Hong Kong's leader John Lee says he will only implement United Nations sanctions, after the US warned the territory's status as a financial centre could be affected if it acts as a safe haven for sanctioned individuals.
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Lee's statement on Tuesday came days after a luxury yacht connected to Russian tycoon Alexey Mordashov docked in the city.
Mordashov, who is believed to have close ties to Russian President Vladimir Putin, was sanctioned by the US, UK and the European Union in February after Russia's invasion of Ukraine.
Hong Kong authorities have said that they do not implement unilateral sanctions imposed by other governments.
"We cannot do anything that has no legal basis," Lee told reporters.
"We will comply with United Nations sanctions, that is our system, that is our rule of law," he said.
A US State Department spokesperson said in a statement on Monday that "the possible use of Hong Kong as a safe haven by individuals evading sanctions from multiple jurisdictions further calls into question the transparency of the business environment."
The State Department spokesperson also said the city's reputation as a financial centre "depends on its adherence to international laws and standards."
The $US500-million ($A792 million) superyacht Nord, allegedly owned by Mordashov, moored in Hong Kong's harbour on Wednesday following a weeklong journey from the Russian city of Vladivostok.
Mordashov is one of Russia's richest men, with an estimated wealth of about $US18 billion ($A28.5 billion). He also is the main shareholder and chairman of Severstal, Russia's largest steel and mining company. Mordashov has tried to challenge the sanctions against him in European courts.
US and European authorities have seized over a dozen yachts belonging to sanctioned Russian tycoons to prevent them from sailing to other ports that are not affected by the sanctions.
Russian oligarchs have begun docking their yachts at ports in places like Turkey, which has maintained diplomatic ties with Russia since the war began.
The Nord measures 141.6 metres, has two helipads, a swimming pool and 20 cabins. The yacht is currently sailing under a Russian flag.
The State Department spokesperson said U.S. companies "increasingly view Hong Kong's business environment with wariness" amid Beijing's undermining of Hong Kong's high degree of autonomy and its freedoms.
Australian Associated Press
