LCQ13: Implementation of United Nations Security Council’s sanctions against North Korea
Following is a question by the Hon Kenneth Leung and a written reply by the Secretary for Commerce and Economic Development, Mr Edward Yau, in the Legislative Council today (November 22):
Since 2006, the United Nations Security Council (UNSC) has adopted a series of resolutions to impose sanctions against the Democratic People’s Republic of Korea (North Korea). Pursuant to the instructions of the Ministry of Foreign Affairs, the Government has made, under section 3(1) of the United Nations Sanctions Ordinance (Cap. 537), a relevant regulation and amendments thereto to implement the sanctions in the Hong Kong Special Administrative Region (HKSAR). On the other hand, it has been reported that for many years, a number of companies registered in Hong Kong have allegedly been helping the North Korean authorities circumvent the sanctions and earn foreign remittance. In this connection, will the Government inform this Council:
(1) as UNSC adopted on September 11 this year Resolution 2375 (2017) to impose a new round of sanctions against North Korea, whether HKSAR Government has, for the purpose of implementing the sanctions under that resolution:
(i) liaised with the Ministry of Foreign Affairs; if so, of the details; if not, the reasons for that; and
(ii) drawn up a specific work plan and an implementation timetable; if so, of the details; if not, when it will draw up the work plan;
(2) whether it has studied the impacts of HKSAR implementing the sanctions against North Korea on the trade relations between the two places and on Hong Kong’s financial regulatory system and economy; if so, of the findings of the study; if not, whether it will conduct such a study expeditiously; and
(3) whether it has, since 2006, conducted any investigation and instituted any prosecution in respect of locally registered companies suspected of helping North Korea circumvent the sanctions; if so, of the details; if not, whether it will expeditiously conduct a comprehensive investigation into the activities of the companies concerned so as to uphold Hong Kong’s reputation as an international financial centre?
The United Nations Security Council (UNSC) has since 2006 adopted a number of resolutions to impose a series of sanctions against the Democratic People’s Republic of Korea (DPRK).
The Hong Kong Special Administrative Region Government vigilantly implements sanctions decided by the UNSC, at the instructions of the Ministry of Foreign Affairs of the People’s Republic of China (MFA). The United Nations Sanctions (Democratic People’s Republic of Korea) Regulation (Cap. 537AE) (DPRK Regulation) sets out sanctions imposed by the UNSC against DPRK.
My reply to the three parts of the question is as follows:
(1) For Resolution 2375 adopted by the UNSC on September 11, 2017, at the instruction of the MFA, the Government is in the process of drafting amendments to the DPRK Regulation to implement the relevant sanction measures. We are taking forward the legislative exercise as expediently as possible.
(2) On trade between Hong Kong and DPRK, the DPRK Regulation prohibits the supply, sale and transfer to and the procurement from DPRK prohibited items, for example arms or related materiel. The trade volume between Hong Kong and DPRK is very small. In 2016, DPRK ranked 158th among Hong Kong’s trading partners in the world and the majority of the items traded between the two places were not subject to sanction. Therefore, the sanctions imposed by the UNSC will not have material impact on Hong Kong’s economy.
On Hong Kong’s financial regulatory system, the DPRK Regulation prohibits the provision of financial services that could contribute to DPRK’s nuclear or ballistic missile programme, and the making available or transfer of any funds, financial assets or economic resources that could contribute to the programme. Moreover, the DPRK Regulation also prohibits the making available of any funds, financial assets or economic resources to, or for the benefit of, individuals and entities designated by the UNSC or its sanctions committees. Hong Kong has a robust financial regime. Regulators and financial institutions have been highly vigilant about sanctioned businesses, individuals and entities related to DPRK. Suspicious transactions will be reported to law enforcement agencies for follow-up. Therefore, we believe that the sanction measures will not have impact on Hong Kong’s financial regulatory system.
(3) The Government has been staying highly vigilant about activities and suspected cases that may violate UNSC sanctions. We keep a close watch on reports of the UNSC in relation to sanctions against DPRK in which Hong Kong individuals and registered companies are alleged to be involved. Our law enforcement agencies will seriously follow up on suspected violations.