Hong Kong Autonomy Act: U.S. Congress Passes Sanctions Bill in Response to Chinese National Security LawSullivan & Cromwell LLP - July 7, 2020
On July 2, the U.S. Senate passed H.R. 7440, which, once it becomes law, will require the Executive Branch to impose sanctions against foreign individuals and financial institutions determined to be “involved in the erosion of certain obligations of China with respect to Hong Kong.” The Act would require the Executive Branch to file reports with Congress identifying individuals and entities determined to be “materially contributing” or attempting to materially contribute to any failure by the Chinese government to uphold its obligations under the Sino-British Joint Declaration or the Hong Kong Basic Law, which together “clarify certain obligations and promises that the Government of China has made with respect to the future of Hong Kong.” The Act would also require reports to Congress that identify foreign financial institutions determined to have knowingly conducted a “significant transaction” with persons identified in the report described in the previous sentence. The Act provides for elective sanctions on persons and entities identified in the report upon publication of the report, and mandatory sanctions after one year from inclusion in the report, unless certain conditions are satisfied. Foreign financial institutions would be subject to mandatory sanctions after one year, unless certain conditions are satisfied. The Act was passed unanimously by both the Senate and the House of Representatives and has been sent to President Trump to sign into law. Given the overwhelming bi-partisan support for the Act in both the House and the Senate, it appears likely to take effect later this month.