Citigroup Inc. and Standard Chartered Plc are stepping up scrutiny of banking clients in Hong Kong, aiming to avoid violating U.S. sanctions on officials in the former British colony.
U.S.-based Citigroup is already taking steps to suspend accounts linked to some of the 11 targeted individuals, one person familiar with the matter said. Standard Chartered, which is based in London, is reviewing whether it has relationships with any of the officials and will monitor their transactions, another person said, adding that it has suspended new account openings for those on the list.
With the U.S. and China each imposing sanctions on the other in an escalating standoff over Beijing’s crackdown on the former British colony, Western lenders are walking a tightrope over their operations in Hong Kong and expansion plans in China. For their part, Chinese lenders such as Bank of China Ltd. and Industrial & Commercial Bank of China Ltd. are vulnerable due to their need for dollars.
The sanctions forbid banks from doing business with the penalized individuals. But complying with that order could put lenders directly at odds with the national-security law Beijing recently imposed in Hong Kong, which says that no sanctions or hostile actions can be applied against the city and mainland China.
“We regularly review client accounts around the world,” said a Citigroup spokesman, who declined to comment further on Hong Kong. A Standard Chartered spokeswoman declined to comment.
The individuals sanctioned by the U.S. include Hong Kong Chief Executive Carrie Lam, Xia Baolong, director of the Hong Kong and Macau Affairs Office of China’s State Council, and Chris Tang, commissioner of the Hong Kong Police Force. The targeted officials will have property and assets in the U.S. frozen.