The national emergency declared under Executive Order 13936 ("Hong Kong Normalization") expired on July 14, 2026. The Office of Foreign Assets Control has taken a series of consequential actions in response, restructuring the U.S. sanctions framework applicable to Hong Kong-related persons and transactions.

OFAC has removed from the SDN List persons who were sanctioned solely under the authority of E.O. 13936. These individuals and entities are no longer subject to the asset-freeze and U.S.-person-dealing prohibitions that apply to SDN-listed parties.

The expiration of E.O. 13936 does not affect the continued operation of:

• The Hong Kong Human Rights and Democracy Act (HKHRDA)
• The Hong Kong Autonomy Act (HKAA)

Persons who remain subject to restrictions under the Hong Kong Autonomy Act have been moved or added to OFAC's Non-SDN Menu-Based Sanctions List (NS-MBS List). The NS-MBS List imposes a different — and in some respects more complex — set of restrictions than the SDN List. Covered persons on the NS-MBS List are subject to menu-based sanctions that may include correspondent account restrictions, property-blocking, visa denials, and other measures, depending on the specific designation.

Property that was blocked before July 14, 2026 does not automatically unblock merely because the relevant person was removed from the SDN List. OFAC has made clear that the removal of a party from the SDN List does not, by itself, authorize the release of previously blocked funds, assets, or property. Each situation requires a transaction-specific OFAC analysis before any blocked asset is released.

OFAC has indicated that implementing regulations and guidance will be updated to reflect the restructured framework. Compliance officers should monitor OFAC's website for updated regulations, FAQs, and general licenses.

Banks and financial institutions should take the following steps immediately:

• Refresh screening databases to reflect the SDN List removals and NS-MBS List additions. Automated screening systems that rely on SDN List data alone will not capture NS-MBS List designations.
• Analyze each apparent delisting carefully. A party removed from the SDN List may still be subject to menu-based restrictions under the HKAA, may control or be controlled by an entity that remains designated, or may be subject to secondary-sanctions exposure.
• Do not release blocked funds or assets without a transaction-specific OFAC analysis. The automatic-unblocking assumption is incorrect and could expose the institution to OFAC enforcement.
• Review correspondent banking relationships involving Hong Kong counterparties, particularly where the counterparty or its beneficial owners may be subject to NS-MBS List restrictions.

Real estate funds and investors with Hong Kong-connected counterparties, beneficial owners, or holding structures should:

• Screen all Hong Kong-connected parties against both the SDN List and the NS-MBS List
• Review existing investments where Hong Kong holding companies or beneficial owners are involved
• Assess whether previously blocked escrow funds or transaction proceeds may now be released, and obtain OFAC analysis before doing so

Corporate service providers — including registered agents, trust companies, and corporate administrators — that maintain Hong Kong-connected entities should:

• Update KYC and beneficial-ownership records to reflect the changed sanctions status of relevant parties
• Screen all Hong Kong-connected beneficial owners against the NS-MBS List
• Review service agreements with parties that may have been removed from the SDN List but remain subject to HKAA restrictions

Trading companies and businesses that use Hong Kong holding companies or transact with Hong Kong-connected counterparties should:

• Immediately refresh sanctions screening for all Hong Kong-connected counterparties, suppliers, customers, and beneficial owners
• Review open transactions and contracts involving Hong Kong entities to assess whether any party is subject to NS-MBS List restrictions
• Consult OFAC counsel before releasing any previously blocked payments or assets

1. Update screening systems to include the NS-MBS List as a separate screening source
2. Conduct a targeted review of all Hong Kong-connected counterparties, beneficial owners, and holding structures
3. Do not release blocked assets without written OFAC analysis
4. Monitor OFAC guidance for updated regulations and general licenses
5. Review internal policies governing Hong Kong-related transactions to reflect the restructured framework

This alert is provided for informational purposes only and does not constitute legal advice. For guidance on how the OFAC Hong Kong sanctions restructuring may affect your specific compliance obligations, please contact ULF New York.