Hong Kong Chief Executive Carrie Lam Cheng Yuet-ngor said that because of the U.S. sanctions, as the Chief Executive of Hong Kong but no bank account, income and expenditure can only be in cash. Why can’t a Chinese bank open an account for Carrie Lam?
In a recent television interview, Mrs. Lam said that she was forced to keep her salary in cash at home because U.S. sanctions have prevented her from having a bank account, resulting in “piles of cash” at home.
As a result of Hong Kong’s implementation of the National Security Law, the U.S. Treasury Department has imposed sanctions on Carrie Lam and other senior officials responsible for Hong Kong and mainland Chinese affairs.
In August, the U.S. imposed sanctions on Carrie Lam and 11 other Hong Kong and Chinese officials in response to China’s implementation of the National Security Law in Hong Kong.
It has been publicly reported that the salary of the Chief Executive of Hong Kong is one of the highest paid among the world’s national and regional leaders.
Mrs. Lam’s remarks sparked a social media firestorm.
Chief Executive’s High Salary
As Hong Kong’s chief executive, Carrie Lam earns an annual salary of about 5.2 million Hong Kong dollars, which comes out to about 400,000 Hong Kong dollars a month.
In a television interview with Hong Kong International Business Channel (HKIBC), a local English-language channel in Hong Kong, Mrs. Lam said Friday (27) that she pays her bills in cash every day.
The person sitting in front of you is the chief executive of the Hong Kong Special Administrative Region (HKSAR), who does not have a bank account,” Mrs. Lam told HKIBC.
Mrs. Lam also said that without a bank account, the government can only pay her salary in cash.
At the same time, she added that she was “very honored” to have been “unfairly sanctioned” by the U.S. government.
National Security Law Controversy
In July of this year, China began implementing the controversial National Security Law in Hong Kong. Critics claim that the law threatens Hong Kong’s freedom of speech and autonomy.
The implementation of the National Security Law has made it easier for the government to punish protesters, and there are concerns that it may pose a threat to Hong Kong’s judicial independence.
In response, the United States decided in August to impose economic sanctions on 11 Hong Kong and China officials, including the freezing and seizure of their assets in the United States.
After the U.S. announced the sanctions against the 11 officials, the officials criticized the U.S. actions, but also said that they had no assets in the U.S. and would not travel to the U.S., so they would not be affected.
Why Chinese banks are not helping
All banks with international operations need to consider the impact that violating the U.S. financial sanctions order could have on their international operations.
SWIFT, the financial information transfer system between financial institutions that controls more than 80 percent of the world’s cross-border payments, is considered a dollar-controlled cross-border financial system and a powerful tool for U.S. financial sanctions around the world.
SWIFT is a cooperative organization jointly owned by global banks with a total of no more than 25 seats on its board of directors, with no more than two representatives from two banks per country – Citibank and JPMorgan Chase in the U.S., Deutsche Bank in Germany, BNP Paribas in France, Lloyds Bank in the U.K., and Bank of China – all of which are among the 25 seats mentioned above, representing the interests of SWIFT users in their respective countries.
As of December 2019, SWIFT data shows that the U.S. dollar’s share of global trade is 42.2% (almost equal to the euro, pound sterling, and yen combined).
Such absolute dominance of the U.S. dollar has become a powerful tool for the U.S. to impose financial sanctions. Whenever the United States is determined to sanction a country or institution, it can directly disconnect the financial institution (or its dollar correspondent) from the U.S. dollar cross-border settlement system (CHIPS), thereby preventing it from conducting any dollar-related transactions.
Therefore, if the United States announces sanctions against a person or institution, almost every international bank in the world will need to examine whether they are doing business with the sanctioned person.
All Chinese banks, large and small, need to protect their international business from the impact of doing business with a sanctioned person, company, or institution. Large Chinese banks cannot violate the U.S. sanctions in order to keep their international financial operations intact.
Banks in countries such as Iran and North Korea have been hit by U.S. financial sanctions and their international trade activities have suffered as a result.
Earlier, Hong Kong’s South China Morning Post also quoted Jeremy Paner, a former official in the U.S. Treasury Department’s Office of Foreign Assets Control, as saying that outsiders tend to underestimate the effectiveness of U.S. sanctions, believing that they are unaffected because they have no assets in the United States.
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