New Act Forces Treasury to Probe Hong Kong's Role in Sanctions Evasion and Money Laundering Risk

The “Stop CCP Money Laundering Act of 2025” isn't about slapping immediate sanctions on Hong Kong. Instead, it’s a policy move that requires the U.S. government to conduct a deep-dive investigation into how Hong Kong’s financial system is currently being used to sidestep U.S. sanctions and export controls. Essentially, this bill is ordering a massive homework assignment for the Treasury, State, and Commerce Departments, with the results potentially shaking up global finance.

The 180-Day Deadline: Money Laundering Check

Within 180 days of the bill becoming law, the Secretary of the Treasury has to tell Congress whether Hong Kong should be formally designated a “jurisdiction of primary money laundering concern.” This isn't a casual label; it’s a serious designation under U.S. law (specifically, Section 5318A of title 31, United States Code) that could trigger mandatory special measures against the jurisdiction, potentially cutting off its financial institutions from the U.S. banking system. While the bill only requires an assessment, the Treasury Secretary has significant discretion here, deciding if there is “enough evidence” to make that call. For anyone doing business with Hong Kong banks, this report will be crucial, as a 'yes' answer could drastically complicate international transactions.

Where Are the Restricted Goods Going?

Beyond money laundering, the bill mandates a comprehensive report from the State, Treasury, and Commerce Secretaries within 360 days. This report focuses on one key question: How effectively are Hong Kong’s financial institutions stopping transactions that violate U.S. sanctions or export controls against countries like Russia and Iran? Think of it this way: if a company is trying to ship restricted microchips to Russia, and they are routing the money or the goods through Hong Kong, this report aims to find out how much Hong Kong’s banks are looking the other way—whether accidentally or on purpose.

Security Laws vs. Compliance

One of the most interesting requirements is the analysis of Hong Kong’s recent security laws—the 2020 National Security Law and the 2024 Safeguarding National Security Ordinance. The report must specifically assess whether these laws make it harder for local financial institutions to follow global anti-money laundering (AML) and Know Your Customer (KYC) rules. If local banks feel pressured by the new security laws to withhold information or prioritize local government demands over international compliance standards, it creates a massive risk for any global business that relies on those banks. This provision directly links Hong Kong's political changes to the practical realities of financial compliance.

The Real-World Impact of Waiting

This legislation is primarily about information gathering, not immediate action. However, the fact that the U.S. government is formally investigating these issues creates uncertainty for the financial sector. For U.S. companies that use Hong Kong as a major trading or financial hub, this means regulatory risk is increasing. If the reports confirm widespread sanctions evasion or compliance failure, it almost guarantees that Congress will push for further regulatory measures, potentially leading to higher compliance costs and restricted access to Hong Kong’s market down the line. The immediate impact is felt by the financial institutions operating in Hong Kong, who are now under a very bright spotlight, facing intense scrutiny that could lead to future restrictions.