Companies and Individuals in Greater China Can Protect Themselves from U.S. Sanctions Overreach
The United States and its allies continue to use sanctions to attack adversarial governments and their perceived allies, putting companies and individuals with tenuous or merely alleged ties at risk. Recent sanctions have mainly targeted Russia, but PRC companies were most recently designated in February 2024, signaling increasing risk to PRC individuals and businesses if China-U.S. relations deteriorate. At-risk individuals and business should take proactive steps to prepare.
March 4, 2024
The United States and its allies continue to use sanctions as an aggressive political strategy to attack adversarial governments and their perceived allies. As a result, companies and individuals with tenuous or even merely alleged ties to those powers are at risk of being sanctioned.
While Russian entities have borne the focus of these efforts in recent years, on February 23, 2024, the United States designated nine People Republic of China (PRC) companies for alleged connections to Russia. Should relations between the U.S. and China break down further, the West will likely respond by enacting additional sanctions against individuals and businesses with ties to China, its government, and Chinese nationals.
Moreover, jurisdictions where many Chinese companies and individuals base corporate and trust structures to hold non-PRC-domiciled assets – including the Cayman Islands and the British Virgin Islands – apply sanctions designations by the United Kingdom. This compounds the associated risks, as sanctioning governments tend to sanction a wide range of targets in an effort to exert maximum pressure.
At-risk individuals, businesses and their advisors may be able to mitigate potential risks they face provided they act early and decisively:
In the rapidly evolving world of international sanctions regimes, individuals and businesses with ties to China may quickly become engulfed in the conflict through Western governments' aggressive use of sanctions. These risks could come not just from sanctioning authorities but also from commercial counterparties or business rivals who seek to take advantage through the spread of misinformation. It may be prudent for these individuals and businesses to explore taking affirmative steps now to ensure that misinformation does not lead to negative outcomes.
Kobre & Kim is a global law firm focusing on cross-border disputes and investigations, often involving fraud and misconduct.
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