US urged to crack down on Hong Kong banks

Hong Kong has become a hub for money laundering and sanctions evasion, a committee of the US Congress claimed in a letter to Treasury Secretary Janet Yellen, urging her to do something about it.

The self-governing region of China, which was a UK colony until 1997, continues to enjoy a privileged economic status with the US.

“We must now question whether longstanding US policy towards Hong Kong, particularly towards its financial and banking sector, is appropriate,” said a letter to Yellen from the House Select Committee on the Chinese Communist Party, according to Reuters.

Hong Kong front companies have allegedly engaged in buying Iranian oil and selling Western semiconductors to Russia, according to the letter signed by committee chair John Moolenaar, a Michigan Republican, and the ranking Democrat, Raja Krishnamoorthi of Illinois.

They cited research according to which nearly 40% of goods shipped from the territory to Russia in 2023 were items the US considered high-priority for military use in the conflict with Ukraine. Moolenaar and Krishnamoorthi have accused Hong Kong of becoming a major player in the “authoritarian axis” of Russia, China, Iran, and North Korea.

Washington sanctioned Tehran in 2018, after unilaterally pulling out of the Iran nuclear deal. The US and its allies have also repeatedly sanctioned Russia since 2022, over the conflict in Ukraine. China has rejected both sets of sanctions as unilateral and illegitimate, vowing to defend its property rights and trade interests.

The current Congress will see its mandate end in early January, but both Krishnamoorthi and Moolenaar won their respective re-election races, so they are likely to continue their work in the next session. Yellen is due to depart from Treasury later that month, after the inauguration of President-elect Donald Trump, who has already nominated Scott Bessent as her successor.