Entities in Hong Kong have purchased about $35 billion in Russian gold since the beginning of 2022.
The influx of Russian gold strengthens Hong Kong’s position as a major center for the entry of gold into China, especially with the restrictions imposed by Beijing on gold imports. In July, Hong Kong began experimenting with a new system for settling gold transactions, and sought to attract central banks to store bullion in its vaults.
In contrast, the growing Russian gold trade through Hong Kong raises additional risks for Western financial institutions. In 2024, the US Treasury Department imposed sanctions on entities in Hong Kong linked to a Russian gold trading network.
“Western banks already face a real risk of unintended exposure to sanctions,” said Tan Albayrak, a sanctions specialist at Reed Smith.
The Hong Kong Financial Services and Treasury Authority confirmed that participants in the new settlement system will be subject to regulations related to combating money laundering and terrorist financing.
