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香港海關根據《打擊洗錢及恐怖分子資金籌集條例》(第615章)，對四間持牌金錢服務經營者違規行為進行了紀律處分。其中三間經營者受到公開譴責，顯示違規行為的嚴重性。 海關對四間找換店違反反洗錢條例進行紀律處分 香港海關根據《打擊洗錢及恐怖分子資金籌集條例》(第615章)，對四間持牌金錢服務經營者違規行為進行了紀律處分。其中三間經營者受到公開譴責，顯示違規行為的嚴重性。 案例一 決定日期: 2024年8月12日; 紀律處分: 公開譴責及糾正行動。 違規事項: 未就匯款交易備存相關文件記錄（包括內地銀行帳戶匯款明細）。 未設立程序以識別客戶或實益擁有人是否為政治人物。 未在指定時間內向海關報告銀行帳戶變更詳情。 案例二 決定日期: 2024年8月12日; 紀律處分: 公開譴責及糾正行動。 違規事項: 未備存六宗匯款交易的文件記錄（包括客戶盡職審查篩查文件）。 進行匯款交易前，未識別及核實匯款人及實益擁有人身份。 進行匯款交易前，未識別代表客戶行事的人的身份及授權。 案例三 決定日期: 2024年8月12日; 紀律處分: 公開譴責及糾正行動。 違規事項: 未在與客戶建立業務關係前執行客戶盡職審查措施。 進行匯款交易前，未記錄收款人地址及指示時間。 未在指定時間內向海關報告營業處所的停業日期。 案例四 決定日期: 2024年8月12日; 紀律處分: 糾正行動。 違規事項: 未在指定時間內向海關報告提供金錢服務的銀行帳戶變更詳情。 海關執法行動焦點 這四間店鋪中，有三間的違規行為與 客戶盡職審查 和 文件備存 有關。這些行動強調了客戶盡職審查和文件備存在反洗錢合規中的重要性。 根據香港海關執行反洗錢和打擊恐怖融資的紀錄，從2014年到2024年，大部分的執法行動涉及 客戶盡職審查 和 文件備存 的規定。這些規定包括： 第5條: 就客戶作盡職審查及備存紀錄： 這是指金錢服務經營者在與客戶建立業務關係前，必須進行客戶盡職審查，並保存所有與交易有關的文件記錄。 附表2: 就客戶作盡職審查及備存紀錄： 這是對上述規定的具體應用，強調在進行交易前，必須確保客戶的身份和交易活動的合法性。 總計 2024年 2023年 2022年 2021年 2014-2020年 第5條: 就客戶作盡職審查及備存紀錄 23 0 2 1 6 14 第29條: 經營金錢服務的限制 21 0 0 0 2 19 第35條: 擬任持牌人董事需獲關長批准 1 0 1 0 0 0 第37條: 擬成為持牌人合夥人的人需獲關長批准 2 0 2 0 0 0 第38條: 加入新的營業處所 2 0 0 2 0 0 第40條: 持牌人有責任向關長具報詳情改變 19 3 7 8 0 1 第41條: 持牌人有責任向關長具報停業 3 0 1 2 0 0 附表2: 就客戶作盡職審查及備存紀錄 10 0 2 2 2 4 資訊來源 ComplianceOne - 香港海關對金錢服務經營者的執法和刑事調查案件資訊： https://eservices.customs.gov.hk/MSOS/common/enforcenew 客戶盡職審查 指在與客戶建立業務關係前，金錢服務經營者需要採取措施來識別和核實客戶及其實益擁有人的身份，並確保他們不涉及任何非法活動。這包括檢查客戶的身份證明文件、收集相關信息，並在必要時進一步核實。 文件備存 則要求金錢服務經營者保存所有與交易有關的文件記錄至少五年，以確保在監管機構要求時可以提供完整的交易記錄。這不僅有助於防止洗錢活動，還能提高業務透明度，保護金錢服務經營者免受潛在的法律風險。 這些行動展示了海關對維護金融系統完整性及嚴格執行反洗錢法規的承諾。公開譴責提醒所有金錢服務經營者，遵守反洗錢要求的重要性。金錢服務經營者應審查其反洗錢政策及程序，以確保符合要求，避免面臨類似處分。 立即試用「東查查反洗錢/ 客戶管理系統」

The topics discussed in this monthly newsletter for insurance are as follows: ComplianceOne Insurance Newsletter – November 2025 The topics discussed in this monthly newsletter are as follows: REGULATORY UPDATES IA Issues Circular on Reference Checking Schemes for Licensed Insurance Intermediaries ENFORCEMENT NEWS IA Imposes Restrictive License Conditions on Mighty Divine Insurance Brokers Limited Associated with Prince Group (太子集團) ICAC Secures Jail Sentences for Last Batch of Defendants in $52 Million Dummy Agents Commissions Fraud ICAC Issues Arrest Warrants for Two Individuals Implicated in $3 Million Insurance Commissions Fraud Regulatory News 1. IA Issues Circular on Reference Checking Schemes for Licensed Insurance Intermediaries On 20 November 2025, IA Issues further Circular on the Reference Checking Scheme (the “ Scheme ”) for Licensed Insurance Intermediaries. Addressing the “rolling bad apples” phenomenon “One bad apple spoils the whole barrel” so the old adage goes. In the context of the Scheme, the phenomenon of “rolling bad apples” refer to licensed individuals attempt to evade the consequences of past misconduct by moving principals without proper disclosure. To address the issue of “rolling bad apples”, the Scheme was launched by the Hong Kong Federation of Insurers (“ HKFI ”) by its circular dated 5 July 2025 to be used by its members which are authorized insurers carrying on long-term business from 1 September 2024 onwards. The IA then issued the Circular on 5 July 2024 to endorse and support the Scheme. The Scheme then expanded in Phase 2, jointly launched by the HKFI, the Hong Kong Confederation of Insurance Brokers (“ CIB ”) and Professional Insurance Brokers Association (“ PIBA ”), covers all licensed long-term individual intermediaries to protect policyholders, maintain market confidence, and prevent misconduct from spreading. Effective Date With effect from 1 January 2026 , the Scheme will be expanded to cover all appointment of all individuals licensed intermediaries carrying on long term insurance business. Non-compliance may lead to supervisory scrutiny or disciplinary action by the IA. Scope and Application Applies to appointments of prospective intermediaries (the “ Candidates ”), including: licensed individual insurance agents; technical representatives (agent); or technical representatives (broker) (collective as “ TRs ”); for regulated activities in long-term business . As a Recruiting Principal, conduct reference checks on candidates with past 7 years of relevant experience. Check only the THREE most recent appointments if multiple. Excludes agencies that are authorized institutions under Banking Ordinance (potential integration with banking scheme ongoing). Summary of the Scheme Making a Reference Checking Request (as Recruiting Principal) Before appointing for long term activities, conduct reference checks on THREE most recent appointments within Past 7 years. · Use Annex 1A template to request info from responding principals. · Obtain written consent from candidates via Annex 2A form , authorizing checks, disclosure, and exempting contractual limits. If candidates refuse to provide consent or withdrawn the provided consent, should NOT appoint. For group companies, one entity can conduct checks for reliance, but each remains accountable with access to results. Responding to a Reference Checking Request (as Responding Principal) Upon received the Reference Checking Request from Recruiting Principal: · Complete and return info within 15 days; · If delayed, send interim reply with reason and expected final (max 2 months , exceptional only, approved by * KPIM/RO or delegate). *KPIM - key person in control function for intermediary management; RO - Responsible Officer. After submitting the first round of reference checking requests, respond to any further clarification requests within 15 days, if applicable. Recruiting Principal may assume that no further clarification to be provided by Responding Principal. Assessment by the Recruiting Principal (as Recruiting Principal) Discretion in Decisions : Recruiting principal has full discretion to appoint based on all info, including references. Evaluate adverse info considering nature, timing, explanations, and recurrence risk. Responding principals may voluntarily add material facts. Opportunity to Be Heard : For fairness, provide candidates chance for representations if adverse info may block appointment; share reference copy. No need to reopen investigations or seek more from responders. Proceeding with Adverse Records : Document assessment and justification for appointing despite issues; endorsed by KPIM/RO. Ongoing Assessment : If Responding Principal declare further information to provide, the reference process may consider complete once the Recruiting Principal assesses available information and decides on appointment ( must document the justification with KPIM/RO endorsement ). Pre-Appointment & Post-Appointment (as Recruiting Principal) Pre-Appointment If the Recruiting Principal decides to appoint despite adverse records from reference checks, they must document the assessment and justification, which requires endorsement by KPIM/RO. Post-Appointment If additional information arrives after appointment, the Recruiting Principal has full discretion to use it for ongoing evaluation, including potential actions like terminate the appointed candidate. Records and Communications (All Principals engaging Long-term business) Record Keeping For Insurance Broker Company engaging Long-Term Business: · Maintain records of resigned TRs for at least 7 years (or per internal policy, not longer than necessary under PDPO). · For unsuccessful application, retain max 2 years unless reason or consent. IIC Centralized Contact Database IA will maintain centralized contact database contain all participating principals via IA’s e-portal - Insurance Intermediaries Connect (“ IIC ”). As a safeguard, responding principals are not required to reply to reference check requests unless sent from the valid designated email address recorded in the contact database. Reference Checking Schemes Materials The Circular attached with relevant materials including: I. Main Paper – Details of the Schemes and Procedures II. Annex 1A – Template III. Annex 2A – Consent Form IV. FAQ for Licensed Entities V. FAQ for Licensed Individuals Attachment: Reference Checking Schemes Materials 附件: 保險中介人背景查核計劃資料 SIGNIFICANCE: This Scheme reinforces the IA's commitment to maintaining high standards of conduct and integrity in Hong Kong's insurance sector by preventing the recirculation of unfit intermediaries. By mandating structured reference checks, it enhances policyholder protection, reduces risks of misconduct, and promotes a more transparent and accountable industry. Insurers and intermediaries should review their hiring processes promptly to ensure compliance, as this could mitigate potential regulatory risks and foster greater trust in the market. Enforcement News 2. IA Imposes Restrictive License Conditions on Mighty Divine Insurance Brokers Limited Associated with Prince Group (太子集團) The Prince Group (太子集團) founded by Chen Zhi (陳志), has been implicated in operating telecom fraud parks in Cambodia, with Chen Zhi facing US prosecution and sanctions, including the freezing of approximately HK$120 billion in Bitcoin assets. On 28 October 2025, IA Imposes Restrictive License Conditions on Mighty Divine Insurance Brokers Limited (“ Mighty Divine ”) - Associate Company with Prince Group. The conditions prohibit the company from conducting, or representing itself as conducting, any regulated activities as defined under the Insurance Ordinance (Cap. 41) . Details of the Licensed Corporate: Name (EN) Mighty Divine Insurance Brokers Limited Name (CN) 美迪保險經紀有限公司 Licence No. FB1329 License Type Insurance Broker Company Line(s) of Business General & Long Term Business (excluding Linked Long Term Business) Business Address FLAT/RM 803, 8/F, 68 KIMBERLEY ROAD, TSIM SHA TSUI, KL Responsible Officer(s) Nill (as of 28 Oct 2025) For more details, please refer to Register of Licensed Insurance Intermediaries Conditions of the License 1) The licensee is restricted from carrying on, or holding out to carry on, any regulated activities under the Insurance Ordinance (Cap. 41) (“IO”); 2) Without prejudice to the generality of condition (1) above, and subject to condition (3) below, the licensee shall not receive, hold, or deal with any monies as specified in section 71(2) of the IO (i.e. (a) monies received by the company from or on behalf of a policy holder or potential policy holder for or on account of an insurer in connection with a contract of insurance; and (b) monies received by the company from or on behalf of an insurer for or on account of a policy holder or potential policy holder.) (“Client Monies”); and 3) The licensee may be involved in arranging the transfer, remittance or payment of, or otherwise deal with, Client Monies in accordance with the requirements under the IO and the Insurance (Financial and Other Requirements for Licensed Insurance Broker Companies) Rules (Cap. 41L), provided that (i) it acts in compliance with all applicable laws and regulatory requirements; and (ii) it has obtained the prior written consent of the Insurance Authority. 3. ICAC Secures Jail Sentences for Last Batch of Defendants in $52 Million Dummy Agents Commissions Fraud On 21 November 2025, the Hong Kong District Court sentenced the final six defendants in a major corruption case investigated by the Independent Commission Against Corruption (“ ICAC ”), involving a $52 million fraud scheme (the ” Scheme ”) orchestrated through dummy insurance agents at: FWD Life Insurance Company (Bermuda) Limited (富衛人壽保險(百慕達)有限公司) (“ FWD ”); and Sun Life Hong Kong Limited (香港永明金融有限公司) (“ Sun Life ”). Case Summary The scheme, masterminded by LO Yin-wa (“ LO ”), a former FWD branch manager who was earlier sentenced to 46 months' imprisonment, involved recruiting dummy agents who falsely represented themselves as handlers of 478 high-commission insurance policies between February 2016 and November 2020. This deception led to the release of over $52 million in commissions, incentives, bonuses, and allowances, most of which were funneled back to LO through laundered bank accounts. The majority of the policies lapsed due to non-payment of subsequent premiums. FWD and Sun Life provided full cooperation during the ICAC investigation, which stemmed from a corruption complaint. Enforcement Act and Court Order The last six defendants, aged 25 to 39 and acting as purported insurance agents were convicted or pleaded guilty to charges of conspiracy to defraud and conspiracy to deal with property known or believed to represent proceeds of an indictable offense, with sentences ranged from 12 to 21 months' imprisonment. i. LEUNG Tsz-wing (梁紫穎) ii. MO Wing-han (毛詠嫻) iii. WOO Kin-leung (胡健良) Entered Guilty Pleas iv. LO Nga-wing (羅雅穎) v. NGAN Tsz-ting (顏梓定) vi. KONG Tsz-ying (江梓瑩) Convicted After Trial A total of 17 defendants faced 20 charges in the case, with 10 other dummy agents previously sentenced to terms ranging from 11 to 22 months. SIGNIFICANCE: The ICAC continues to prioritize integrity in the insurance sector, offering training and resources like the Corruption Prevention Guide for Insurance Companies to mitigate such risks. The judge also reprimanded the defendants for breaching professional conduct standards, noting they were lured into the offenses by the main culprit. This case highlights the severe consequences of integrity breaches in the insurance industry, emphasizing the need for robust internal controls, agent verification processes, and anti-fraud measures to prevent dummy agent schemes that erode public trust and cause financial harm. 4. ICAC Issues Arrest Warrants for Two Individuals Implicated in $3 Million Insurance Commissions Fraud The ICAC has issued arrest warrants for NG Ho-lun (吳浩麟) (“ NG ”) and Kuzca CHIK Sin-deon, formerly known as Pan CHIK Ka-tung (戚善惇, 前稱戚加彤) (“ CHIK ”), two key figures in an alleged insurance fraud scheme that defrauded: Sun Life Hong Kong Limited (香港永明金融有限公司) (“ Sun Life ”); and China Taiping Life Insurance (Hong Kong) Company Limited (中國太平人壽保險(香港)有限公司) (“ Taiping Life ”); of approximately $3 million in commissions, bonuses, and allowances through bogus policies and false representations. Case Summary The case, which involves recruiting family members, friends, and police officers as dummy agents and policyholders, stems from corruption allegations and has led to charges against eight individuals total, with six already charged and appearing in court. On 6 November 2025, the case against the six charged defendants were transferred from the Eastern Magistrates’ Courts to the District Court for plea on 27 November 2025. The defendants face 21 charges. See below table for the Six Charged Defendants Details: Role/Relationship Name Police Sergeant LAM Hin-ho (林顯豪) LAM Hin-ho’s brother LAM Chun-pong (林振邦) LAM Hin-ho’s sister-in-law YU Xiaodan (余曉丹) LAM Hin-ho’s friend LAU Chun-yee, formerly known as LAU Man-yee (劉臻頤, 前稱劉敏儀) Solicitor Osbert HUI Yee (許懿) Police Constable SZE Hong-chak (施匡澤) For more details of the case, please refer to Topic 4 of ComplianceOne Insurance Newsletter – October 2025 Details of Two Wanted Individuals Name Former Positions Role in Fraud Fraud Conducted NG Ho-lun Regional Director of Sun Life; Senior Branch Manager of Taiping Life Central role in orchestrating the fraud Recruited individuals (including LAM Hin-ho’s family, friends, and police colleagues) as dummy downline agents and policyholders; Took out 20 insurance policies, paying premiums while falsely claiming they were settled by genuine policyholders; Ensured false claims of agent interviews; Conspired with LAM Hin-ho and LAU Chun-yee to create false academic qualifications for LAU's recruitment. Kuzca CHIK Sin-deon (formerly Pan CHIK Ka-tung) Insurance Agent of Sun Life Participated in recruitment and posed as a dummy agent Contributed to false representations to insurers; Deceived insurers into believing applications were legitimate and interviews occurred, leading to fraudulent commissions. SIGNIFICANCE: This case underscores the vulnerabilities in the insurance sector to internal fraud schemes involving unlicensed or dummy intermediaries, particularly when intertwined with public servants like police officers, potentially eroding public trust in both law enforcement and financial institutions. The ICAC's proactive investigation and pursuit of fugitives highlight the importance of robust verification processes for policy applications, agent qualifications, and commission payouts to prevent such exploitation. Insurers are urged to enhance anti-fraud measures, including cross-verification of applicant interviews and premium sources, while collaborating with regulators to maintain industry integrity and protect policyholders from systemic risks. [End of ComplianceOne Insurance Newsletter – November2025] For more details, please click on the title of the topic above. ================================= ~ Make It Right Today, Better Tomorrow ~ ================================= The Newsletter is for general information purpose only and is not intended to constitute legal or other professional advice. For enquiries, please email to support@complianceone.hk or WhatsApp us at (852) 95164607 . Unit 1605, 16/F, West Tower, Shun Tak Centre,168-200 Connaught Road Central, Sheung Wan, Hong Kong Tel: (852) 39550277 www.complianceone.hk

香港海關於2024年1月2日成功偵破一宗涉及未註冊鑽石交易的案件，並拘捕了涉案公司的一名董事。On 2 January 2024, Hong Kong Customs and Excise Department (the “Customs”) successfully uncovered a case involving unregistered diamond trading and arrested the involved director. 香港海關偵破未註冊鑽石交易案件 一名公司董事被捕 香港海關於2024年1月2日成功偵破一宗涉及未註冊鑽石交易的案件，並拘捕了涉案公司的一名董事。該公司未經註冊進行多宗金額逾12萬港元的鑽石交易，這不僅違反了香港的法律規定，也暴露出一些貴金屬及寶石業務經營者對監管規範的忽視。 根據香港海關的報告，該公司在沒有依照《打擊洗錢及恐怖分子資金籌集條例》所要求的註冊情況下，進行了數宗總額超過12萬港元的鑽石交易。所有在香港從事貴金屬及寶石交易的商業活動，如果涉及12萬港元或以上的交易金額（無論是現金還是非現金支付），均需向海關註冊。 涉及的董事被捕後，已獲准保釋，但案件仍在進一步調查中。海關強調，任何未註冊的貴金屬及寶石交易商，無論其業務規模大小，都不應忽視這一法律要求。根據法律規定，未註冊進行大額交易者將面臨最高10萬元港幣罰款及最多6個月監禁的處罰。 海關提醒所有貴金屬及寶石交易商，註冊過渡期已經結束，所有業務必須在獲得註冊後才能進行金額為12萬港元或以上的交易。如果您不確定是否需要註冊或如何進行註冊，建議儘早聯繫專業的合規顧問，避免因違法交易而承擔高額罰款和刑事責任。 《貴金屬及寶石交易商監管制度》簡介 所有涉及貴金屬和寶石業務的公司和個人，必須遵守香港特區政府於2023年4月1日實施的新規範，即《貴金屬及寶石交易商監管制度》。該制度要求所有在香港經營貴金屬及寶石交易，並進行12萬港元以上交易的商家必須註冊，並接受海關的監管。 註冊類別 交易方式 A類註冊人 非現金交易 B類註冊人 現金交易及非現金交易 ** 更多關於貴金屬及寶石交易商註冊的資訊，請參考 天匯合規網站 上的詳細指引 ** 根據《打擊洗錢及恐怖分子資金籌集條例》（第615章）的要求，未經註冊的交易不僅涉及法律風險，還可能引發洗錢和恐怖分子資金籌集等金融犯罪問題。所有貴金屬及寶石交易商在進行大額交易前，必須先向香港海關註冊，以確保合規經營。 為什麼需要監管？ 貴金屬和寶石，尤其是鑽石、金、銀等高價值商品，往往成為洗錢、資金籌集和其他非法活動的工具。由於這些交易通常金額巨大且難以追蹤，若缺乏有效的監管，將容易成為金融犯罪的溫床。這一註冊制度旨在提高對貴金屬和寶石交易的監管透明度，確保該行業避免用作洗錢、資金籌集等非法活動的渠道。 如您有任何疑問，或需要協助完成註冊過程，請隨時 聯繫我們 。我們提供專業的合規顧問服務，幫助您輕鬆應對監管要求。 此外，參加 天匯合規網上持續培訓平台 – Thinkific 提供的貴金屬及寶石交易商（”DPMS”）線上培訓課程，了解更多貴金屬及寶石業務經營的合規知識。 The Customs Reveal another Unregistered Diamond Trading Case On 2 January 2024, Hong Kong Customs and Excise Department (the “Customs”) successfully uncovered a case involving unregistered diamond trading and arrested the involved director. The company had conducted multiple transactions exceeding HK$120,000 in diamond sales without the required registration, violating Hong Kong’s legal regulations and highlighting the negligence of some precious metals and gemstone traders regarding the regulatory framework. According to the Customs, the company carried out several transactions exceeding HK$120,000 in total, without registering as required by the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (“AMLO”) (Cap. 615). All businesses engaging in precious metals and gemstone transactions in Hong Kong involving amounts of HK$120,000 or more (whether in cash or non-cash payments) are required to register with the Customs. The arrested director has been released on bail; investigation still ongoing. The Customs emphasized that all precious metals and gemstone traders, regardless of the size of their business, must comply with Dealers in Precious Metals and Stones (“DPMS”) Regulatory Regime. Violate the registration rule can result in fines of up to HK$100,000 and a maximum of 6 months' imprisonment. The Customs urges all precious metals and gemstone traders that the grace period for registration has ended, and must register before engaging in transactions of HK$120,000 or more. If you are unsure whether you need to register or how to register, it is advisable to contact a professional compliance advisor to avoid any legal breaches. Dealers in Precious Metals and Stones (“DPMS”) Regulatory Regime All entities and individuals involved in the precious metals and gemstones business must comply with the new regulations under the DPMS implemented by the Hong Kong SAR government on 1 April 2023. The system requires businesses engaging in precious metals and gemstones transactions of HK$120,000 or more to register and be monitored by the Customs. Registration Categories Registration Categories Category A Non-cash transactions Category B Cash and non-cash transactions For more information about registering as a precious metals and gemstones trader, please refer to the detailed guidelines on the ComplianceOne website. In accordance with the AMLO, unregistered transactions not only carry legal risks but may also trigger money laundering and terrorist financing concerns. All traders must register with the Customs before engaging in large transactions to ensure compliance. Why Is Regulation Needed for DPMS? Precious metals and gemstones, especially diamonds, gold, and silver, are often used for money laundering, fundraising for terrorism, and other illicit activities. These transactions typically involve large sums of money and untraceable. Without regulation, they can become a breeding ground for financial crimes. The DPMS regulatory regime aims to increase transparency in the precious metals and gemstones market and ensure that the industry is not used for money laundering, terrorist financing, or any other illegal activities. If you have any questions or need assistance with the registration process, please feel free to Contact Us . We provide professional compliance advisory services to help you meet legal requirements smoothly. For more compliance knowledge, join the DPMS online training course on ComplianceOne Onling Training Platform - Thinkific .

為規管虛擬資產場外交易 (Virtual Asset OTC)， 香港政府擬根據《打擊洗錢及恐怖分子資金籌集條例》(第615章) (《打擊洗錢條例》)設立虛擬資產場外交易服務提供者發牌制度。我們就此準備了簡易的說明。 虛擬資產場外交易的發牌事宜 [Mar 2024] 為規管虛擬資產場外交易 (Virtual Asset OTC)， 香港政府擬根據《打擊洗錢及恐怖分子資金籌集條例》( 第6 1 5 章) (《打擊洗錢條例》)設立虛擬資產場外交易服務提供者發牌制度。財經事務及庫務局(財庫局) 已在2024年2月8日展開公眾諮詢。公眾諮詢為期兩個月至2024年4月12日。 根據政府的數字，全港約有200多間實體虛擬資產場外交易店 (包括以自動櫃員機操作的場外交易)正在運作，以及約有 200多個數碼平台或活躍網上貼文在 提供虛擬資產買賣服務。這些業務日後將需要申請發牌並受到監管。 監管原則: 香港政府在2022年10月曾發表《有關香港虛擬資產發展的政策宣言》，表明在 「相同業務、相同風險、相同規則」 的原則下，政府致力就虛擬資產活動完善規管框架以及充分保障投資者。 適用人士: 1) 任何人如在香港 從事 有關任何虛擬資產現貨交易服務的業務 2) 或向香港公眾 積極推廣 提供虛擬資產場外交易服務 適用法例: 虛擬資產場外交易營運者須遵守《打擊洗錢條例》附表 2 所訂的打擊洗錢及恐怖分子資金籌集規定和其他規管要求，包括適當人選準則及其他海關關長認為相關的因素。 業務模式: 實體店 (包括自動櫃員機) 或數碼平台。 豁免發牌: 1) 個人與個人 (peer-to-peer) 之間的虛擬資產買賣 2) 已獲發牌的虛擬資產交易平台、持牌法團、認可機構和穩定幣發行人 其他規管要求: 1) 只可涵蓋在至少一所獲證監會發牌的虛擬資產交易平台上供零售投資者交易的代幣 (現時只有 比特幣(BTC) 和 以太幣(ETH) )，以及在擬議穩定幣發行人發牌制度落實後，獲香港金融管理局(金管局) 發牌的發行人所發行的 穩定幣 ; 2) 所有使用的錢包及帳戶都需要海關關長登記; 3) 在指定條件下才可以進行匯出; 4) 與打擊洗錢相關的規定: (i) 委任合規主任和洗錢報告主任; (ii) 具體相關資格／知識和經驗的高級管理層; (iii) 業務穩健; (iv) 具有操守; (v) 風險管理; 及 (vi) 備存記錄。 不容許的業務: 1) 由一種虛擬資產轉換另一種虛擬資產的交易; 2) 直接或間接保管／暫存顧客的虛擬資產; 3) 任何形式的虛擬資產顧問或轉介服務; 4) 提供虛擬資產衍生工具或其他金融產品 (包括但不限於質押、借貸及保證金交易)。 牌照期限和過渡期: 1) 牌照期限: 兩年 2) 過渡期: 不設「被當作已獲發牌」 或 設有「被當作已獲發牌」 以上資料只為立法建議的一部份，我們需要等到完成整個立法流程才會正式生效，我們估計此監管框架最快可在2024年年底至2025年年中啟動發牌的程序。 資料參考: 有關規管虛擬資產場外交易的立法建議-公眾諮詢 (財經事務及庫務局) https://www.fstb.gov.hk/fsb/tc/publication/consult/doc/VAOTC_consultation_paper_tc.pdf 天匯合規顧問有限公司 2024年3月27日

主題： 虛擬資產是否不可靠？虛擬資產交易平台如何分辨真偽？去中心化技術是否成為騙子聚集的溫床？ 天匯合規顧問有限公司 ("天匯合規") 將與柏奇商業顧問服務有限公司("KPI") 共同舉辦研討會！ 今次研討會主要討論 從JPEX平台的倒下，分享虛擬資產牌照及法規對行業發展的重要 。 活動詳情： 主題： 虛擬資產是否不可靠？虛擬資產交易平台如何分辨真偽？去中心化技術是否成為騙子聚集的溫床？ 日期：2023年10月12日（星期四） 時間：17:00-18:30 形式：實體 (30人)/ 線上會議Zoom (上限100人) 費用：港元100 (實體)/港元50 (線上會議Zoom) 語言：廣東話 地點：尖沙咀星光行5樓533室 培訓時數：1.5小時 *培訓出席證書將在研討會後通過電子郵件發放。 演講嘉賓： Ivan Leung - 柏奇商業顧問服務有限公司董事 Tao Wong - 天匯合規顧問有限公司合伙人 Peter Chong - Centralin Analytics創始人 報名請透過以下超連結: https://docs.google.com/forms/d/e/1FAIpQLSfxWsqUBCnIPUZN_jM0mIFGqf7cOW71vZ_Rza2c4w7SqWdDqQ/viewform?usp=sf_link 如需進一步資訊，請WhatsApp+852 54908117 聯絡陳小姐 (Tiffany Chan)。 天匯合規顧問有限公司

The topics discussed in this monthly newsletter for insurance are as follows: ComplianceOne Insurance Newsletter –April 2025 The topics discussed in this monthly newsletter are as follows: 1. IA releases provisional statistics of New Business Premiums for 2024 2. Hong Kong Welcomes New Captive Insurer, Strengthening Its Role as a Global Risk Management Hub 3. Process Review Panel conduct review on IA’s Internal Process in Enhancing its Operation 4. China Taping Former Manager Admit to Multi-Million Dollar Fraud Scheme Market News 1. IA releases provisional statistics of New Business Premiums for 2024 On 25 April 2025, IA has released its provisional statistics for 2024, revealing a robust year for Hong Kong’s insurance industry. Total gross premiums reached HK$637.8 billion, underscoring the sector’s resilience and growth. However, one of the most striking trends is the significant contribution of Mainland visitors to the market’s expansion. A summary of the provisional statistics is at Annex . Mainland Visitors: A Driving Force In 2024, new business premiums derived from Mainland visitors totaled HK$62.8 billion, marking a 6.5% increase from the previous year. This figure accounts for 28.6% of the total new office premiums for individual business, highlighting the critical role Mainland visitors play in Hong Kong’s insurance landscape. Policy Preferences : The majority of these policies were settled at regular intervals, with whole life, critical illness, and medical policies making up approximately 59%, 28%, and 5% of the total, respectively. This preference for long-term, protection-oriented products reflects the trust Mainland visitors place in Hong Kong’s insurance offerings. Market Share : The HK$62.8 billion in premiums from Mainland visitors is a testament to Hong Kong’s reputation as a premier destination for high-quality insurance products. Factors such as the city’s regulatory stability, diverse product range, and the perceived reliability of its insurers continue to attract Mainland buyers. Overall Market Performance The overall insurance sector (including PRC visitors above-mentioned) also demonstrated strong performance in 2024: Long Term Business : New office premiums (excluding Retirement Scheme business) surged by 21.4% to HK$219.8 billion, primarily fueled by Non-Linked individual business, which saw a 22.8% increase to HK$208.1 billion. In-Force Business : Total revenue premiums for in-force business rose by 11.4% to HK$537.4 billion, with claims and benefits paid to policyholders increasing by 6% to HK$352.5 billion. General Business : The general insurance sector thrived, with total gross premiums reaching HK$100.5 billion and an overall operating profit of HK$8.1 billion. SIGNIFICANCE: The IA’s data underscores the growing interdependence between Hong Kong’s insurance market and Mainland visitors. The sustained interest from Mainland visitors can be attributed to several factors: Product Diversity: Hong Kong offers a wide range of insurance products that may not be as readily available or competitively priced in PRC. Regulatory Trust: The city’s stringent regulatory framework, overseen by the IA, provides assurance of policyholder protection and market stability. Investment Opportunities: Many policies, particularly whole life and participating products, are seen as attractive long-term investment vehicles by Mainland buyers. As the sector continues to evolve, this relationship is likely to deepen, with Mainland buyers remaining a pivotal source of growth. The next update on Mainland visitor premiums will be released alongside the provisional statistics for the first half of 2025, offering further insights into this dynamic segment. 2. Hong Kong Welcomes New Captive Insurer, Strengthening Its Role as a Global Risk Management Hub On 2 May 2025, IA has authorized Wayfoong (Asia) Limited, a wholly-owned subsidiary of the HSBC Group, as Hong Kong’s newest captive insurer. This marks a historic moment as it is the first captive insurer established by a multinational enterprise based in Hong Kong, reinforcing its growing prominence as a global risk management center. What is a Captive Insurer? A captive insurer is a specialized insurance company created by a parent corporation to provide coverage for its own risks. Unlike traditional insurers, captives are designed to meet the unique needs of large businesses, particularly those with operations spanning multiple regions. They enable companies to: Customize risk coverage tailored to their specific operations. Enhance efficiency by managing risks internally. Optimize resources and potentially lower insurance costs. For multinational enterprises with a wide geographical footprint, captive insurers are a strategic tool to handle diverse and complex risks effectively. For more details of Captive Insurer: IA - Regulatory Requirements on Captive Insurers Government Backing The Hong Kong government has played a key role in this development by: Offering a 50% tax concession for local captive insurers, making the city more competitive. Collaborating with the insurance industry to promote diversified growth. SIGNIFICANCE: The arrival of Wayfoong (Asia) Limited as a captive insurer is a game-changer for Hong Kong, affirming its role as a global risk management hub and paving the way for future growth in the insurance sector. Mr. Christopher Hui, Secretary for Financial Services and the Treasury, welcomed the move, saying, “The decision of HSBC to set up a captive insurer here underscores its solid confidence and firm commitment in Hong Kong. Given the current global situation where risks take on new dimensions, we will continuously revisit our policy tools to attract more multinational enterprises.” Mr. Clement Cheung, CEO of the IA, stated, “This decision reflects our growing attractiveness and promising potential as a key captive domicile, leveraging the unique advantages of Hong Kong to facilitate multinational enterprises in managing their global operations.” IA News Updates 3. Process Review Panel conduct review on IA’s Internal Process in Enhancing its Operation On 29 April 2025, Process Review Panel for the IA (“ PRP ”) has published its 2024 Annual Report , offering valuable insights into the IA’s regulatory processes. Established in 2019, the PRP is an independent body dedicated to ensuring the IA’s internal procedures and operational guidelines remain fair, transparent, and efficient. The report reviews 20 selected cases from 1 January to 31 December 2023, covering licensing, complaint handling, and disciplinary actions. PRP’s Key Observations and Recommendations PRP highlighted areas for improvement while recognizing the IA’s progress in enhancing its operations. Here are the key points: Clear Timelines and KPIs Needed: The PRP observed inconsistencies in case handling times due to undefined timelines and Key Performance Indicators (“ KPIs ”). It recommends setting target timelines for all case types and establishing KPIs to track performance. Addressing Delays: Delays, linked to manpower shortages and high case volumes (e.g. over 2,600 CPD non-compliance cases), prompted the PRP to suggest continuous monitoring and process streamlining, such as returning incomplete applications promptly. Standardizing Disciplinary Processes: The IA’s framework for CPD non-compliance cases was praised, but the PRP advised extending standardized processes to other straightforward cases, like false qualifications, for greater consistency. Expanding the Disciplinary Panel (“ DP ”) Pool: The PRP proposed broadening the DP pool with expertise in areas like risk management and compliance to speed up complex case handling. Regular Review of Procedures: A formal mechanism for regularly updating operational guidelines was recommended to keep pace with regulatory changes. Positive Improvements: The PRP applauded the IA’s streamlined disciplinary workflows via the Disciplinary Executive Process (“ DEP ”) and improved document preparation for reviews, boosting efficiency and collaboration. IA’s Commitment to Improvement Progressive Implementation: Target timelines for licensing and KPIs for investigations and disciplinary actions will be introduced soon. Operational Enhancements: Staffing stabilization and automation (e.g. via the Insurance Intermediaries Connect platform) are in progress. Disciplinary Improvements: The DEP will be refined, and a tariff framework for common offenses will expedite resolutions. Regular Reviews: A biennial review cycle for key procedures will be maintained. SIGNIFICANCE: The 2024 Annual Report reinforces the PRP’s role in upholding the IA’s procedural integrity and efficiency. IA’s proactive response signals its dedication to continuous improvement, solidifying its status as a top-tier regulator. The PRP also invites feedback from the public and market participants—reach out to the PRP Secretariat at prpia@fstb.gov.hk Enforcement News 4. China Taping Former Manager Admits to Multi-Million Dollar Fraud Scheme On 15 April 2025, a former assistant manager at China Taiping Insurance (Hong Kong) Co., Ltd., 周銳坤 (“ CHAU ”) and three of his subordinates have admitted to defrauding the company of over HK$4.59 million through a scheme involving fake insurance policies. The group used puppet insurance agents and false policies to claim commissions and allowances. Background Between February 2021 and October 2022, CHAU allegedly used other people's names and paid approximately HK$3.48 million in premiums himself to submit nine fake insurance policies to China Taiping. He falsely claimed that his subordinates were the handling agents for these policies. This deception led the company to pay out over HK$4.59 million in commissions and allowances to the accounts of the four individuals. CHAU has admitted to nine counts of fraud. His three subordinates, each admitted to one count of money laundering. The case has been adjourned to June 11 for sentencing, with all defendants remanded in custody. One of the subordinates also confessed that she did not handle any policies and was paid by CHAU to facilitate the transfers. SIGNIFICANCE: This case underscores the importance of robust fraud detection and prevention measures in the insurance sector, as the financial and reputational fallout from such incidents can have lasting effects on a company’s operations and market position. Case Number: DCCC1163/2024 [End of ComplianceOne Insurance Newsletter – April 2025] For more details, please click on the title of the topic above. ================================= ~ Make It Right Today, Better Tomorrow ~ ================================= The Newsletter is for general information purpose only and is not intended to constitute legal or other professional advice. For enquiries, please email to support@complianceone.hk or WhatsApp us at (852) 95164607 . Unit 1104, 11/F, 299QRC, 287-299 Queen's Road Central, Sheung Wan, Hong Kong Tel: (852) 39550277 www.complianceone.hk

The topics discussed in this monthly newsletter are as follows: ComplianceOne Newsletter – Mar 2025 The topics discussed in this monthly newsletter are as follows: REGULATORY UPDATES 1. The SFC issues additional guidance for high-multiplier IPO subscription 2. SFC proposes enhancements to targeted tools to address corporate misconduct MARKET NEWS 3. Hong Kong capital markets ended with high achievements in 2024 4. HKEX and Exchange Fund collaborate on development of fixed-income and currency (FIC) ecosystem 5. Hong Kong’s securities industry posted broad-based growth in 2024 6. Hashkey Capital was granted type 1 license by the SFC ENFORCEMENT NEWS 7. SFC obtains disqualification order against former financial controller of Anxin-China Holdings Limited 8. SFC seeks disqualification and compensation orders against entire former board of 3DG Holdings (International) Limited 9. SFC obtains disqualification orders against former executive directors of Tech Pro Technology Development Limited 10. SFC suspends a Finfluencer for 16 months for unlicensed investment advice on Telegrams 11. SFC fines Enlighten Securities Limited $5 million for securities margin financing failures 12. SFC bans former RO of Kylin International for private fund management failures Regulatory Updates 1. The SFC issues additional guidance for high-multiplier IPO subscription The SFC recently completed a review (“ Review ”) of the risk management practices and control measures of selected licensed corporations (“ LC ”s) in relation to their initial public offering (“ IPO ”) subscription and financing services. A circular dated 20 March 2025 set out the findings of the Review and provides guidance to LCs on the expected standards of conduct. An Executive Summary of the Review 1. Key Findings from the Review The Review identified the deficiencie s including lenient credit control in assessing clients’ financial capabilities, imprudent IPO financing, thus rendering the LCs to risk exposure levels beyond their anticipation. (1) Credit controls are too lenient the LCs over-emphasized on the subscription levels rather the assessment of the clients’ financial capacities, resulting in over-leverage for clients, subject the LCs to increased client default risk; practices observed like applying high multiplier to clients’ account balances based on some pre-set leverage ratios without written justification ; (2) IPO funding arrangement some LCs collected minimal upfront subscription deposits on non-fully funded IPO subscription orders, while relying on house money to meet pre-funding requirement, putting significant pressure on the liquidity level of the LCs; (3) Handling subscription deposits the LCs failed in proper and timely segregation of the subscription deposits received from the clients that were not placed with the designated banks for pre-funding confirmation; causing under-segregation of client monies in segregated bank accounts; the LCs failed in timely segregation of the client money released from designated banks after the balloting process and before returning to clients within one day after receiving the receipts by the LCs; 2. The Regulatory Guidance With the aim to mitigate excessive exposure for the investors, some expected standards of conduct are set out in particular with respect to FRR capital requirements and relevant internal control measure. (1) For IPO financing activities, the LCs should: assess the financial capabilities of the clients, and collect minimum upfront subscription deposits of not less the 10% of the subscription amounts; conduct financial and liquidity assessment prior to offering any IPO financing activities to the clients, including estimation of the maximum amount of IPO financing as well as the utilization of any external sources of financing clients’ subscriptions; (2) For Segregation of subscription deposits LCs are reminded to properly segregate upfront subscription deposits that are not placed with designated banks for pre-funding confirmation; 3. Other important points with compliance Issues (1) Investor identification requirement under FINI to ensure the Client Identification Data (“CID”) submitted to FINI for IPO subscriptions is accurate; to prevent clients from submit multiple subscription orders; (2) Computation of liquid capital the LCs which provide IPO financing facilities to clients for pre-funding confirmation should follow the guidance set out in the circular with respect to FRR rules and requirements; FINAL REMINDER LCs should critically review their existing policies and procedures to ensure proper implementation of and full compliance with this circular for IPOs with offering periods commencing after the date of this circular. SIGNIFICANCE: LCs are advised to pay attention to this circular which outlines the perspective of the SFC in relation to imprudent IPO financing and its adverse impact on FRR compliance of the LCs; it is of top priority to strike a balance between risk, viability and compliance as the pendulum needs to swing to sustain the momentum rather than staying at either side. 2. SFC proposes enhancements to targeted tools to address corporate misconduct On 28 March 2025, the SFC began a consultation on proposed enhancements (“ PPEH ”) for the relating to Securities and Futures (Stock Market Listing) Rules (“SMLR”) for IPO cases and post-IPO matters, aiming to improve regulatory efficiency and providing protection for investors at large. In the wake of the SMLR review, the PPEH was put forward to ensure the SFC with sufficient targeted tools to encourage that the listed issuers and listing applicants to make more transparent & accurate disclosures, as well as addressing misconduct. The key PPEHs to the SMLR comprise of FOUR areas : (1) for IPO cases: listing applicants are required to meet continuing disclosure obligations post-listing without the SFC’s objections to the listing, given that the listing conditions remain effective after listing. It is expected that some applications can be expedited with increased transparency with this bespoke disclosure requirement; (2) for post-IPO matters: apart from the existing power to execute suspension of dealing in the securities, the SFC would be able to impose post-listing conditions on a listed issuer, requiring for more transparent and complete disclosures in order that investors can make more informed decisions; (3) for trading suspension: to shorten the suspension time through proposed simplified procedures to handle application for trading resumption more efficiently; (4) for issuers unsatisfied with SFC’s decisions: the aggrieved party would have the right to seek for a review by the Securities and Futures Appeals Tribunal, providing an independent safeguard to the aggrieved that the decisions made by the SFC are reasonable and fair. SIGNIFICANCE: The merits of these PPEHs can be summarised by what Mr. Michael Duigan, the SFC’s Executive Director of Corporate Finance, has said, “ Investors and listed issuers alike stand to benefit from these comprehensive enhancements to drive regulatory and operational efficiencies in Hong Kong’ s listing market as a favourite listing destination for companies at home and abroad .” The above PPEHs, despite its name as targeted tools for the SFC to address misconduct, are actually beneficial arrangements to both the issuers and the investing public by strengthening public accountability and streamlining the regulatory process on one hand; whereas further consolidating the execution authority of the SFC in implementing the policies and procedures with more flexibility. Market News 3. Hong Kong capital markets showed high achievements in 2024 A Quarterly Report (Q4) of the SFC in March showed that strong asset management sector and enhanced market connectivity amidst improving investor sentiments boosted the Hong Kong capital markets to end with high scores. Some key takeaways of the achievements: (1) The average daily turnover of ETFs surged 35% year-over-year to HKD18.9 billion with net inflows of HKD22.8 billion for the year; (2) Net inflows of HK-domiciled funds were up 88% to HKD 162.9 million with asset managed up 22% HKD1.64 trillion; (3) Cross-listing of two Hong Kong ETFs in Saudi Arabia with combined market capitalization of USD1.6 billion as of December; (4) Enhancement of the ETF Connect and the Mainland-Hong Kong Mutual Recognition of Funds scheme bolstered the fund sales in HK since January 2025; (5) Stock Connect saw 55% jump in average daily southbound trading to HKD48.2 billion, more than 18% of turnover in HK, with net inflows hit a 10-year high of HKD807.9 billion; (6) Total number of licensed corporations was up 1.5% with number of license applications up 15% as end of 2024; (7) The number of SFC licensed VA trading platforms was up three more to a total of 10; and the launch of “ ASPIRe ” roadmap further navigated the development of the VA regime in HK; (8) Step up of investor education and combat investment fraud, in December, the SFC launched a fresh anti-scam publicity campaign titled “ Don’t be Sucker ” through the mass media to arouse public alertness. SIGNIFICANCE: Undoubtedly, the support from Mainland is second to none as a driver for the success in Hong Kong. And to conclude the achievements, Ms Julia Leung, the SFC’s CEO, said, “ Building upon the progress, the SFC will remain committed to facilitating developments and fostering innovation for our markets while upholding their integrity and quality. ” 4. HKEX and Exchange Fund collaborate on development of fixed-income and currency (FIC) ecosystem The Hong Kong Exchanges and Clearing Limited (“ HKEx ”) has been providing an unrivalled connectivity between China and the rest of the world, and diversifying the business of the exchange to make it more resilient to volatility and prepared for opportunities. The HKEx has established the most comprehensive product ecosystems in Asia, and it continues to work. For the cash equity market, complemented by the equity derivatives franchise, the HKEX has provided the clients with one-stop-shop to trade and manage risk. Going further, the HKEX will be focusing on driving fixed-income and currency (“FIC”) market development to cultivate a similar ecosystem or this asset class. Mainland China’s fixed-income market, at USD24.6 trillion, ranks the second largest in the world. With strong policy support, it is expected that the growth trajectory of Mainland’s FIC market to continue and connectivity with offshore market. Two cornerstone s of market liquidity and resilience: (a) Diverse investor base: Bond Connect is a key channel for international investors to gain access to China’s domestic fixed income market, given the average daily turnover of its northbound broke records since its launch in 2017. (b) Well-functioning derivative market : allowing investors to effectively and efficiently manage their risks. On 4 March 2025, the HKEx marked a new milestone in building HK’s FIC ecosystem with the announcement to collaborate with CMU OminClear Limited (“ CMU OmniClear ”). CMU OmniClear , a wholly-owned subsidiary of the Exchange Fund with USD610 billion assets under custody, and HKEX signed a MOU on that date to deepen their collaboration in enhancing the post-trade securities infrastructure of the Hong Kong’s capital markets, and supporting a long-term development of the fixed-income and currencies (FIC) ecosystem. Key points of the MOU are that the two parties will explore and pursue cooperation in the following areas: (i) realising cross-asset class efficiencies across equities and fixed income; (ii) expanding the use of Mainland bonds as collaterals; (iii) enhancing HK as a bond issuance centre; (iv) developing an international centre securities depository (“ ICSD ”) in Asia; SIGNIFICANCE: This MOU sets an important milestone and a commitment from both parties to the development of the capital markets, and also for building a vibrant FIC ecosystem in HK. Moreover, through the MOU, the HKEX, HKMA and the CMU OmniClear are collaborating to enhancing the development of HK’s fixed-income market, materializing the RMB internationalization and consolidating HK as an international financial centre as well as an offshore RMB business hub. 5. Hong Kong’s securities industry posted broad-based growth in 2024 On 26 March 2025, the SFC published that from a report on the financial review of the securities industry , it showed that the securities industry demonstrated a remarkable resilience in financial performance in 2024 with total net profits up 56% year-on-year to HKD44.4 billion. The encouraging findings are as below: (i) earning growth of 11% increase in total income to HKD222.6 billion; (ii) the total value of transactions of all securities dealers and securities margin financiers jumped 34% to HKD144.1 trillion; (iii) broad-based growth across different categories: securities commission up 18% to HKD20.2 billion; asset management income up 14%to HKD37.5 billion, and underwriting and placing of securities (up 18% to HKD11.1 billion). For details of the financial review, it is available on the website. 6. Hashkey Capital was granted type 1 license by the SFC On 18 March 2025, HashKey Capital was granted a Type 1 license from the SFC on top of its Type 9 (providing discretionary account management) and Type 4 (providing advisory service on securities and virtual asset investments) licenses. Under the new Type 1 license, HashKey Capital can now offer brokerage services to both retail and professional investors, as well as marketing and distributing funds including those related to virtual assets. With the addition of Type 1 license, HaskKey Capital can now offer a broader range of services which can be classified into three major categories: (1) Market access: providing brokerage services to two markets between crypto exchanges and brokers; (2) Investment funds: its clients now have the access to funds with diverse strategies; (3) Structured products: its clients are now provided with access to diverse suite of structures products HashKey Capital is now able to serve investors with more diversified goals and trading strategies. Enforcement News 7. SFC obtains disqualification order against former financial controller of Anxin-China Holdings Limited SFC has successfully obtained a court order disqualifying Ms. Yang Shuyan, the former financial controller of Anxin-China Holdings Limited (“ Anxin ”, 01149.HK ), from serving as a director, liquidator, receiver, or manager of any listed or unlisted corporation in Hong Kong, or being involved in their management, for three years. This ruling, effective without court permission, stems from her admitted failure to uphold the required standards of skill, care, and diligence in her role. Case Details: The Court of First Instance issued the order following Ms. Yang’s admission that she did not adequately oversee Anxin’s financial reporting. Between 2011 and 2015, the company significantly overstated its cash position, with discrepancies amounting to $1.26 billion in 2012 and $1.73 billion in 2013, as reflected in its audited financial statements. To mask these inaccuracies, false bank records were supplied to auditors during a 2014 audit. As financial controller, Ms. Yang was tasked with ensuring the accuracy of Anxin’s financial statements and overseeing the audit process. However, she failed to take reasonable steps to verify the company’s cash reserves or investigate discrepancies identified by auditors. Additionally, as a member of a special team formed to probe these inconsistencies, she accepted the team’s findings without scrutiny, neglecting to raise concerns about cash flow irregularities or the integrity of senior management. The court described her negligence as "nothing short of breath-taking," emphasizing that such large-scale financial misstatements could not have occurred without gross oversight on her part. SIGNIFICANCE: Mr. Christopher Wilson, SFC’s Executive Director of Enforcement, commented: “ The role of financial controllers in listed companies is pivotal to ensuring the integrity of financial reporting. Professional scepticism is not just a best practice; it is an essential duty. Financial controllers must approach their responsibilities with a critical mindset, actively questioning and verifying financial information to protect stakeholders.” This is not the first instance of regulatory action against Anxin’s leadership. In June 2021, SFC secured an eight-year disqualification order against a former executive director of the company, as part of broader proceedings against its senior management. These repeated interventions signal the severity of governance issues at Anxin and SFC’s resolve to address them. The disqualification of Ms. Yang serves as a powerful reminder of the responsibilities financial professionals bear in safeguarding stakeholder trust. Her failure to exercise professional scepticism and diligence led to significant misrepresentations that undermined the company’s credibility and misled investors. For further details of the case, please refer to - Case No.: HCMP314/2020 8. SFC seeks disqualification and compensation orders against entire former board of 3DG Holdings (International) Limited SFC has initiated legal proceedings in the Court of First Instance against eight former directors of 3DG Holdings (International) Limited, previously known as Hong Kong Resources Holdings Company Limited (“ HK Resources ”, 02882.HK ), which listed on the Main Board of Stock Exchange of Hong Kong since 30 June 2003. SFC is seeking disqualification and compensation orders for their alleged failure to prevent the misappropriation of $74.4 million in corporate funds. There are in total of eight directors (5 Executive Directors & 3 Non-Executive Directors), all serving on the board at the time of the alleged misconduct. Allegations of Misconduct SFC’s investigation revealed that on 8 June 2017, HK Resources acquired a company with a money lender’s license. Between June 2018 and March 2019, the company issued 12 loans totalling $74.4 million through this new money lending business, all of which defaulted. SFC alleges that the acquisition and subsequent loans were part of a scheme to misappropriate HK Resources’ cash. Legal Action and Potential Consequences - SFC is seeking: Compensation Orders: To recover the $74.4 million paid out for the loans, with the directors potentially liable individually or jointly. Disqualification Orders: To bar the directors from serving in corporate management roles for up to 15 years, under Section 214(2)(d) of SFO. SFC claims the directors breached their duties by failing to exercise proper skill, care, and diligence in their roles. SIGNIFICANCE: This case highlights SFC’s commitment to upholding corporate governance and protecting shareholders. The outcome could influence future standards for director accountability in Hong Kong’s financial markets. 9. SFC obtains disqualification orders against former executive directors of Tech Pro Technology Development Limited On 20 January 2025, SFC has won disqualification orders in the Court of First Instance against three former executive directors of Tech Pro Technology Development Limited (“ Tech Pro ”, 03823.HK ) for failing to oversee a joint venture, resulting in significant financial losses. Directors Penalized Mr. Li Wing Sang (former Chairman and Executive Director): Disqualified for 7 years. Mr. Liu Xinsheng (former Executive Director): Disqualified for 7 years. Mr. Chiu Chi Hong (former Executive Director): Disqualified for 4 years. Case Details SFC’s investigation revealed that Li, Liu, and Chiu failed to properly supervise a joint venture, leaving its management to the mainland partner. Li and Liu served as director and supervisor of the venture, respectively, while Chiu had no direct role in it. Their lack of oversight allowed the partner to misappropriate over RMB 300 million. Worse still, the partner didn’t pay rent for a Shanghai building (the venture’s main asset), leading to a mainland court order terminating its sub-leasing rights. This wiped out Tech Pro’s investment, and the directors were oblivious to the legal proceedings. The disqualification orders bar Li, Liu, and Chiu from acting as directors, liquidators, receivers, or managers, or being involved in managing any listed or unlisted corporation in Hong Kong. For Li and Liu, this lasts until 2032; for Chiu, until 2029. SIGNIFICANCE: SFC’s Executive Director of Enforcement, Mr Christopher Wilson, said: “As executive directors of the company, they should be responsible and accountable for managing the financial and operational status of the joint venture. Any delegation of the management of the joint venture to the mainland partner would not exonerate their fiduciary duties and obligation to act in the best interests of the company and safeguard its assets.” “These judgments reinforce the SFC’s commitment to upholding the highest standards of corporate governance and individual accountability in protecting the interests of investors and ensuring market integrity.” Mr Wilson added. The disqualifications which barring the trio from corporate roles in Hong Kong highlight the importance of diligent oversight in joint ventures and SFC’s resolve to maintain market integrity. For further details of the case, please refer to - Case No.: HCMP 2068/2020 10. SFC suspends a Finfluencer for 16 months for unlicensed investment advice on Telegram SFC has suspended Mr. Wong Ming Chung, a financial influencer known as Franky Wong, for 16 months, from 19 March 2025 to 18 July 2026. Wong, a licensed representative of Tse’s Securities Limited (“ TSL ”), was penalized following his criminal conviction for providing investment advice through a subscription-based Telegram chat group without the proper license. Case Details Between 2 January 2018 and 21 May 2019, Wong operated the Telegram chat group in his personal capacity, offering investment advice without the requisite licensing. This led to his conviction on 20 June 2024, where he pleaded guilty, receiving a $10,000 fine and an order to pay SFC’s investigation costs. Although Wong held SFC licenses for Type 1 (dealing in securities) and Type 4 (advising on securities) regulated activities and has been accredited to TSL since 20 August 2010, he was only authorized to act on behalf of TSL. Under the SFO, "advising on securities" is a regulated activity requiring an SFC license. Sections 114(1)(a) and 114(8) of the SFO make it an offense to carry on such a business without proper licensing, barring a reasonable excuse. Wong’s operation of the Telegram group violated these provisions, leading to his conviction. SFC determined that Wong’s actions rendered him unfit to remain licensed to conduct regulated activities. However, in deciding the 16-month suspension, SFC took into account Wong’s cooperation in addressing their concerns. SIGNIFICANCE: Mr. Christopher Wilson, SFC’s Executive Director of Enforcement, issued a stern warning to investors: “Investors should remain vigilant and exercise caution when availing themselves of information shared by finfluencers. Some finfluencers who provide investment-related content on social media and other online platforms may in fact be conducting regulated activities for which they need to be licensed by SFC. Finfluencers who are not licensed may not adhere to SFC’s requisite standards of conduct and accountability, and investors may suffer by relying on their advice.” He further advised: “Before acting upon an investment advice, investors should ensure that firms and individuals who provide the advice are properly licensed.” Wong represents a growing trend of finfluencers who use social platforms like Telegram to share investment-related content. This case highlights the risks of relying on unlicensed advice and reinforces SFC’s commitment to protecting investors by enforcing strict regulatory standards. 11. SFC fines Enlighten Securities Limited $5 million for securities margin financing failures SFC has taken disciplinary action against Enlighten Securities Limited (“ ESL ”), imposing a $5 million fine and a reprimand for serious internal control lapses in its securities margin financing operations. Additionally, Mr. Denny Kua Kong Chak, a responsible officer (“ RO ”) and senior manager at ESL, faces a seven-month suspension of his licence, effective from 21 March 2025 to 20 October 2025. Case Details SFC’s investigation uncovered multiple deficiencies in ESL’s risk management practices over margin financing during the period of 1 May 2020 to 30 November 2022. The key issues included: No safeguards to halt further securities purchases by clients with insufficient equity in their accounts. Weak margin call enforcement, including a failure to liquidate positions when necessary and inadequate documentation for policy deviations. Inadequate oversight of clients’ credit limits. Delayed action on collecting overdue margin payments. These failures breached the Internal Control Guidelines, the Code of Conduct, and the Guidelines for Securities Margin Financing Activities, standards that ESL, as a licensed entity under the SFO, was obligated to meet. Consideration behind the Penalties SFC’s decision was influenced by several factors: Recurring issues: Similar problems were flagged by SFC in 2015, yet persisted into 2022. Prior warnings: ESL received reminders from SFC in 2015 and 2022 to tighten its risk management practices. Kua’s responsibility: His oversight failures as a senior manager were a significant factor. Financial context: ESL’s decision to cease operations and its financial state led to a reduced fine (from a potential $6.5 million). Deterrence: SFC aimed to send a clear message to the industry about the importance of robust controls. Clean records: Both ESL and Kua had no prior disciplinary history, a mitigating factor. SIGNIFICANCE: This case highlights SFC’s commitment to enforcing prudent risk management and holding both firms and their leaders accountable, particularly in high-stakes areas like margin financing. The penalties serve as a warning to other licensed corporations to prioritize compliance or face serious consequences. For further details of the case, please refer to - STATEMENT OF DISCIPLINARY ACTION 12. SFC bans former RO of Kylin International for private fund management failure SFC has barred Mr. Steven Wong Yung, former Responsible Officer (“ RO ”) and CEO of Kylin International (HK) Co., Limited (“ Kylin ”), from the industry for 14 months, from 18 March 2025 to 17 May 2026. The sanction stems from his failure to properly manage private funds under Kylin’s oversight. Case Detail: Between August 2018 and July 2021, Kylin acted as the investment manager and/or consultant for sub-funds of a Cayman-incorporated fund. Wong, who served as RO for Type 9 (asset management) regulated activity from 2016 to 2023, was tasked with overseeing Kylin’s operations and internal controls. SFC found that he : Failed to ensure Kylin maintained appropriate standards of conduct a nd adhered to proper procedures in managing the funds. Did not adequately manage risks tied to Kylin’s business. These lapses fell short of the standards expected of an RO and senior manager, roles in which Wong also served as manager-in-charge for critical functions like compliance, risk management, and overall oversight. The Penalty Wong’s industry ban reflects SFC’s stance on accountability. In determining the 14-month duration, SFC considered: His cooperation in addressing their concerns. His clean disciplinary record prior to this incident. Wong, no longer licensed by the SFC as of 30 November 2023, cannot re-enter the industry until mid-2026. SIGNIFICANCE: Kylin ceased regulated activities on 31 December 2023, and its licence was revoked by the SFC on 22 January 2025 at the firm’s request. SFC’s action against Wong ties into broader disciplinary proceedings against related entities involved with the same funds. Details of these failures remain under wraps until those cases conclude. This ban underscores SFC’s commitment to holding senior management accountable for fund oversight failures. It’s a reminder that ROs must proactively manage risks and uphold rigorous standards to protect investors and maintain market integrity. [End of ComplianceOne Newsletter – March 2025] For more details, please click on the title of the topic above. ================================= ~ Make It Right Today, Better Tomorrow ~ ================================= The Newsletter is for general information purpose only and is not intended to constitute legal or other professional advice. For enquiries, please email to support@complianceone.hk or WhatsApp us at (852) 95164607 . Unit 1104, 11/F, 299QRC, 287-299 Queen's Road Central, Sheung Wan, Hong Kong Tel: (852) 39550277 www.complianceone.hk

The topics discussed in this monthly newsletter for insurance are as follows ComplianceOne Insurance Newsletter - Jul 2024 The topics discussed in this monthly newsletter are as follows: I. IA Regulatory Updates (1) Individual licensees are reminded to submit their CPD Declaration directly to the IA via the Insurance Intermediaries Connect (“ IIC ”) by 30th September 2024 (7 June 2024) (2) Responsible Officers of Licensed Broker Companies are required to attend two RO specific CPD (“ RO-CPD ”) hours in the coming CPD Assessment Period (28 June 2024) (3) The IA put Key Person in Control Function (“ KPIC ”) of Authorized Insurers – related topics into a pilot scheme for CPD training (28 June 2024) (4) The IA will start charging fees for processing insurance intermediary license applications and related notifications starting 23 September 2024 (31 July 2024) (5) The IA issued a Practice Note to provide guidance in respect of the investment choices and premium allocations under Investment-Linked Assurance Scheme Policies (“ ILAS Policies ”) (5 July 2024) (6) The IA and the HKMA carried out join inspection exercise on Premium Financing (“ PF ”) and provided certain findings (27 June 2024) (7) The Hong Kong Federation of Insurers launched a Reference Checking Scheme to standardize the reference check process (5 July 2024) (8) The Hong Kong Federation of Insurers launched a Reference Checking Scheme to standardize the reference check process (5 July 2024) II. Enforcement News (9) Tahoe Life became the first insurer to be taken over by the regulators in Hong Kong to protect policy holders’ interests (27 July 2024) (10) China Taiping’s former employees were charged by ICAC for dummy agent scam and money laundering activities (17 July 2024) (11) The IA bans Chan Hung Fei from the industry within 34 months due to misappropriation of premium payments (12 July 2024) (12) The IA imposes a pecuniary fine against a broker company and a technical representative for mishandling of insurance policy (24 June 2024) I. IA Regulatory Updates (1) Individual licensees are reminded to submit their CPD Declaration directly to the IA via the Insurance Intermediaries Connect (“IIC”) by 30th September 2024 (7 June 2024) The IA issued a circular on 7 June 2024 that sets out the procedures for reporting CPD attainment for the Assessment Period 2023/2024 (1 August 2023 to 31 July 2024). Key deadlines are: 31 July 2024: Complete CPD hours. 30 September 2024: Submit CPD Declarations. 31 October 2024: Appointing principals report CPD compliance to the IA. Licensees and principals can manage CPD requirements via the Insurance Intermediaries Connect (“ IIC”) platform , with daily updates and final lists available on 1 August 2024 . I. CPD Declarations by Individual Licensees : Direct Submission to IA via IIC: Before 31 July 2024: Only if CPD hours are completed. 1 August to 30 September 2024: All licensees can submit, even if incomplete. 1 October to 15 November 2024: Update status if CPD hours were incomplete. Notification to Appointing Principals: Licensees must inform principals of their submission. Licensees without Appointing Principals: Report directly to the IA via IIC or email. II. CPD Declarations to Appointing Principals : Before 31 July 2024: Principals report compliance for licensees who fulfilled CPD requirements. 1 August to 31 October 2024: Principals report compliance for all licensees, including new ones. CPD Penalty Framework : Minimum 15 CPD hours, including 3 hours on “Ethics or Regulations” (3 total for restricted scope travel insurance). SIGNIFICANCE : According to the CPD Non-Compliance League Table (see above), CPD compliance increased from 90% to 96.1%, but the incentive target is 100%. The IA will continue to publish CPD non-compliance rankings. (2) Responsible Officers of Licensed Broker Companies are required to attend two RO specific CPD (“RO-CPD”) hours in the coming CPD Assessment Period (28 June 2024) The Continuing Professional Development (“CPD”) requirements set out in the Guideline on Continuing Professional Development for Licensed Insurance Intermediaries (“GL24”) . The Guideline mentions ROs must complete 15 CPD hours annually, including 3 hours in “Ethics or Regulations.” This requires completion, during each annual CPD Assessment Period (which runs from 1 August to 31 July ). The pilot scheme for the 2024-2025 CPD period requires ROs to complete a 2-hour RO-specific CPD course, which counts towards the 15-hour requirement and 2 of the 3 compulsory “Ethics or Regulations” hours. This course will be delivered through Professional Insurance Brokers Association (“PIBA”) and Confederation of Insurance Brokers (“CIB”) . The IA encourages every ROs of a brokerage firm to attend an RO-CPD course offered by PIBA or CIB during the 2024/2025 CPD Assessment Period (i.e. 1 August 2024 to 31 July 2025). While attendance is not mandatory, records will be kept and absence may impact the IA’s assessment of the broker company’s conduct risk profile. SIGNIFICANCE : The IA emphasizes the importance of representative institutions adhering to the principle of "treating customers fairly". If the pilot project is successful, the continuing professional development requirements for representative institutions may be formally implemented in the future. (3) The IA put Key Person in Control Function (“KPIC”) of Authorized Insurers – related topics into a pilot scheme for CPD training (28 June 2024) While most control functions of Key Person in Control Function (“KPIC”) already existed, the Intermediary Management Control Function was newly introduced on 23 September 2019 which stated out the function of KPIC for Intermediary Management (“KPIM”). To assist KPIMs understand their roles, the IA has issued circulars and conducted training through the Hong Kong Federation of Insurers (“HKFI”). Moreover, the IA is launching a pilot Continuing Professional Development (“CPD”) training for KPIMs during the 2024/2025 CPD Assessment Period (i.e. 1 August 2024 to 31 July 2025). This two-hour course can be attended in person or via recorded sessions. S IGNIFICANCE : The IA mentioned the Polit Scheme attendance is encouraged but not mandatory. However, non-attendance may affect the IA’s assessment of an insurer’s conduct risk profile. The IA emphasizes the importance of KPIMs in upholding the “ treating customers fairly ” principle and maintaining confidence in the insurance market. (4) The IA will start charging fees for processing insurance intermediary license applications and related notifications starting 23 September 2024 (31 July 2024) The IA issued a circular announcing changes to the fees for applications and notifications, effective from 23 September 2024 . Applicants (i.e. individual licensees, insurance agencies, and broker companies) must pay relevant fees specified in Annex 1 to the IA when: applying for a new or renewal license, adding a line of business, seeking approval for a responsible officer, or for appointment and exemption applications. Insurance Intermediaries Connect (“IIC”) gateway update: The gateway without fees for the IA’s e-portal (i.e. Insurance Intermediaries Connect (“IIC”)) will close at 12:00 noon on Friday, 20 September 2024 . Starting from 23 September 2024 , fees for applications and notifications submitted through IIC, must be paid at the time of submission. Access to IIC will be unavailable in between dates mentioned above. SIGNIFICANCE : Applicants should begin preparing their first batch submissions. The updated User Guide for IIC with detailed payment instructions will soon be available on the IA’s website. Additionally, applicants can refer to Annex 2 Q&A section for further understanding. (5) The IA issued a Practice Note to provide guidance in respect of the investment choices and premium allocations under Investment-Linked Assurance Scheme Policies (“ILAS Policies”) (5 July 2024) On 5 July 2024, the Insurance Authority (“IA”) issued a circular and Practice Note outlining regulations for licensed insurance brokers offering services related to investment choices and premium allocations under Investment-Linked Assurance Scheme Policies (“ILAS Policies”). Effective on 1 October 2024 . The Practice Note applies to Broker Companies, Technical Representatives (“Broker”), and Responsible Officers (“RO”), addressing execution-only services, advisory investment services, and discretionary investment management services. Annex A pertains to individuals, while Annex B covers the IA’s expectation of Broker Companies’ internal controls and procedures. Annex A - outlines the competency requirements for personnel (i.e. Brokers and ROs) who offer advisory investment services and discretionary investment management services which apply to all ILAS Polices issued on or after 1 October 2024 . Under the grandfathered investment-linked life insurance policy, those who fail to meet the new competency requirements and wish to continue providing relevant services before 31 July 2027 is required to complete an additional 2 hours of mandatory Continuing Professional Development (“CPD”). Annex B - outlines the IA’s expectations for corporate governance, controls, and procedures related to ILAS Policies, applicable from 1 October 2024 . Broker Companies must ensure that policyholders receive and understand transparent information about terms, remuneration and service charges that are independent of the investment life policy feature. SIGNIFICANCE : Broker companies and ROs may consider the grandfathered arrangements as the temporary alternative solution if issues arise during the license (i.e. Type 4 and Type 9) application before 1 October 2024 . (6) The IA and the HKMA carried out join inspection exercise on Premium Financing (“PF”) and provided certain findings (27 June 2024) The Insurance Authority (“IA”) and the Hong Kong Monetary Authority (“HKMA”) jointly completed an inspection on premium financing (“PF”) activities in late 2023 to assess compliance with the New Supervisory Standards (the “Standards”) introduced on 1 January 2023 . The inspection found that most authorized insurers and licensed intermediaries complied with the standards, often adopting stricter thresholds to prevent over-leveraging. The “ Important Facts Statement – Premium Financing ” (IFSPF) disclosure requirement was widely implemented. Good Practices and Findings The inspection revealed several good practices among insurers and intermediaries, such as: Conservative affordability analysis, Displaying leverage ratios in financial needs analysis (FNA) forms, and Conducting post-sale calls due to different circumstances instead of just to vulnerable customers. However, issues were also noted, including unawareness of PF standards, Questionable financial reconfirmations, Incorrect bank reference letters, Incomplete IFS-PF forms, premature product recommendations, and Inadequate credit assessments by banks. SIGNIFICANCE : Insurers and intermediaries are reminded to adhere to the Standards, especially in the current high-interest environment. Details of the observations of two regulators can be found in the Annex for further understanding. (7) The Hong Kong Federation of Insurers launched a Reference Checking Scheme to standardize the reference check process (5 July 2024) On 5 July 2024, the Hong Kong Federation of Insurers (“HKFI”) introduced the Reference Checking Scheme for Insurance Intermediaries with long-term businesses. The Insurance Authority (“IA”) endorsed and supported this Scheme through a Circular issued on the same date. The Scheme will come into effect on 1 September 2024 under the IA regulate requirement. Key Aspects of the Scheme In accordance with the Scheme’s requirement, when Long Term Insurers (the “Recruiting Insurer”) consider appointing a candidate who has previously worked for other Long Term Insurers (the “Responding Insurers”) within the past 7 years , the Recruiting Insurer must conduct reference checks with the Responding Insurers. The assessment should be reviewed by the Key Person in Control Function for Intermediary Management (“KPIM”) . The IA expects Long Term Insurers and their KPIMs to implement the Scheme with internal controls (i.e. due diligence, vetting procedures etc.) as part of their regular onboarding procedures. The IA’s Supervisory Approach Any Long Term Insurer does not participate in the Scheme or fails to meet its obligations, the IA views this as a sign of internal control weaknesses. As such, the insurance company may expect the enhance supervisory on the adequacy of recruitment and onboarding controls by the IA. This may result in the insurance company's application for any insurance license (i.e. new license and renewal) being scrutinized more closely and taking a relatively longer time. SIGNIFICANCE : As the circular mentions that the IA is currently evaluating the possibility of expanding the scheme to cover all types of insurance institutions, it is expected that the scheme will soon be applicable to all insurance intermediaries. Insurance intermediaries currently exempt from participating in the Scheme should consider the Scheme as the “best practice” and implement it gradually. II. Enforcement News (8) Tahoe Life became the first insurer to be taken over by the regulators in Hong Kong to protect policy holders’ interests (27 July 2024) On 26 July 2024 , the Insurance Authority (“IA”) appointed to take full control of Tahoe Life Insurance Company Limited ("Tahoe Life”)’s affairs and property in Hong Kong. By order of the Supreme Court of Bermuda dated 26 July 2024 , Mr Marcin Czarnocki of Deloitte Financial Advisory Ltd., Mr Derek Lai and Mr Forrest Kam of Deloitte Touche Tohmatsu, and Mr Oliver Cheng of Deloitte Advisory (Hong Kong) Limited as the Joint Provisional Liquidators (the “JPLs”) of Tahoe Life as a coordinated regulatory action with the IA to protect policy holders’ interests. This coordinated action aims to protect policyholders’ interests by ring-fencing Tahoe Life’s assets rather than winding up the company. Both the IA and Bermuda Monetary Authority (“BMA”) are cooperated under the International Association of Insurance Supervisors Multilateral Memorandum of Understanding (“MMoU”) to ensure effective regulatory oversight and recovery solutions for Tahoe Life. SIGNIFICANCE : Back in 2020, Tahoe Group experienced its first debt default. On 28 July 2023, the Shenzhen Stock Exchange terminated its listing qualifications. Just two weeks after Tahoe Group was delisted, the IA appointed a special advisory team from PricewaterhouseCoopers (“PWC”) to provide professional advice on investment strategy and dividend policy for Tahoe Life . This move aimed to ensure the protection of policyholders’ interests. As Tahoe Group’s issues worsened, the IA finally took action. Within a year, Tahoe Life was taken over, marking the first instance of a life insurance company being taken over in Hong Kong’s history. (9) China Taiping’s former employees were charged by ICAC for dummy agent scam and money laundering activities (17 July 2024) The Independent Commission Against Corruption (“ICAC”) charged five former employees of China Taiping Life Insurance (Hong Kong) Company Limited (“China Taiping”) for their involvement in a dummy agent scam and providing false information in insurance policy applications, defrauding the company of $4.25 million in commissions and other payments. Three of the dummy agents were also charged with handling over $2.3 million in crime proceeds. Court proceedings are still ongoing. In accordance, charges of this case contain the following: Fraud (Section 16A(1) of the Theft Ordinance) - could face imprisonment up to 14 years. Dealing with proceeds of an indictable offence (Section 25(1) of the Organised and Serious Crimes Ordinance) - could face imprisonment up to 14 years and fine up to HKD 5 million. Forgery (Section 71 of the Crimes Ordinance) - could face imprisonment up to 14 years. Penalties vary based on the offence’s severity and the court’s discretion, considering prior records and other factors. SIGNIFICANCE : Despite China Taiping has not received any penalties and fully cooperated with the investigation, as a regulated insurance company, it is responsible to ensure the fit and proper of its appointed agents and brokers, as well as supervising and preventing such incidents. Insurance companies should learn from this incident by conducting their own or third-party compliance reviews, strengthening internal controls, enhancing monitoring processes, and preventing similar incidents in the future. (10) The IA bans Chan Hung Fei from the industry within 34 months due to misappropriation of premium payments (12 July 2024) The IA has banned Chan Hung Fei (“Mr Chan”) from applying for a licence for 34 months due to misappropriating premiums from two policyholders. Between 2019 and 2021, Mr. Chan directed HK$36,093 in premiums to his personal bank account instead of passing them to AXA, causing the policies to lapse. He also failed to inform the policyholders about the status of their policies and upcoming payments. After complaints were filed, Mr. Chan returned the premiums, reinstated the policies, and reimbursed medical expenses for one policyholder. The IA emphasized the importance of intermediaries adhering to professional and ethical standards, regardless of personal relationships with clients. Policyholders are reminded to make premium payments through official insurer channels. SIGNIFICANCE : As concluded by the IA, considered Mr. Chan’s return of premiums, admission of misconduct, and cooperation in deciding the disciplinary action, aiming to achieve a strong deterrent effect. (11) The IA imposes a pecuniary fine against a broker company and a technical representative for mishandling of insurance policy (24 June 2024) The Insurance Authority (IA) fined a licensed insurance broker company HK$37,270 and a licensed technical representative HK$7,000 for mishandling a client’s insurance policy. The broker company admitted its wrongdoing and compensated the client HK$62,730 for property damages. Consequently, the IA imposed a fine of HK$37,270 on the broker company and HK$7,000 on the technical representative due to the seriousness of the wrongdoing. SIGNIFICANCE : The IA remains vigilant and will take disciplinary actions against those who fail to properly discharge their duties. Further details can be found in the “Enforcement News” section on the IA’s website. [End of ComplianceOne Insurance Newsletter – July 2024] For more details, please click on the title of the topic above. ================================= ~ Make It Right Today, Better Tomorrow ~ ================================= The Newsletter is for general information purpose only and is not intended to constitute legal or other professional advice. For enquiries, please email to support@complianceone.hk or WhatsApp us at (852) 95164607 . Unit 1104, 11/F, 299QRC, 287-299 Queen's Road Central, Sheung Wan, Hong Kong Tel: (852) 39550277 www.complianceone.hk

天匯合規的聯營公司 億東金融科技有限公司 本年已正式推出東查查反洗錢客戶管理系統 (Screen-X AML/CRM Solutions)。 ComplianceOne Fintech Solutions - Screen-X AML/CRM Solutions 天匯合規金融科技解決方案 – 東查查反洗錢/客戶管理系統 天匯合規的聯營公司 億東金融科技有限公司 本年已正式推出東查查反洗錢/客戶管理系統 (Screen-X AML/CRM Solutions)。 憑藉 天匯合規 在監管合規和資訊科技領域的豐富經驗，我們透徹地了解香港、大灣區、以至全球金融監管的框架，專注為受監管的金融機構和企業提供合規科技解決方案，深入了解監管政策和行業痛點，因此，我們研發了 東查查 ，務求為金融機構提供 全自動化的反洗錢系統 ，以符合監管機構的要求，並協助金融機構 在營運上減低合規風險及提升營運的效率 。 東查查反洗錢/客戶管理系統集 認識你的客戶及客戶盡職審查 、 風險評估 、 持續監察 、 備存紀錄 等功能於一身，為您的合規工作護航，以下會詳細說明。 1. 認識你的客戶及客戶盡職審查 東查查可快速完成客戶身份驗證，包括個人和法人（公司）客戶。系統支持多種身份證件驗證，如身份證、護照、營業執照等，並可自動與國內外公開資料庫進行比對，有效降低KYC過程中的人工核查成本。 2. 客戶風險評估 東查查配備風險評估功能，根據客戶背景、行為、交易等多維度數據，自動計算客戶風險，並針對不同風險級別設定持續監察頻率，幫助您更好地管控合規風險。 3. 持續監察 東查查可設定持續監控客戶的交易活動，實時捕捉可疑交易。同時也能定期審查客戶資料，確保與實際活動保持一致。若客戶的交易模式突然變化或與其聲稱的業務模式不符，會建議進行進一步調查。 4. 備存紀錄 東查查提供客戶管理功能，能協助用戶備存必要的記錄和文件，以便日後監管審查和調查。我們採用嚴格加密及系統安全措施，例如︰數據儲存於阿里雲﹑對數據庫的數據進行加密﹑登錄加密﹑每天備份﹑接口加密，以保護極度敏感的客戶數據免受未經授權的訪問，及確保信息的機密性和完整性。 客戶反饋例 資產管理公司 東查查能準確識別高風險客戶，提供的分析報告也清楚易明，減省了大量人工審查的時間，令同事的工作變得更高效，提升了工作效能。 信託或公司服務提供者（TCSP） 公司一直非常重視反洗錢合規管理，但隨著業務快速增長，傳統的人工盡職調查已難以滿足需求。東查查的價格相宜，可以在網上自行完成購買和使用，操作非常簡便快捷。系統的客戶盡職審查和風險評估功能，大幅提升了我們的工作效率，同時又能確保合規風險的有效管控。 東查查的數據庫供應商介紹 Acuris 自2015年的收購提供了獨特的合規數據集和全球運力 作為擁有專屬的政治公眾人物 (PEPs)、制裁和負面新聞的數據提供者 由全球擁有超過200名懂多種語言的分析師組成的專屬研究團隊 獲得ISO 27001認證 擁有ACAMS認證的研究團隊 立即試用 如有任何查詢，歡迎以下列方式聯絡我們，謝謝！ If you have any questions about this order, please feel free to contact us. Thank you! https://edon.asia/ info@edon.asia (852) 3543 9099 (852) 9690 0882 https://www.youtube.com/watch?v=29FJ23T0ODc

The topics discussed in this monthly newsletter for insurance are as follows: ComplianceOne Insurance Newsletter – Nov 2024 The topics discussed in this monthly newsletter are as follows: 1. Asian Insurance Forum 2024: Navigating Global Volatility 2. CPD Course for Insurance Brokers on Grandfathered ILAS Policies 3. The SFC Announces First Batch of Brokers for Wealth Management Connect Pilot Scheme and Insights on Insurance Connect IA News Updates 1. Asian Insurance Forum 2024: Navigating Global Volatility The IA's annual flagship event, the Asian Insurance Forum (“AIF”), will be held on 10 December 2024 , themed “Rising to the Challenge amidst Global Volatility.” This event will feature prominent speakers from the insurance and financial sectors, as well as regulators and government officials from Hong Kong and around the world. Keynote speakers include Mr. John Lee, Chief Executive of the HKSAR, Mr. Paul Chan, Financial Secretary of the HKSAR, and Mr. Jonathan Dixon, Secretary General of the IAIS. Panel discussions will cover: Global supervisory priorities. Strengthening the headquarters economy. Insurance solutions in wealth management, along with a dialogue with IA leadership. Participants can register online to join the forum virtually for free. For more details and the full program, visit the AIF 2024 website . 2. CPD Course for Insurance Brokers on Grandfathered ILAS Policies The IA published the circular on 8 November 2024 which provides additional details on the CPD course required for compliance with the Grandfathering Arrangements. From 1 October 2024, licensed insurance brokers offering advisory or discretionary investment services for ILAS Policies must meet new competency requirements as per the Practice Note . Grandfathering Arrangements: Licensed insurance brokers unable to meet the new requirements by 1 October 2024 can continue servicing policies issued before this date (Grandfathered ILAS Policies) until 31 July 2027, provided they comply with the Additional CPD requirement. This entails completing 2 additional CPD hours annually in the following periods: 1 August 2024 to 31 July 2025 1 August 2025 to 31 July 2026 1 August 2026 to 31 July 2027 Firs run of the Course for Insurance Brokers on Grandfather ILAS Policies The Hong Kong Securities and Investment Institute (“HKSI”), in collaboration with the Professional Insurance Brokers Association (“PIBA”) and The Hong Kong Confederation of Insurance Brokers (“CIB”), is launching the first Course on 26 November 2024 , which fulfills the Additional CPD requirement under the Grandfathering Arrangements established by IA. Market News 3. SFC Announces First Batch of Brokers for Wealth Management Connect Pilot Scheme and Insights on Insurance Connect SFC has announced that 14 LCs are now eligible to participate in the Cross-boundary Wealth Management Connect Pilot Scheme (“WMC”) in the Guangdong-Hong Kong-Macao Greater Bay Area (“GBA”). This scheme enhances connectivity between Hong Kong and Mainland China, offering new business opportunities for financial services. Impact on Insurance Brokers and Future of Insurance Connect The success of the WMC is seen as a positive indicator for the potential implementation of similar mechanisms, such as the anticipated Insurance Connect. This would allow Hong Kong and Macau insurance companies to sell insurance products directly to Mainland residents without establishing local branches. However, current Mainland regulations conflict with this approach, and a pilot for Insurance Connect is not yet feasible. Licensed insurer(s), insurance broker companie(s) shall see the WMC as a best practice to get ready for the eventual establishment of Insurance Connect. By familiarizing themselves with cross-boundary operations and regulatory requirements, they can smoothly transition once the Insurance Connect is approved. SIGNIFICANCE: Despite the delay in Insurance Connect, preparations for establishing insurance after-sales service centers in Nansha and Qianhai are in their final stages. These centers will offer policy management and claims services for Hong Kong policyholders in the GBA. [End of ComplianceOne Insurance Newsletter – November 2024] For more details, please click on the title of the topic above. ================================= ~ Make It Right Today, Better Tomorrow ~ ================================= The Newsletter is for general information purpose only and is not intended to constitute legal or other professional advice. For enquiries, please email to support@complianceone.hk or WhatsApp us at (852) 95164607 . Unit 1104, 11/F, 299QRC, 287-299 Queen's Road Central, Sheung Wan, Hong Kong Tel: (852) 39550277 www.complianceone.hk

The topics discussed in this monthly newsletter for insurance are as follows: ComplianceOne Insurance Newsletter – Sep 2024 The topics discussed in this monthly newsletter are as follows: Statistics showed Hong Kong insurance industry posted first increase in gross premiums in 3 years IA hosting AML/CTF Seminars for insurance practitioners in Oct 2024 Hong Kong’s pivotal role in supporting Belt and Road projects Sigma Report on World Insurance 2023: Hong Kong’s role as international financial center IA News Updates 1. Statistics showed Hong Kong insurance industry posted first increase in gross premiums in 3 years The Insurance Authority (“IA”) has published the Hong Kong insurance business statistics for 2023, referring audited returns and actuarial data submitted by authorized insurers. The total gross premiums for the year marking a 0.8% increase compared to 2022. Key Highlights: Total Gross Premiums : HKD $542.1 Billion, up by 0.8% from the previous year. General Insurance Business : Gross premiums of HKD $67.3 Billion, a 4.6% increase Long Term Business : Total revenue premiums of in-force long term business were $474.8 billion, increased by 0.3% compare with previous year, continued to be dominated by the Individual Life category. SIGNIFICANCE: The 0.8% growth is particularly notable as it represents the first increase in gross premiums since the IA began releasing provisional statistics of the Hong Kong insurance industry in 2021. 2. IA hosting AML/CTF Seminars for insurance practitioners in Oct 2024 The IA will host two AML/CTF seminars on 28 and 29 October 2024 , at the Hong Kong Science Museum in Tsim Sha Tsui. These seminars aim to enhance insurance practitioners’ awareness and understanding of AML/CTF regulatory requirements and recent ML/TF trends. Who Should Attend? Compliance Officers, Money Laundering Reporting Officers, and relevant personnel responsible for AML/CTF systems and control measures. Each company may nominate up to 3 representatives. CPD Hours: The seminars are categorized as Type 7 Continuing Professional Development (CPD) activities under GL24. Attendees will receive 3 CPD hours in the “Ethics or Regulations” category. SIGNIFICANCE: Each Company should only submit one enrolment form by 7 October 2024 , via the provided Enrolment Link . Please also find the below Schedule Table for your reference. 3. Hong Kong’s pivotal role in supporting Belt and Road projects On 11 September 2024, the IA hosted a breakout session at the Belt and Road Summit to explore the pivotal role of captive insurance in supporting Belt and Road projects, especially those focusing on less coal-intensive energy. The session emphasized how Hong Kong’s insurance professional services ecosystem can facilitate these projects. Key Topics : Captive Insurance : Managing risks from overseas energy projects and addressing challenges of energy transition. Risk Management : Opportunities in sectors like electric vehicles benefiting from sustainable development. Hong Kong’s Role : As an international risk management hub, Hong Kong is positioned to support captive insurers and serve as a preferred domicile for Mainland enterprises expanding globally. SIGNIFICANCE: The panel moderator highlighted the growing use of captives by Mainland enterprises to manage overseas project risks and enhance intra-group risk management. Emphasized Hong Kong’s readiness to provide comprehensive professional services to captive insurers. 4. Sigma Report on World Insurance 2023: Hong Kong’s role as international financial center Hong Kong remains a global financial hub, as highlighted by the IA and the Sigma 3/2024 – World Insurance by Swiss Re. With the highest insurance penetration rate and second highest insurance density globally, Hong Kong’s total premiums reached HK$550 billion, ranking it 16th worldwide. Robust regulatory framework developments: Risk Based Capital (“RBC”) Regime: Introduced in July 2024, this regime ensures that capital requirements are more sensitive to each insurer’s asset-liability profile, promoting sophisticated risk management. Public Disclosure: The focus is now shifting to public disclosure under Pillar 3 of the RBC regime, with ongoing industry collaboration to ensure transparency and mutual trust. Quality Operating Environment: IA is dedicated to reviewing and optimizing the RBC regime parameters to incentivize insurer and brokers to conduct more business in Hong Kong. SIGNIFICANCE: Hong Kong’s unique advantages such as the “One Country, Two Systems” principle and “Dual Circulation” strategy strengthen its role as a key connector in Asia. The Guangdong-Hong Kong-Macao Greater Bay Area (“GBA”) further boosts its appeal as a top international financial center. [End of ComplianceOne Insurance Newsletter – September 2024] For more details, please click on the title of the topic above. ================================= ~ Make It Right Today, Better Tomorrow ~ ================================= The Newsletter is for general information purpose only and is not intended to constitute legal or other professional advice. For enquiries, please email to support@complianceone.hk or WhatsApp us at (852) 95164607 . Unit 1104, 11/F, 299QRC, 287-299 Queen's Road Central, Sheung Wan, Hong Kong Tel: (852) 39550277 www.complianceone.hk

The topics discussed in this monthly newsletter are as follows: ComplianceOne Newsletter – Nov 2024 The topics discussed in this monthly newsletter are as follows: 1. SFC concludes consultation on market sounding guidelines 2. The first batch of 14 brokers joining Wealth Management Connect Pilot Scheme 3. SFC hosts AML/CFT Regtech Forum in November 4. Stay aware of the inherent risks in use of Generative AI Language Models 5. SFC bans former RO of Tarascon Capital for false trading of shares 6. SFC commences MMT proceedings against Ding Yi Feng for market manipulation 7. SFC sanctions Zuo Ping for breaches of the Takeovers Code 8. SFC suspends Yuanta’s former employee Wang Shian-tang for violation of employee dealing policy 9. China Forestry’s former chairman and CEO sanctioned for insider trading Market News 1. SFC concludes consultation on market sounding guidelines On 31 October 2024, the SFC published the conclusions of its consultation on the proposed guidelines for market soundings. The guidelines gazetted on 1 November 2024 and will become effective on 2 May 2025. Intermediaries will have a six-month transitional period to comply with the new guidelines, ensuring a smooth implementation process. The guidelines are designed to uphold market integrity by setting protocols for protecting confidential information during market soundings. Respondents generally supported the objectives, providing constructive feedback that led to refinements in the guidelines. To address their comments, the SFC has refined the scope of the guidelines, clarified some requirements, and incorporated respondents’ feedback in the guidelines as appropriate. The SFC has provided practice guidance and examples through frequently asked questions to aid intermediaries. As Ms Julia Leung, the SFC ‘s Chief Executive Officer has said, “ the guidelines tackle the misuse of confidential information during market soundings, and lead to an unfair market, these guidelines will enhance investor confidence in Hong Kong’s capital markets by clarifying regulatory expectations and deterring substandard conduct. “ SIGNIFICANCE: The new “ Guidelines for Market Soundings ” are well complied to provide Four Core Principles, namely, (i) handling of information, (ii) governance, (iii) policies and procedures, (iv) review and monitoring controls; with specific requirements for Disclosing Persons (a sell-side broker) and Recipient Persons (a buy-side firm). 2. The first batch of 14 brokers joining Wealth Management Connect Pilot Scheme On 1 November 2024, the SFC announced the 14 licensed corporations (“LC”s) eligible to participate in the Cross-boundary Wealth Management Connect Pilot Scheme (“WMC”) in the Guangdong-Hong Kong-Macao Greater Bay Area (“GBA”). This initiative aims to enhance connectivity between financial markets in the GBA and foster Hong Kong's wealth management business. The guidelines will be effective immediately . The 14 LCs include: China Galaxy International Securities (Hong Kong) Co., Limited, China Industrial Securities International Brokerage Limited, China International Capital Corporation Hong Kong Securities Limited, China Merchants Securities (HK) Co., Limited, China PA Securities (Hong Kong) Company Limited, China Securities (International) Brokerage Company Limited, CITIC Securities Brokerage (HK) Limited, GF Securities (Hong Kong) Brokerage Limited, Guosen Securities (HK) Brokerage Company, Limited, Guotai Junan Securities (Hong Kong) Limited, Huatai Financial Holdings (Hong Kong) Limited, SDICS International Securities (Hong Kong) Limited, Shenwan Hongyuan Securities (H.K.) Limited, and Zhongtai International Securities Limited. The above-mentioned LCs will work in partnership with their Mainland partner brokers, the list is to be confirmed by the relevant Mainland regulatory authority, namely, the China Securities Regulatory Commission. SIGNIFICANCE: As commented by Ms Julia Leung, the Chief Executive Officer of the SFC, that “T oday’ s announcement marks another significant milestone for the brokerage industry and the WMC scheme in terms of enhancing the connectivity of financial markets in the GBA and fostering Hong Kong’ s wealth management business. “ With respect to the WMC Scheme, a set of guidance (the three Annex ) for LCs have already been posted in January early this year which covered essentially the following items: eligible criteria for participating LCs; eligible criteria for investors; scope of eligible investment products; account opening arrangements; investor quota management; cross-boundary closed-loop fund flow arrangements; and promotion and sales arrangements. 3. SFC hosts AML/CFT Regtech Forum in November On 4 November 2024, Ms Julia Leung, the Chief Executive Officer of the SFC , made a speech in the “SFC Regtech Forum”, main points of the speech are as below. Regtech progress and compliance pain points as its driver (1) A “Report on the Adoption of Regtech for Anti-Money Laundering and Counter-Financing of Terrorism” has been published to highlight use cases as helpful guidelines. (2) Many firms have already adopted the Regtech solutions in their AML processes like name screening, customer due diligence and transactions monitoring. (3) Conventional AML approaches are losing efficacy as bad actors are using novel techniques to launder crime proceeds, the situation is aggravated with increasing number of customers and transaction data faced by the firms. (4) Firms are struggling with backlog of pending reviews due to high volume of false positive alerts from name screening and transaction monitoring. (5) False alerts from traditional rule-based solutions fail to cater for multiple dynamic parameters, providing misleading solutions and causing futile investigations and operational inefficiencies, especially when real red flags are missed. Regtech use cases burgeoning With the advent of Regtech and the application of automation, data analytics and AI, a huge mass of data can be processed swiftly to spot out for suspicious activities. Regtech can now be adopted in many stages throughout the AML process with the use cases conducted by the SFC ranked by the usage rates. (i) Client onboarding: mostly used to authenticate client’s identity and collect digitised customer data for subsequent AML processes. (ii) Name screening: with a usage rate of 92% of the firms with robot process automation (“RPA”) to extract relevant customer information and compare it against the system alerts. (iii) Transaction monitoring: with usage rate of 69% as another important process to detect unusual or suspicious transactions and activities. (iv) Third-party deposit identification and due diligence: with a lower usage rate of 34%, attributed to its late introduction of the relevant guidelines & requirements published in May 2019 and uniqueness of the securities sector. Responsible adoption is key Alike other AML controls, the responsibility are still rested on the licensed firms to regularly review all Regtech solutions including AI models, and protect the customers and transaction data with robust data protection and cybersecurity measures. SIGNIFICANCE: The adoption of technology helps alleviate the repetitive and onerous data processing and analyses routines, and streamline the AML and KYC processes which are particularly crucial amid the sophisticated use of novel technologies by bad actors to circumvent the traditional monitoring tools. 4. Stay aware of the inherent risks in use of Generative AI Language Models On 12 November 2024, the SFC published a circular concerning the use of generative Artificial Intelligence language models (“AI LMs”). There the SFC notes that firms are using the AI LMs in all facets of their services provided including response to client enquiries via public chatbots, generating research reports, identifying investment signals etc. The SFC also pointed out that the use of AI LMs may amplify existing risks and pose additional risks on top of those from traditional AI. The key takeaways are: Risk in relation to AI LMs AI LMs’ output can be inaccurate, biased, unreliable and inconsistent. For instance: (i) AI LMs are prone to hallucinations risk, (ii) bias may exist in data used to train the AI LMs, (iii) there may be heightened risk of cyberattacks and leakage of confidential information, (iv) over-reliance on certain limited number of external service providers. In the light of the increased risks, LCs are advised to make reference to the Appendix which provided a list of non-exhaustive risk factors to be aware of in the process of adopting any AI LMs. Scope of this circular This circular is applicable regardless of whether the AI LM is developed or provided by the LC itself, its group company, an external service provider (Third Party Provider) or comes from an open source. Risk-Based approach An LC may implement the requirements in this circular, including the Core Principles, in a risk-based manner commensurate with the level of risk incurred by the application of the AI LM . It should be noted that an AI LM used by LCs for providing investment recommendations, advice or research to investors or clients are considered as high-risk use cases by the SFC. The FOUR Core Principles are: (1) Senior Management Responsibilities (2) AI Model Risk Management (3) Cybersecurity and Data Risk Management (4) Third Party Provider Risk Management Notification Requirements For LCs which intend to adopt AI LMs in high-risk use cases, they are reminded to comply with the notification requirements under the Securities and Futures (Licensing and Registration) (Information) Rules (Information Rules). SIGNIFICANCE: This circular, together with the Appendix, provide the LCs with a set of fully comprehensive guidance in relation to the use of AI LMs in the provision of their services. LC are strongly advised to seek reference and get acquainted with the requirements before adopting the AI LMs which may be a double-edged instrument if no used properly. Enforcement News 5. SFC bans former RO of Tarascon Capital for false trading of shares On 6 November 2024, the SFC announced that Mr Jonathan Dominic lu Wai Ching (“Iu”) has been prohibited from re-entering the industry for 15 years. Key Findings: Iu, a former responsible officer of Tarascon Capital Management (Hong Kong) Limited, engaged in false trading of shares. lu used the brokerage accounts of a hedge fund and his mother, gaining $5.6 million for his mother’s account. SFC determined that Iu is not fit and proper to be licensed due to his serious and dishonest conduct over two months, violating client trust. This action serves as a deterrent to prevent similar future misconduct. SIGNIFICANCE: This ban highlights the SFC's dedication to maintaining market integrity and enforcing ethical standards. By imposing severe consequences on Iu, SFC aims to deter other practitioners from engaging in dishonest behaviour and emphasizes the importance of trust and compliance in the financial industry. 6. SFC commences MMT proceedings against Ding Yi Feng for market manipulation SFC commenced proceedings in the Market Misconduct Tribunal (“MMT”) against Mr Sui Guangyi (“SUI”), former chairman and non-executive director of Ding Yi Feng Holdings Group International Limited (“Ding Yi Feng”), two corporate entities and 28 other suspects for alleged manipulation of the shares of Smartac International Holdings Limited ( 00395.HK ). The SFC alleged that between 31 October 2018 and 11March 2019, SUI and other suspects manipulated the trading of Smartac shares to push up the price and turnover, creating a false and misleading appearance of active trading. The increase in share price contributed to an investment gain by Ding Yi Feng, which held a 21.68% of the share in its gross assets as of 31 December 2018. The SFC had issued restriction notices to freeze securities accounts linked to the suspected market manipulation of Smartac shares which still remain in force. SIGNIFICANCE: This action by the SFC emphasizes its commitment to combating market misconduct and maintaining market integrity. The proceedings against Mr. Sui and others are a clear signal that the SFC will take stringent measures against manipulative trading practices. Cooperation between the SFC and the China Securities Regulatory Commission underscores the importance of regulatory collaboration in addressing cross-border market manipulation. 7. SFC sanctions Zuo Ping for breaches of the Takeovers Code On 15 November 2024, the SFC publicly censured and imposed a six-year cold shoulder order against Ms ZUO Ping (“ZUO”) for breaching the mandatory general offer obligation under the Takeovers Code. ZUO made a number of acquisitions and disposals of shares in CBK Holdings Limited ( 08428.HK ) on the market between 2 November 2023 and 20 November 2023, and her interest in CBK increased from 0% to 30.22% of CBK’s issued capital on 20 November 2023, triggering a mandatory general offer obligation under Rule 26.1 of the Takeovers Code. Yet ZUO did not make any general offer then. Zuo acknowledged her breach of the Takeovers Code, and agreed to the disciplinary action. SIGNIFICANCE: The SFC emphasizes the importance of adhering to the Codes on Takeovers and Mergers, advising parties to seek professional advice when in doubt. The order denies Zuo access to the Hong Kong securities market from 15 November 2024 to 14 November 2030. 8. SFC suspends Yuanta’s former employee Wang Shian-tang for violation of employee dealing policy The SFC suspended the licence of Mr Wang Shian-tang (“WANG”), a former licensed representative of Yuanta Securities (Hong Kong) Limited (“Yuanta”) for 26 months from 20 November 2024 to 19 January 2027. In the investigation, it was found that WANG entered into a private profit-sharing agreement with a client on discretionary trading services without Yuanta’s knowledge or consent; and WANG would be entitled to 10% of any annual profits made for the client. It was also found that WANG maintained another account with an outside broker for conducting 10 warrant trades with a total transaction value of HKD350,000; yet these were not disclosed to Yuanta which violated the employee dealing policy of the company, depriving the company to monitor his personal dealings. SIGNIFICANCE: With the false and disingenuous representations to the SFC regarding his personal account and trades, the SFC considered WANG had displayed dishonest behaviour that undermined the interests of his then employer and its clients, as well as the integrity of the market. 9. China Forestry’s former chairman and CEO sanctioned for insider trading The Market Misconduct Tribunal (MMT) ordered Mr Li Han Chun (“LI”), the former chief executive officer (CEO) of China Forestry Holdings Company Limited ( 00930.HK ), and his investment vehicle, Top Wisdom Overseas Holdings Limited (Top Wisdom), to disgorge $353,430,000 which represents the loss they avoided by insider dealing of China Forestry’s shares. The MMT also imposed the following orders against LI and Mr Li Kwok Cheong (“LIKC”), the former chairman of China Forestry, for disclosing false or misleading information in China Forestry’s IPO prospectus, annual results announcement, and annual report for the year ended 31 December 2009, inducing transactions in the company’s shares: Disqualification orders for five years Cold shoulder order for five years Cease and desist orders Please see the SFC’s press releases dated 7 August 2024 and 28 June 2018 . And LI, LIKC and Top Wisdom had to pay the costs and expenses incurred by the Government and the SFC as well. SIGNIFICANCE: This case underscores the importance of transparency and integrity in the financial markets, with severe penalties for insider dealing and disseminating false information to maintain market trust and investor confidence. 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