The U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”) published regulations in the Federal Register on January 15, 2021 to implement Executive Order 13936 (“E.O. 13936”), titled “The President’s Executive Order on Hong Kong Normalization.” The President determined on July 14, 2020 in E.O. 13936 that Hong Kong was no longer sufficiently autonomous to justify special treatment under U.S. law, due to the implementation of the Law of the People’s Republic of China on Safeguarding National Security in the Hong Kong Administrative Region (“National Security Law”). Additionally, E.O. 13936 directed the Department of Treasury to implement sanctions on persons undermining democracy in Hong Kong.
OFAC’s Hong Kong regulations formally block transactions prohibited by E.O. 13936 and establish the process by which persons and entities are added to OFAC’s Specially Designated Nationals and Blocked Persons List (“SDN List”). On January 15, 2021 OFAC also added six (6) persons to the SDN List pursuant to E.O. 13936. These persons were found to have been involved in the implementation of the National Security Law and to be undermining democratic processes in Hong Kong. As a result, all property and interests in property of 50% or greater belonging to these persons—which are in the U.S. or held by U.S. persons—must be blocked and reported to OFAC.
OFAC stated in its final rule that the regulations “are being published in abbreviated form at this time for the purpose of providing immediate guidance to the public,” and that OFAC intends to supplement with “a more comprehensive set of regulations.” However, since the OFAC regulations are a published final rule, they are not impacted by the President’s “Regulatory Freeze Pending Review Memorandum” and are therefore in effect until amended or withdrawn.