With the war in Ukraine raging, Hong Kong may become a safe haven for Russian companies to avoid sanctions.

(Reuters file photo)

[Financial Channel/Comprehensive Report] Russian companies that have been shut out of Western financial capital have recently reported that they are seeking Hong Kong as an alternative, which has aroused the concern of US officials that the financial center Hong Kong may become a safe haven for Russian companies to avoid sanctions under the Ukraine war. .

"Bloomberg" reported that Sherman Yan, a managing partner of Hong Kong law firm ONC Ke Wu Chen, said that many large Russian companies, including state-owned enterprises, are seeking to cooperate with Hong Kong law firms to help them settle in more than New York, "Friendly" jurisdictions in places like London.

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Russian companies have also approached at least two other law firms in China, some of which have inquired about raising funds there, three of the people said.

Zhen Zhuoning said the interest of Russian companies in moving certain activities to Hong Kong was definitely increasing, and that his law firm had held preliminary discussions with Russian clients.

Zhen Zhuoning added that some are seeking to change their registration to Hong Kong while maintaining their business operations in Russia.

After the outbreak of the war between Russia and Ukraine, Western countries imposed severe sanctions on Moscow, and China was reluctant to condemn the invasion and maintained friendly relations with the Putin government. As the conflict escalates, Hong Kong will be able to provide Russian companies with a gateway to foreign capital. window.

But given the potential threat of "Secondary Sanction", there are doubts over whether Hong Kong banks and accountants will be willing to work with Russian companies.

A luxury yacht owned by Russian President Vladimir Putin's friend and steel tycoon Alexey Mordashov docked in Hong Kong last week, which has also attracted attention, and various circles believe that this may be an action by Russian oligarchs to evade sanctions.

After the outbreak of the war, many Russian billionaires related to Putin were sanctioned by the West one after another, and European countries also seized many Russian yachts.

A spokesman for the US State Department stated that Hong Kong's reputation as a financial center will depend on its compliance with international regulations and standards. In order to evade sanctions in multiple jurisdictions, some people may use Hong Kong as a safe haven, which raises further questions. Transparency of the local business environment.

The spokesman added that the actions of the Chinese authorities also undermined Hong Kong's high degree of autonomy and people's freedom in the past, and US companies are increasingly cautious about the business environment in Hong Kong.

A spokesman for the Hong Kong Monetary Authority said that under Hong Kong law, banks are not obliged to impose unilateral sanctions by foreign governments, and it will be up to banks to assess such risks and treat customers fairly.

According to data from the HKMA, as of the end of June, Hong Kong banks’ exposure to Russia was only HK$800 million (about NT$3.12 billion), down from HK$2.6 billion (about NT$10.15 billion) at the end of February.

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