26 September 2001

The Chief Executive
All authorized institutions

Dear Sir/Madam,

United States Executive Order

You will be aware that the US President issued an Executive Order on 24 September 2001. The Order applies to financial assets of, and transactions with, 27 entities specified in the Order. Such entities, it appears, are believed to be terrorist organisations, terrorist leaders, or to have links with such persons.

The text of the Executive Order and the list of the 27 entities are available on the website of the Office of Foreign Assets Control under the US Treasury (www.ustreas.gov/ofac). Authorized institutions ("AIs") should obtain a copy of the order and the list and study it carefully.

The Executive Order, among other things, prohibits "any transaction or dealing by United States persons or within the United States in property or interests in property blocked pursuant to this order." The term "United States person" includes an "entity organised under the laws of the United States (including foreign branches), or any person in the United States". It appears that the intention of the Order is that it should apply both to United States-incorporated entities (including their foreign branches) and to the United States branches of foreign-incorporated institutions (including Hong Kong institutions).

We are seeking clarification of the legal implications of the Executive Order and we shall notify you of any further information when it becomes available. In the meantime, however, it is clearly essential that AIs in Hong Kong cooperate in the international effort against terrorist activities and do not become involved, albeit innocently, in facilitating such activities through the provision of banking or other financial services.

AIs should therefore review carefully the list of 27 entities attached to the Executive Order to check whether they have had, or currently have, accounts, transactions or dealings with such entities.

If suspicious accounts, transactions or dealings come to light, AIs should promptly notify the Joint Financial Intelligence Unit in order to ensure that they fulfil their obligations under section 25A of the Organized and Serious Crimes Ordinance in the usual way. It would also seem sensible for AIs to take their own legal advice on the implications that the Executive Order may have for their operations.

Yours faithfully,

(D T R Carse)
Deputy Chief Executive