On December 11, 2020, the Treasury Department submitted its first report to Congress under the Hong Kong Autonomy Act, stating that to date it has not identified any foreign financial institutions (FFIs) that have knowingly conducted a significant transaction with an identified foreign person under the Hong Kong Autonomy Act (HKAA). The Department of the Treasury’s Office of Foreign Assets Control (OFAC) notes that it continues to monitor for any activity that meets reportable criteria, and states that it will continue to engage foreign governments and FFIs to “ensure they understand the reporting requirements and sanctions risks under the HKAA.”

Under the HKAA, enacted on July 14, 2020 (see Update of July 16, 2020), the State Department must review and determine if any foreign person “is materially contributing to, has materially contributed to, or attempts to materially contribute to the failure of the government of China to meet its obligations under the Sino-British Joint Declaration (‘Joint Declaration’) or Hong Kong’s Basic Law.” Once so identified, the State Department must notify Congress and OFAC of the foreign person and provide a description of the activity that resulted in the identification. On October 14, 2020, the Secretary of State issued such a report, see Update of October 15, 2020. OFAC had previously sanctioned most of these persons and placed them on the Specially Designated Nationals (SDN) List, see Update of August 10, 2020. However, the Department of the Treasury is further tasked with then attempting to identify any foreign financial institution that knowingly conducts a significant transaction with a foreign person identified by the State Department.