Hong Kong.

Rep. John Moolenaar, R-Michigan, and Rep. Raja Krishnamoorthi, D-Illinois, sent a letter to Treasury Secretary Janet Yellen asking how the department plans to combat money laundering and sanctions evasion conducted through Hong Kong’s financial system, the Wall Street Journal (WSJ) reported Monday (Nov. 25).

Moolenaar and Krishnamoorthi are the chairman and ranking member, respectively, of the House Select Committee on the Chinese Communist Party, which is focused on competition with China, according to the report.

Their letter to Yellen will be released publicly Monday, the report said.

“Hong Kong has shifted from a trusted global financial center to a critical player in the deepening authoritarian axis of the People’s Republic of China, Iran, Russia and North Korea,” the lawmakers said in the letter, per the report. “We must now question whether longstanding U.S. policy towards Hong Kong, particularly towards its financial and banking sector, is appropriate.”

A spokesman for the Hong Kong government told the WSJ that the allegation is unfounded and that Hong Kong has a system to prevent the illegal diversion of strategic commodities.

Hong Kong has a special status within China but has been drawn closer to the country and has cracked down on dissidents, according to the WSJ report.

Moolenaar and Krishnamoorthi accused Hong Kong of enabling the export of controlled technology to Russia, aiding the purchase of Iranian oil and facilitating other violation of U.S. trade controls, per the report.

It was reported in April that sanctions on payments between China and Russia have created a thriving market for middlemen and that half of all payments by Russian companies for Chinese products are now handled by intermediaries.

The U.S. Treasury has warned that it could impose sanctions on entities that facilitate transactions and has asked foreign banks to increase compliance.

In August, it was reported that Russia was preparing to begin trials of cryptocurrency exchanges and cross-border crypto transactions to solve the payment troubles the country has been facing after more than two years of worldwide sanctions triggered by Russia’s invasion of Ukraine.