Exclusive: Airbnb hosts Xinjiang rentals on land owned by sanctioned group

Airbnb has more than a dozen homes available for rent in China's Xinjiang region on land owned by an organization sanctioned by the U.S. government for complicity in genocide and forced labor, an Axios investigation has found.

Why it matters: The listings expose Airbnb to regulatory risk under U.S. law. They also land yet another American tech company in the crossfire between the U.S. and China.

• Airbnb is one of 14 top-level sponsors of the 2022 Winter Olympics in Beijing. A growing number of governments, including the U.S. and U.K., have said they are considering a diplomatic boycott of the Games due to the ongoing genocide in Xinjiang.

Airbnb told Axios the company believes the sanction does not apply to these listings and that it implements guidance provided by the U.S. Department of Treasury to comply with sanctions.

The big picture: China is promoting tourism in Xinjiang where it is carrying out genocide.

• The region in northwestern China is a popular destination for Chinese tourists, who come to enjoy the desert landscapes and an increasingly "Disneyfied" version of Uyghur culture. The regional government is developing local sites by demolishing traditional Uyghur neighborhoods and religious sites and replacing them with tourist-ready attractions.
• Uyghurs from cities with Airbnb listings have been systematically detained in mass internment facilities that are in some cases located near the rental homes.
• Airbnb's operations in Xinjiang "pose an unacceptably high level of regulatory and reputational risk for the company in the United States," Isaac Stone Fish, founder and CEO of Strategy Risks, a firm which specializes in assessing China and Xinjiang-related risk, told Axios.

Where it stands: Airbnb had not previously discussed the listings with the Treasury Department's Office of Foreign Assets Control (OFAC), which is in charge of sanctions compliance and enforcement.

• "We take our obligation to comply with U.S. Treasury rules incredibly seriously. OFAC rules require Airbnb to screen the parties we are transacting with, not the underlying landowners," Airbnb spokesperson Christopher Nulty said in a statement provided to Axios.
• "We screen all hosts and guests against global government watchlists, including OFAC’s Specially Designated Nationals and Blocked Persons list, including the hosts associated with the listings raised by Axios," Nulty said.

Yes, but: While OFAC sanctions are focused on financial transactions, full compliance is a complex undertaking.

• "Sanctions compliance is not a check-the-box exercise. There are other considerations within the compliance regime that go beyond pure transaction screening with the immediate counterparty," said Alex Zerden, a former Treasury official who worked on Global Magnitsky Act sanctions and founder at Capitol Peak Strategies, a digital asset and risk advisory firm.

Details: Axios identified 14 Airbnb listings on land owned by the Xinjiang Production and Construction Corps (XPCC), a large paramilitary organization that has long controlled vast swaths of Xinjiang's land, natural resources and economy.

• The land holdings data comes from a publicly available XPCC 2018 annual report, the most recent data available. The XPCC has a decades-long history with much of this land, which is usually in rural areas or on the outskirts of cities. Some townships are named after the XPCC regiments that govern them.
• The Airbnb rental locations were determined through data from Airbnb's website. The 14 listings identified by Axios are all located well within the boundaries of land claimed by the XPCC.
• Five rentals are in rural areas, advertising pastoral views and convenience for those taking a road trip. Six rentals are in regional capital Urumqi's Saybag District. Three are in Khorgas, a border crossing between China and Kazakhstan.

Background: In July 2020, the Trump administration sanctioned the XPCC under the Global Magnitsky Act for complicity in ongoing genocide and repression targeting ethnic minorities in the region.

• The sanctions "prohibit all transactions" that "involve any property or interests in property" of the XPCC.
• The XPCC operates some of the mass internment facilities in Xinjiang where various outlets report 1 million or more ethnic Uyghurs have been detained, subjected to torture and indoctrination, and forced to renounce their religious beliefs.
• The XPCC is also involved in the production of approximately one-third of the region's cotton, an industry that widely utilizes Uyghur coerced labor.
• In July 2021, several U.S. federal agencies issued an advisory to U.S. businesses, warning that continuing to operate in Xinjiang "could run a high risk of violating U.S. law."

How it works: OFAC relies largely on companies to self-report compliance issues, and it's issued a detailed framework for companies that emphasizes a "risk-based approach to sanctions compliance."

• In 2020, Airbnb conducted an internal compliance review and then voluntarily filed disclosures with OFAC about Airbnb user activity in Cuba and Crimea, where there are U.S. sanctions in place. The Crimea disclosures were resolved with no penalty, while those regarding Cuba are still ongoing.
• "Large multinational companies have unprecedented resources at their disposal for the purpose of compliance with OFAC and other regulations, including open source and commercially available tools," said Zerden, who also serves as an adjunct senior fellow at the Center for a New American Security.

• The U.S. Treasury Department declined to comment for this story.

Between the lines: Information connecting numerous Airbnb listings with XPCC-owned land is publicly available, in some cases on Airbnb's own website.

• One Airbnb listing states it is located at the XPCC Cavalry Regiment's Seventh Company, near the scenic Nalati Grassland in Yili Prefecture, and advertises that guests can experience "XPCC cavalry culture."
• A listing, the Mobei Kangyang Hotel, states it is located at an XPCC regiment on the outskirts of the city of Shihezi in northern Xinjiang.
• Another rental is listed in Chinese under the name "XPCC Farmhouse."
• Yet another listing, a small rural hotel in the northern county of Altay, is posted on Trip.com, another booking website. There a review states, "Come here to experience a new rural area of the XPCC ... the host is a 75-year old XPCC retiree."

What they're saying: Airbnb told Axios these 14 listings had brought in a total of just over $6,500 in the last 12 months, and that five of them had zero reservations during that time.

• "Stays in China have accounted for approximately 1% of revenue for the last few years. While China has been a very minimal part of our financial success, we believe China is an important part of our purpose to connect people from around the world," Nulty said.

What to watch: Whether Airbnb can satisfy both U.S. and Chinese demands regarding its operations in Xinjiang.

• H&M and other international clothing retailers faced state-fanned consumer boycotts in the Chinese market after they publicly stated they would no longer use Xinjiang cotton. U.S. law prohibits the importation of products made through forced labor.
• In November, Human Rights Watch urged Airbnb and other top-level 2022 Winter Olympics sponsors to press China on its Xinjiang policies. Other rights groups have called for a boycott of companies sponsoring the 2022 Olympics.
• But criticizing China's policies in Xinjiang or withdrawing Olympic sponsorship could result in a Chinese consumer boycott or official punishment, analysts say.

The bottom line: "Airbnb serves as a stark reminder for other U.S. businesses operating in Xinjiang: Better to close Xinjiang operations quietly, rather than risk a scandal in the United States or China," Stone Fish said.

Axios' Shawna Chen contributed reporting and the Australian Strategic Policy Institute's International Cyber Policy Centre provided some of the data and research.

Disclosure: An Airbnb executive is a member of Axios' board of directors. One of the authors of this article owns a U.S. property that is rented out through Airbnb.

Editor's note: This article has been corrected to reflect that there are 14 top-level Olympic sponsors (not 13 U.S. sponsors).