Hong Kong Country Summary
Sanctions
Medium Concern
FATF AML Deficient List
Low Concern
Terrorism
Low Concern
Corruption
Low Concern
US State ML Assessment
High Concern
Criminal Markets (GI Index)
Medium Concern
EU Tax Blacklist
Low Concern
Offshore Finance Center
High Concern
Please note that although the below Summary will give a general outline of the AML risks associated with the jurisdiction, if you are a Regulated entity then you may need to demonstrate that your Jurisdictional AML risk assessment has included a full assessment of the risk elements that have been identified as underpinning overall Country AML risk. To satisfy these requirements, we would recommend that you use our Subscription area.
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Anti Money Laundering
FATF Status
Hong Kong is not on the FATF List of Countries that have been identified as having strategic AML deficiencies
Compliance with FATF Recommendations
The last follow-up Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Hong Kong was undertaken in 2023. According to that Evaluation, Hong Kong was deemed Compliant for 11 and Largely Compliant for 25 of the FATF 40 Recommendations. It was deemed Highly Effective for 0 and Substantially Effective for 6 of the Effectiveness & Technical Compliance ratings.
Sanctions
As a member of the United Nations, Hong Kong must adhere to the sanctions measures established by the UN Security Council to maintain international peace and security. Since 1966, the Security Council has implemented 31 sanctions regimes, which include various measures such as economic sanctions, arms embargoes, and travel bans. Currently, there are 15 ongoing sanctions regimes that focus on political settlements, nuclear non-proliferation, and counter-terrorism, all administered by a sanctions committee.
While there are no international sanctions currently against Hong Kong, the United States issued an Executive Order in July 2020 that altered its preferential treatment towards Hong Kong. The UK has maintained an arms embargo against mainland China since 1989 and extended this embargo to Hong Kong in July 2020, following the implementation of the National Security Law. This embargo includes restrictions on lethal weapons and equipment that could be used for internal repression.
Bribery & Corruption
Rating |
0 (bad) - 100 (good) |
|---|---|
| Transparency International Corruption Index | 74 |
| World Bank: Control of Corruption Percentile Rank | 93 |
Mainland China ratified the United Nations Convention Against Corruption in 2006, which also applies to Hong Kong, where the Independent Commission Against Corruption (ICAC) plays a key role in combating corruption. The ICAC is involved in international anti-corruption efforts and has established the Hong Kong International Academy Against Corruption to provide training. U.S. firms do not view corruption as a barrier to foreign direct investment, and bribery is strictly penalized under the law.
Economy
Hong Kong is a highly open economy characterized by a free market philosophy, with the service sector contributing over 90% to its GDP in 2023. Despite its favorable business conditions and status as a major financial center, recent political developments, including the imposition of the National Security Law, have introduced significant uncertainties for both foreign and local firms, leading to a decline in foreign direct investment and a reduction in the number of multinational companies operating in the region.
Hong Kong maintains a highly open investment climate, characterized by favorable conditions for foreign businesses, including no restrictions on foreign ownership and straightforward reporting requirements. However, the imposition of the National Security Law and subsequent legislation has introduced significant uncertainty, raising concerns among foreign investors about potential impacts on routine business activities and legal protections. Despite these challenges, Hong Kong remains a major recipient of foreign direct investment, particularly in sectors like finance and technology.
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- Risk Analysis
- Corruption
- Economy
- Sanctions
- Narcotics
- Executive Summaries
- Investment Climates
- FATF Status
- Compliance
- Key Findings
