Hong Kong warned not to provide refuge to oligarch yachts

A warning has been issued by the US government to authorities in Hong Kong about the Chinese Special Administrative Region (SAR) becoming a potential haven for the superyachts of sanctioned Russian oligarchs.

According to a Financial Times report, the warning from the US State Department was issued following the arrival in the territory of the142m superyacht Nord. She is understood to have Alexei Mordashov as her ultimate owner and she called into Hong Kong mid last week, having sailed from the Russian Far East port of Vladivostock.

Nord is believed to be currently registered under the Russian flag.

Mordashov gained his wealth from the Russian steel group Severstal and following the invasion of Ukraine he was sanctioned by the US, UK and EU.

Another aspect related to the US warning is that the Hong Kong authorities have reportedly indicated that they will not enforce Western sanctions relating to Nord or the superyachts of other oligarchs.

In its warning, the US State Department suggested that the position of Hong Kong as a key Asian financial centre could be further affected by its response to oligarch-owned yachts. Its message said, according to the FT, that the territory’s “reputation as a financial centre depends on adherence to international laws and standards.”

The territory’s role as a key business centre has already been impacted by the new Chinese security law and the strict Covid restrictions the SAR has been under until recently.

The view of the US State Department was that Hong Kong’s position might encourage sanctioned oligarchs to reside in the territory and possibly base their yachts there.

The US statement says: “The possible use of Hong Kong as a haven by individuals evading sanctions from multiple jurisdictions further calls into question the transparency of the business environment.”