Beating US financial sanctions

America's decision to impose sanctions on Hong Kong must have taken many people aback.

Meanwhile, Macau's Banco Delta Asia placed an ad in Sing Tao Daily, noting that after striving for 15 years the bank has finally emerged from US financial sanctions.

Group chairman Stanley Au Chong-kit used shu er wang zhi - forgive and forget - as the concluding remark on the ending of the prolonged entanglement.

Au didn't say much about how the problem was settled, but the incident has long been cited as a textbook case of US sanctions in mainland research.

Since the 9/11 terrorist attacks, financial sanctions have been increasingly employed by the United States as political leverage. Such a trend has been studied by mainland experts, who have concluded that China could become a target and have proposed countermeasures.

One such study was conducted by Liu Jianwei, a researcher for the Shanghai Institutes for International Studies, who published the paper "An in-depth analysis of the operating mechanism of American financial sanctions" five years ago.

In it, he mentioned how sanctions imposed on Banco Delta Asia for alleged money laundering for North Korea had led to a bank run and the intervention of the Macau government.

The saga was said to have started with North Korea firing a short-range missile at the Sea of Japan, which triggered a US investigation into its foreign financial activities.

Sanctions were slapped on Banco Delta Asia a few months later.

The paper observed that such heavy-handed action achieved obvious results, with North Korea agreeing to return to the six-party talks the following year on condition that it gets back funds totaling US$24 million (HK$187.2 million) frozen at the bank.

However, even after the funds were released, no other financial institution was willing to handle the money.

Eventually, the US had to request the New York branch of the Federal Reserve channel the money to the Russian central bank for onward transfer to a far eastern bank in Vladivostok for ultimate return to the North Koreans.

We can see, therefore, how players in the financial industry try to avoid US financial sanctions like the plague.

It also shows how those subjected to such sanctions need determination and perseverance to emerge from such a long ordeal.

Siu Sai-wo is publisher of Sing Tao Daily