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The topics discussed in this monthly newsletter are as follows: ComplianceOne Newsletter – September 2025 The topics discussed in this monthly newsletter are as follows: REGULATORY UPDATES NASDAQ is pioneering in launching tokenization of stocks SFC consults on extending investor identification regime to exchange-traded derivatives in Hong Kong MARKET NEWS Hong Kong’s securities industry saw continued earnings growth and record transactions in first half of 2025 Only a limited number of licenses will be granted by the HKMA amid 77 applications received for Stablecoin Issuers SFC and Dubai Financial Services Authority bolster ties in supervising cross-border investment management SFC and HKMA unveil roadmap to advance Hong Kong’s vision to be global fixed income and currency hub ENFORCEMENT NEWS SFC Bans Former UBS Advisor Suen Kin-wing for Life Over Money Laundering and Contempt Convictions SFC Bans Former Citigroup Executive Richard Charles Heyes for 5 Years Over Serious Misconducts SFC Reprimands and Fines Instinet Pacific Limited $8 Million for Cross Trade Reporting Failures SFC Upholds Fine on RaffAello Capital for Sponsor Failures in Paprika Listing SFC Reprimands and Fines Roofer Securities $2.1 Million for Client Money Mishandling SFC Secures Disqualification Orders Against Five More Former Directors of Superb Summit Due to misappropriate assets SFC Suspends Former Agg. Asset Management RO Chow Tsz Lam for 12 Months Over Fund Mismanagement SFC Pursues Disqualification Orders Against Former Directors of Century Energy International Holdings Limited Regulatory Updates 1. NASDAQ is pioneering in launching tokenization of stocks In less than two years, the tokenized securities market experienced almost “explosive” growth with on-chain stocks surging from less than 5 million dollars starting from 2024 to 0.42 billion, a more than 80 times increase in two years. The driving wave is originated from the collective entry and accelerated layout of enterprises; both crypto-native companies and traditional financial giants are striving to tap the advantage of being the first-mover in the emerging circuit of tokenized stocks. These moves not only set off a race between crypto and traditional finance, but also a potential “revolution” against the traditional exchange model. Nasdaq, being the world’s second-largest exchange, took the initiative to incorporate tokenized stocks attempting to push itself to be the pioneer in the Wall Street. Some key takeaways we need to know about the moves by NASDAQ: Tokenized stocks are not new stuff, they are new “packaging” for the traditional equity, namely, to connect blockchain’s bookkeeping and settlement capabilities on top of existing financial infrastructure. The appeal of tokenization is that it touched several “core pain points” in the capital market and provide quick solution with: (i) settlement efficiency, (ii) transaction time and accessibility, (iii) programmability of assets. With the completion of the Depository Trust Company (“DTC”) upgrade, and the on-chain settlement function early in Q3 next year, there will already be parallel run of cryptocurrency stocks and traditional stocks this year. SIGNIFICANCE: NASDAQ has officially submitted an application for tokenized Stocks trading with the SEC, a “core attempt” by Wall Street in the digitalization process. The core of this proposal is that tokenized stocks should enjoy exactly the same rights and protections as their underlying securities , transaction matching is still carried out in the existing order book, and DTC is responsible for minting equivalent tokens on the chain. As the CEO of NASDAQ has said, “ Blockchain technology offers unprecedented possibilities for shortening settlement cycles, modernizing proxy voting, and automating corporate actions .” To put in simple words, NASDAQ is not trying to do away with the old order, but rather to upgrade the underlying structure of the market with minimal impact and to ensure that the core principles of investor protection and market transparency remain intact . 2. SFC consults on extending investor identification regime to exchange-traded derivatives in Hong Kong The SFC launched a consultation on 22 September 2025 on the proposed investor identification regime for the exchange-traded derivatives market (“ HKIDR-DM ”) which is expected to further consolidate and reinforce the integrity and sustainable development of Hong Kong’s exchange-traded derivatives markets, while a tentative schedule for implementation is in the first quarter of 2028. The proposed HKIDR-DM was established and based on the successful implementation of the similar regime for the securities markets, i.e. the HKIDR-S (the Hong Kong investor identification regime for securities markets). The scope of the HKIDR-DM comprises of order submissions for futures contracts, options contracts and stock options traded on the trading system of the Hong Kong Futures Exchange Limited (“ HKFE ”). Key takeaways are: the regime will apply to Relevant Regulated Intermediaries (“ RRIs ”), i.e., licensed corporations (“ LCs ”) under the SFC and registered institutions (“ RIs ”) under the HKMA that trade (as principal or agent) futures and options contracts; the requirements under the proposed HKIDR-DM are analogous to those currently set out in the HKIDR-S. RRIs will be required to assign a unique “Broker-to-Client Assigned Number” (“ BCAN ”) to Relevant Clients (it basically refers to the immediate client of a RRI who maintains a trading account with the RRI) placing or intending to place orders in the futures market; RRIs must collect and submit up-to-date client identification data (“ CIDs ”) alongside the BCAN in a file (“ BCAN-CID Mapping File ”) to a central data repository maintained by Hong Kong Exchanges and Clearing Limited (HKEX), the same arrangements as the securities side; SIGNIFICANCE: As Mr. Rico Leung, the SFC’s Executive Director of Supervision of Markets has said, “t o keep up with Hong Kong’s fast-growing derivatives market and align with global best practices, the proposed extension of our investor identification regime represents a major stride in detecting irregularities and protecting investors whilst minimizing operational burden on the industry ”; and he further added that, “ our enhanced cross-market surveillance capabilities will help reinforce market integrity and investors’ confidence – both essential in solidifying Hong Kong’s sustainable development as an international financial center. ” Market News 3. Hong Kong’s securities industry saw continued earnings growth and record transactions in first half of 2025 The latest financial review of the industry issued by the SFC demonstrates a robust growth in the earnings of the securities sector with key promising figures as below: a steady growth momentum with a 14% profit increase to HKD28.9 billion amid record high securities transaction value in the first six months of 2025; a total value of transactions of all securities dealers and securities margin financiers reached a record HKD99.2 trillion in the first half of 2025, a recorded increase of 22% from Q2 of 2024 and 57% (year-over-year); the net profits of all the SEHK participants were up 34% during the previous 6 months to HKD15.6 billion. The main driving forces are attributed to the steady growth of trading commission, reduction in overheads and interest expenses; within the revenue side, the net securities income was up 23% to HKD13.6 billion and income from advising on corporate finance was up 33% to HKD2 billion! One point deserves attention is that the net profits of Category C brokers, which cater for general public and small retail investors, doubled to HKD2.5 billion, implying a holistic recovery of the brokerage business rather than being concentrated on the top category brokers. SIGNIFICANCE: As Dr Eric Yip, the SFC’s Executive Director of Intermediaries, said, “ once again, the solid performance of our licensed corporations showcases the strength and agility of our financial industry in a fast-changing business landscape , underscoring their key role in driving Hong Kong’s continued success as a top international financial centre. ” 4. HKMA to grant limited stablecoin licenses amid 77 stablecoin application Main themes of the press are that: the 77 applicants originated from a range of sectors comprising of banking, technology firms, asset manager, e-commerce platforms, payment companies and Web3 startups; only a limited number of stablecoin licenses will be issued in the initial stage; only applicants meeting strict compliance requirements will be granted approvals. Key takeaways readers should know : the Hong Kong Monetary Authority ("HKMA") would not publish the list of entities showing interests or submitting applications; and reiterated that communications with the applicants did not indicate any hints of regulatory approval; the meetings were only meant to help applicants evaluate the necessity and maturity of their issuance plans before making a formal submission; with the stablecoin licensing regime came into effect on 1 August 2025, it serves as a regulatory reference point to develop the virtual asset framework. As only a limited number of licenses will be granted, some applicants either postpone applications, partner with existing licensees or adopt alternative structures to meet the strict compliance thresholds. These adaptive adjustments amid the screening process help shape the evolving regulatory regime of the nascent stablecoin ecosystem. 5. SFC and Dubai Financial Services Authority bolster ties in supervising cross-border investment management The SFC and the Dubai Financial Services Authority (“ DFSA ”), the independent regulator of the Dubai International Financial Centre (“ DIFC ”), today signed a Memorandum of Understanding (MoU) to deepen cooperation on the regulatory oversight and supervision of collective investment scheme managers in each other’s markets to ensure compliance, governance, and cross-border regulatory alignment. Key takeaways of the MOU: underscoring the significance of cross-border regulatory collaboration and Hong Kong’s growing ties with the Belt and Road jurisdictions; establishing a collaborative framework for consultation, cooperation and the exchange of information in order to enhance the regulators’ supervision and oversight of regulated entities which engage in cross-border investment management or advisory activities; signifying the efforts of joint collaboration of the high-level meetings between the SFC and the DFSA over the years. SIGNIFICANCE: As comments from SFC and DFSA officials, the MOU is a consequence of strengthened SFC-DFSA partnership which underscores the shared commitment to mutual benefits of HK and DIFC as internation financial hubs, and efforts towards regulatory excellence, supervision and cross-border innovation between the two jurisdictions. 6. SFC and HKMA unveil roadmap to advance Hong Kong’s vision to be global fixed income and currency hub The SFC and the HKMA jointly announced Hong Kong’s Roadmap for the Development of Fixed Income and Currency (“ FIC ”) Markets (the “ Roadmap ”) on 25 September 2025 to position the city strategically as a global FIC hub by fostering demand, liquidity and innovation. An overview of the Roadmap is outlined as below with FOUR pillars and TEN initiatives: Reinforcing Foundations Pillar 1: Boosting issuance in primary market Initiative 1: Lead by example through government bond issuance Initiative 2: : Promote Hong Kong’s strengths to issuers and investors in target markets Initiative 3: Expand investor base including family offices, funds and corporate treasury centres Pillar 2: Enhancing liquidity in secondary market Initiative 4: Finalize implementation of over-the-counter FIC derivatives regime Initiative 5: Facilitate development of a repo central counterparty Breaking New Ground Pillar 3: Expand offshore RMB business Initiative 6: Broaden offshore RMB usage Initiative 7: Enhance Connect schemes to increase offshore RMB liquidity and RMB-related product offerings Pillar 4: Next-generation infrastructure Initiative 8: Future-proof FIC financial market infrastructure Initiative 9: Support development of next-generation electronic trading platforms Initiative 10: Facilitate market innovation and implementation of use cases for tokenized FIC products SIGNIFICANCE: The Roadmap will guide the policy making and implementation of the SFC and the HKMA in coming years to support the sustainable and diversified growth of Hong Kong’s capital markets. Comments from key officials highlight the significance of the Roadmap: Dr. Kelvin Wong, Chairman of the SFC: “ The Roadmap is poised to guide our marketevolution that will benefit issuers, investors and intermediaries alike for years to come ”. Mr. Eddie Yue, Chief Executive of the HKMA: “ The Roadmap comprehensively set out our work focuses in the near future . We look forward to implementing the initiatives in collaboration with industry stakeholders. ” Ms. Julia Leung, Chief Executive Officer of the SFC: “ The Roadmap reflects our close collaboration and shared commitment with the HKMA, industry partners and other stakeholders to enhance Hong Kong’ s vital role in bridging Mainland and international capital markets .” Enforcement News 7. SFC Bans Former UBS Advisor Suen Kin-wing for Life Over Money Laundering and Contempt Convictions On 2 September 2025, the SFC has imposed a lifetime ban on Mr. SUEN Kin-wing (“ SUEN ”), a former Associate Director at UBS AG (“ UBS ”), preventing him from re-entering the industry. This action follows SUEN's criminal convictions for money laundering and contempt of court, highlighting serious breaches of trust and regulatory standards. Background of the Case SUEN, who served as a Client Advisor at UBS from January 2014 to June 2018, was responsible for Type 1 and Type 4 regulated activities. The issues stemmed from his dealings with two Mainland Chinese clients who held a joint account at UBS. Facing challenges in transferring RMB funds from Mainland China to Hong Kong, the clients entered into an arrangement with SUEN to facilitate cross-border transfers. Under this setup, the clients deposited over RMB132 million into Mainland bank accounts designated by SUEN between November 2016 and February 2018. SUEN provided what appeared to be legitimate transaction confirmations and bank statements showing the funds had reached the joint account. However, the clients later discovered that a substantial portion of the money was missing. Investigations revealed that over HK$134 million had been diverted into two Hong Kong bank accounts controlled by SUEN. The Court determined these funds were proceeds of crime, as SUEN had defrauded or stolen them from his clients. He used the misappropriated money to fund a luxurious lifestyle, including purchases of high-end vehicles and properties in the UK and Mainland China. Legal Outcomes Charge(s) Remarks Case No. Money Laundering Conviction On June 21, 2024, the Court of First Instance sentenced SUEN to 10 years' imprisonment after he pleaded guilty to two counts of dealing with property known or believed to represent proceeds of an indictable offense. HCCC 77/2021 Contempt of Court In July 2018, the clients secured a worldwide freezing injunction against SUEN to recover the stolen funds, prohibiting him from disposing of assets up to HK$130 million. Despite this, SUEN transferred his interests in several UK properties to a British Virgin Islands (BVI) company he owned, violating the order. On 20 December 2023, he was sentenced to six months' imprisonment for contempt. HCMP 633/2019 SIGNIFICANCE: Given the severity of SUEN's actions, which demonstrated a profound lack of honesty and professionalism, the SFC has deemed him unfit and improper to hold any regulated position in the future. SUEN is currently neither registered with the Hong Kong Monetary Authority (“ HKMA ”) nor licensed by the SFC. This case serves as a stark reminder of the consequences of financial misconduct and the SFC's zero-tolerance policy toward activities that undermine market confidence. Industry professionals are encouraged to review internal controls and compliance measures to prevent similar incidents. 8. SFC Bans Former Citigroup Executive Richard Charles Heyes for 5 Years Over Serious Misconducts In a significant move underscoring the importance of senior management accountability, the SFC has imposed a five-year industry ban on Richard Charles Heyes (“ Heyes ”), a former key figure at Citigroup Global Markets Asia Limited (“ CGMAL ”). Effective from 15 September 2025 to 14 September 2030, the ban prevents Heyes from re-entering the financial industry in any licensed capacity. Heyes, who served as a RO, Manager-In-Charge (“ MIC ”) of Key Business Line, board member, and Head of Pan-Asia Equities at CGMAL, has been held accountable for serious regulatory breaches and internal control lapses at the firm. These issues stem from a decade-long period (i.e. 2008–2018) where CGMAL's Cash Equities business disseminated mislabelled Indications of Interest (“ IOIs ”) and made misrepresentations to institutional clients during facilitation trades. Key Details of the SFC's Findings: The SFC's investigation highlighted Heyes' failure to fulfill his supervisory and managerial duties, which directly contributed to CGMAL's violations. Specifically: 1. Mislabelled IOIs Heyes overlooked practices at the Equities Sales Trading Desk where IOIs were falsely labelled to elicit client inquiries. Despite a 2014 SFC review flagging concerns with CGMAL's IOI processes, Heyes did not implement adequate controls. Additionally, between 2017 and 2018, he received reports of client complaints about IOI accuracy but took no action to investigate or halt the misconduct. 2. Misrepresentations in Facilitation Trades In 2014, Heyes attended an SFC roundtable that SFC emphasized the need for explicit client consent and pre-trade disclosures for facilitation trades. However, he failed to ensure CGMAL had proper guidelines or monitoring in place. Emails forwarded to him revealed traders disguising facilitation trades as agency trades to boost market share, but these went unaddressed. These lapses allowed a culture prioritizing revenue over client interests and ethical standards to persist within CGMAL. The SFC emphasized that Heyes' neglect enabled the firm's internal control failures to continue unchecked for over ten years. Factors Influencing the Sanction In determining the five-year ban, the SFC considered: The severity of Heyes' neglect, which enabled prolonged regulatory breaches. His extensive industry experience, which should have ensured higher standards as an RO, MIC, board member, and senior manager. The need to send a strong deterrent message to the industry. Mitigating factors, including Heyes' cooperation with the SFC, withdrawal of his appeal to the Securities and Futures Appeals Tribunal, and his otherwise clean disciplinary record. This action follows prior SFC sanctions against CGMAL itself for the same underlying issues. For more details of the case, please refer to the Statement of Disciplinary Action . SIGNIFICANCE: Christopher Wilson, SFC's Executive Director of Enforcement, stated: "Senior management of a licensed corporation bears primary responsibility for ensuring the firm’s maintenance of appropriate standards of conduct and adherence to proper procedures. By exerting significant pressure on the trading desks to grow CGMAL’s market share while failing to be vigilant for telltale signs that his subordinates were achieving this by dishonest means, Heyes neglected and failed to properly discharge his managerial responsibility." Wilson added that the SFC will actively use the MIC regime to hold senior executives accountable, aiming to foster cultural and behavioral changes among intermediaries. This case serves as a stark reminder for financial institutions in Hong Kong and beyond: Senior leaders must prioritize robust compliance frameworks, vigilant oversight, and ethical practices. With regulators increasingly focusing on individual accountability, firms should review their internal controls, training programs, and escalation procedures to prevent similar failures. 9. SFC Reprimands and Fines Instinet Pacific Limited $8 Million for Cross Trade Reporting Failures The SFC has issued a reprimand and imposed an $8 million fine on Instinet Pacific Limited (Instinet) for non-compliance with reporting requirements for direct business transactions, commonly known as cross trades, to The Stock Exchange of Hong Kong Limited (“ SEHK ”). Key Details of the Case The SFC's investigation uncovered that from December 2012 to March 2018, Instinet failed to report 8,817 pairs of cross trades totalling approximately $25.9 billion in value between its clients and an affiliated company. This breach violated the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission. During this period, Instinet lacked any internal policies, procedures, or monitoring mechanisms for reporting cross trades to the SEHK, and it conducted no reviews of its trade reporting processes. Scope of the Breach: The unreported trades spanned over five years and involved significant transaction volumes, highlighting systemic deficiencies in Instinet's compliance framework. Code and Rule Violations: The failures contravened the SFC's Code of Conduct and Rules of the Exchange, which mandates proper cross trades reporting. In deciding the disciplinary sanction, the SFC has taken into account all relevant circumstances, including the duration of Instinet’s failure, the number of unreported cross trades and the sum involved, and Instinet’s initiative to cease the relevant trade flows and cooperation with the SFC in resolving the SFC’s concerns. For more details of the case, please refer to the Statement of Disciplinary Action . SIGNIFICANCE: This enforcement action reinforces the SFC's commitment to upholding market transparency through strict adherence to reporting obligations. Financial institutions must prioritize robust internal controls, regular reviews, and comprehensive policies to monitor trade reporting. Failures in these areas can lead to significant penalties and reputational damage. Firms are encouraged to audit their compliance systems, particularly for cross trades and affiliated transactions, to align with SEHK and SFC standards. 10. SFC Upholds Fine on RaffAello Capital for Sponsor Failures in Paprika Listing In a recent decision, the Securities and Futures Appeals Tribunal (“ SFAT ”) has affirmed the SFC reprimand and $4 million fine against RaffAello Capital Limited (“ RaffAello ”) for shortcomings in its role as sponsor for Paprika Holdings Limited's Paprika listing application. This case underscores the critical importance of rigorous due diligence in Hong Kong's capital markets, highlighting lapses that could undermine investor confidence. Background on the Case RaffAello, a licensed corporate finance advisor, sponsored Paprika's application for listing on the Growth Enterprise Market (“ GEM ”) of the Stock Exchange of Hong Kong Limited ("SEHK"), submitted in June 2017 but withdrawn in April 2018. Paprika, a handbag and accessories retailer, relied heavily on retail sales, accounting for about 90% of its revenue in the two financial years ending March 2017, with over 80% from physical stores. The SFC's investigation revealed that RaffAello failed to conduct reasonable due diligence and lacked professional scepticism when reviewing Paprika's provided information. Key issues centered on suspicious retail transactions and questionable relationships with key business partners. Key Findings Failings in Retail Sales Due Diligence During a sample walkthrough of retail store transactions from 19 February to 13 March 2016, RaffAello uncovered several red flags: Approximately 230 consecutive cash transactions across stores, involving 1,431 handbags, made up 90% of cash sales and 42% of total sales on those dates. Many occurred within 1-10 minutes. Around 240 bulk credit card purchases of 1,860 handbags by individuals, including owners of Paprika's wholesaler and suppliers, accounting for 83% of credit card sales and 45% of total sales. Invoices marked "POS Test" (point-of-sale system testing) were included in sales records. Despite inquiries, RaffAello largely accepted explanations from Paprika and involved parties without deeper scrutiny. The SFC noted overlooked indicators suggesting potential fabrication to inflate sales figures. Inadequate Scrutiny of Key Partners RaffAello also fell short in verifying the independence of Paprika's largest wholesaler, Novi eBusiness Limited (“ Novi ”) (responsible for over 90% of a 96% wholesale revenue surge from 2016 to 2017), and its fifth-largest supplier, API Trading Company Limited (“ API ”) (part of suppliers accounting for 53.4% of 2017 purchase costs). Red flags included: Bovi and API both were former subsidiaries of a company linked to a 15% Paprika shareholder. Acquisitions facilitated by Paprika's founder, Chairman, and CEO, Mr. Samuel Leung ("Leung"). Novi's owner partnered with Mainland Chinese firms tied to Leung's authorized payment recipients. Owners of both entities made repeated bulk purchases from Paprika stores. Additionally, RaffAello did not sufficiently probe API's business substance, especially after discovering it acted as an intermediary for a pre-existing supplier (i.e. Lung Yiu), with supplies jumping from $41,000 in 2016 to $3.18 million in 2017. SIGNIFICANCE: The SFC initially proposed a $13 million fine but reduced it to $4 million due to RaffAello's financial constraints, a decision the SFAT upheld to avoid liquidation and harm to clients. Chaired by Mr. Michael Hartmann, GBS, the Tribunal emphasized sponsors' duties under the Code of Conduct: when red flags arise, additional due diligence is mandatory, including detailed documentation and consultations (e.g., with reporting accountants) rather than assumptions. The Tribunal noted: "If issues of concern are identified, it is not sufficient for the sponsor simply to investigate the matter, make a bald note of that fact... a coherent note should be made of what has been discovered and what has been resolved." Over-reliance on management's representations was deemed unreasonable. Related actions include a two-year industry ban for Mr. Tsang Kwong Fai , RaffAello's responsible officer overseeing the application. This ruling serves as a stark reminder for sponsors to apply professional scepticism and thorough investigations. It reinforces SFC's commitment to maintaining listing integrity, potentially influencing future due diligence practices in Hong Kong's vibrant IPO market. 11. SFC Reprimands and Fines Roofer Securities $2.1 Million for Client Money Mishandling The SFC has issued a reprimand and imposed a $2.1 million fine on Roofer Securities Limited ("Roofer") for violations related to the improper handling of client funds. This action highlights the SFC's ongoing commitment to enforcing strict segregation rules to protect investor assets in Hong Kong's financial markets. Case Overview The investigation, initiated following a referral from the Hong Kong Exchanges and Clearing Limited (“ HKEX ”), uncovered 12 incidents between 8 February 2021, and 7 July 2022, where Roofer failed to maintain adequate funds in its segregated client account. In one notable instance, the shortfall reached $15.5 million. These breaches stemmed from several operational lapses: Using client account funds to cover margin calls (actual or anticipated) from HKEX which is not paid in accordance with a written direction or standing authority form the client and/or used to meet the client’s settlement or margin requirement. Failure in client money segregation due to inadequate management of daily online bank transfer limits. Human errors by staff. The SFC determined that these failures violated the Securities and Futures (Client Money) Rules and the Code of Conduct for Persons Licensed by or Registered with the SFC. Mitigating Factors and Sanctions In determining the penalty, the SFC considered various factors, including: No clients suffered financial losses due to the incidents. Roofer promptly rectified the under-segregation in each case and implemented remedial measures, such as strengthening internal controls and processes. The firm's full cooperation with the SFC during the investigation. Roofer's clean prior disciplinary record. For more details of the case, please refer to the Statement of Disciplinary Action . SIGNIFICANCE: This case serves as a reminder to licensed corporations of the critical need for robust internal systems to ensure client money segregation. Failures in this area can erode market trust and expose firms to significant regulatory penalties. The SFC's balanced approach factoring in remediation and cooperation, demonstrates its focus on proportionate enforcement while upholding high standards. 12. SFC Secures Disqualification Orders Against Five More Former Directors of Superb Summit Due to misappropriate assets The SFC has successfully obtained disqualification orders from the Court of First Instance against an additional five former directors of Superb Summit International Group Limited (“ Superb Summit ”), bringing the total number of disqualified directors to 10. This latest action emphasizes the SFC's rigorous enforcement of director duties in cases involving misleading acquisitions and non-existent assets. This follows earlier disqualifications in June 2025 against five other former directors: Mr. Lee Chi Kong (10 years), Mr. Wong Yun Kuen (7 years), and Messrs. Lam Ping Kei, Wong Choi Fung, and Yeung Kwong Lun (5 years each). The SFC's investigations and proceedings against additional former directors and officers of Superb Summit continue. Director(s) involved: Director(s) Disqualifications Mr. Chan Chi Yuen (“ CHAN ”) 4 Years Mr. Law Wai Fai (“ LAW ”); and Mr. Cheng Man (“ CHENG ”) 3.5 Years each Mr. Qiu Jizhi (“ QIU ”) 3 Years Mr. Li Jun (“ LI ”) 2.5 Years Details of the Breaches Superb Summit, listed on the Main Board of The Stock Exchange of Hong Kong Limited from September 2001 until its delisting in June 2020, engaged in two problematic acquisitions: 2007 Acquisition : LAW, LI, QIU, AND CHAN failed to adequately review key documents or critically assess the methodologies and assumptions used by professionals during due diligence on the target company's alleged forestry assets. 2009 Acquisition : LAW, CHENG, AND CHAN neglected to properly verify the ownership of the claimed forestry assets. They also approved a company announcement containing false or misleading information about these non-existent assets. The SFC initiated proceedings under section 214 of the Securities and Futures Ordinance in December 2020. The disqualifications were resolved via the Carecraft procedure, where the court approved orders based on agreed facts and proposed sanctions. Overview of the Disqualifications The affected individuals include three former executive directors, LAW, LI and CHENG and two former independent non-executive directors, QIU and CHAN. The orders, effective immediately, prohibit them from serving as directors or participating in the management of any corporation in Hong Kong or elsewhere for periods ranging from two and a half to four years. Additionally, the former directors have been ordered to cover the SFC's costs in the proceedings. These sanctions follow their admissions of breaching duties and negligence related to Superb Summit's acquisitions in 2007 and 2009, which involved purported forestry assets that proved to be fictitious. **For the detail of judgment and the prior disqualifications, please refer to: - the Judiciary’s website (Case No. HCMP 2305/2020 ); or - the SFC’s press release dated 11 July 2025 ,.** SIGNIFICANCE: These orders reinforce the SFC's stance on accountability for directors, particularly in due diligence and disclosure processes. They highlight the severe consequences of negligence in approving transactions with misleading elements, serving as a cautionary tale for boards in Hong Kong's listed companies to uphold rigorous standards to protect investors and maintain market integrity. 13. SFC Suspends Former Agg. Asset Management RO Chow Tsz Lam for 12 Months Over Fund Mismanagement The SFC has suspended Mr. CHOW Tsz Lam (“ CHOW ”), a former RO and manager-in-charge at the now-dissolved Agg. Asset Management Limited (“ Agg ”), for 12 months effective from 2 September 2025, to 1 September 2026. This disciplinary measure addresses failures in fund management practices that exposed investors to undue risks and conflicts of interest. Investigation Findings The SFC's probe revealed that Agg, acting as investment manager for a Cayman-incorporated fund, allocated up to 100% of the fund's assets into debentures issued by entities controlled by Mr. NG Ka Shun (“ NG ”), Agg's sole shareholder, director, and fellow RO. This approach neglected to mitigate conflicts of interest and adequately manage associated risks (concentration risks and credit risks). Furthermore, Agg directed the fund into two debentures seemingly designed to artificially inflate the fund's net asset value. CHOW, as an RO and senior management member, was found to have fallen short in ensuring Agg operated in the best interests of the fund and its investors, while adhering to regulatory standards. Although primary responsibility lay with NG (who made the investment decisions), CHOW's oversight lapses contributed to these breaches. For more details of the case, please refer to the Statement of Disciplinary Action . SIGNIFICANCE: This case underscores the SFC's emphasis on robust conflict management and risk oversight in asset management, particularly where personal interests intersect with firm operations. It serves as a reminder for ROs and senior executives to prioritize investor protection and regulatory compliance, with self-reporting potentially mitigating penalties. The SFC previously issued a lifetime ban and $1.7 million fine to NG for window-dressing Agg's financial resources and mismanaging two funds (see SFC press release dated 23 December 2024 ). Agg itself faced a restriction notice in April 2020 prohibiting regulated activities, leading to its dissolution in July 2024 and deemed license revocation. 14. SFC Pursues Disqualification Orders Against Former Directors of Century Energy International Holdings Limited The SFC has initiated legal proceedings to seek court orders disqualifying four former directors of Century Energy International Holdings Limited ("CEIHL", formerly known as China Oil Gangran Energy Group Holdings Limited). The action targets individuals accused of misconduct that led to substantial financial losses for CEIHL. Background on CEIHL CEIHL, listed on the Growth Enterprise Market of the SEHK since 18 May 2011, was primarily involved in trading refined oil and methyl tert-butyl ether, as well as manufacturing and selling power and data cords. CEIHL's troubles stem from the loss of control over four major operating subsidiaries in Mainland China, which accounted for over 80% of its total revenue for the year ended 31 March 2018, and more than 40% of its total assets as of that date. These subsidiaries were deconsolidated from CEIHL's accounts effective 1 January 2019, resulting in a staggering loss of $184 million for the fiscal year ended 31 March 2019. Allegations of Misconduct The SFC alleges that these former directors failed to adequately supervise the Mainland subsidiaries and did not act in the best interests of the company. This prolonged lack of oversight contributed to the deconsolidation of the subsidiaries and the ensuing financial losses. Furthermore, Mr. Ho, Ms. Yang, and Mr. Lau are accused of being responsible for the publication of a 2014 circular that contained inaccurate or misleading information about one of the operating subsidiaries. Under section 214 of the SFO , the Court of First Instance may impose disqualification orders preventing individuals from serving as directors or being involved in the management of any corporation for up to 15 years if they are found responsible for conduct involving defalcation, fraud, misfeasance, or other misconduct toward the company or its members. The SFC's proceedings name the following accused directors: Mr. Gregory Ho Chun Kit (“HO”) Former executive director. Mr. Zheng Jian Peng (“ZHENG”) Former executive director, chief financial officer, and company secretary. Ms. Eugenia Yang (“YANG”) Former independent non-executive director. Mr. Vincent Lau Sung Tat (“LAU”) Former independent non-executive director. The SFC alleges that these former directors failed to adequately supervise the Mainland subsidiaries and did not act in the best interests of CEIHL. This prolonged lack of oversight contributed to the deconsolidation of the subsidiaries and the ensuing financial losses. Furthermore, HO, YANG, and LAU are accused of being responsible for the publication of a 2014 circular that contained inaccurate or misleading information about one of the operating subsidiaries. Under section 214 of the SFO , the Court of First Instance may impose disqualification orders preventing individuals from serving as directors or being involved in the management of any corporation for up to 15 years if they are found responsible for conduct involving defalcation, fraud, misfeasance, or other misconduct toward the company or its members. SIGNIFICANCE: This case highlights the SFC's commitment to enforcing corporate governance standards and holding directors accountable for oversight failures in Hong Kong-listed companies. Investors in Hong Kong-listed companies should note the potential risks associated with operations in cross-border subsidiaries and the importance of robust internal controls. [End of ComplianceOne Newsletter – September2025] 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 – August 2022 ComplianceOne Newsletter – August 2022 The topics discussed in this monthly newsletter are as follows: 1. Regulators to enhance Stock Connect trading calendar 2. Hong Kong Securities and Futures Commission (SFC) sets out the way forward for green and sustainable finance 3. Creating and accumulating wealth with diversified fund structures—by Financial Services and the Treasury Bureau 4. SFC reprimands and fines TC Capital International Limited $3 million and suspends its responsible officer for sponsor failures 5. SFC commences MMT proceedings against hedge fund manager over alleged false trading 6. SFC issues restriction notice to a broker to freeze client account linked to suspected insider dealing 7. Retail investors convicted and fined for illegal short selling MARKET NEWS 1. Regulators to enhance Stock Connect trading calendar The SFC and the China Securities Regulatory Commission (CSRC) today jointly announced their in-principle approval for changes to the trading calendar for Stock Connect. The changes would apply to both northbound and southbound trading. Because different public holidays are observed in the Mainland and Hong Kong, investors currently cannot trade through Stock Connect on certain days. The proposed changes enable Stock Connect trading on any day when both the Mainland and Hong Kong markets are open, even when the corresponding settlement day falls on a public holiday Significance: As Mr. Ashley Alder, the SFC’s Chief Executive Officer had said: “ Stock Connect provides a unique opportunity for Mainland and Hong Kong investors to participate in each other’s market. The enhancements will allow investors to better manage their portfolios through Stock Connect and support the further expansion of the programme. ” 2. SFC sets out the way forward for green and sustainable finance The SFC published its “ Agenda for Green and Sustainable Finance ” to set out further steps to support Hong Kong’s role as a regional green finance center with key focus on: a) Enhancing corporate disclosures; b) Monitoring the implementation of and enhancing existing measures relating to environmental, social and governance (ESG) funds and expectations for fund managers; and c) Identifying an appropriate regulatory framework for any proposed carbon markets. As a speech of Mr. Ashley Alder, the SFC’s Chief Executive Officer, has made it explicit that: “ Climate change and sustainability are cross-border issues which require a coordinated response, and Hong Kong has a critical role to play as a regional and international green finance center. The SFC will continue to lead global regulatory development in this space to ensure that domestic policies and international standards are aligned. ” Significance The SFC as a robust regulatory body in HK plays a pro-active role in navigating and allocating more resources to attaining an intricated balance between global economic growth and the preservation of environment from climate risk given the existing scenario where the private sectors, if left to its own device, would not be so dedicated to implementing the measures in a sound and efficient manner than otherwise spearheaded by a regulatory body a like SFC. 3. Creating and accumulating wealth with diversified fund structures Last year, the assets managed by Hong Kong stood at HK$35.5 trillion (US$4.6 trillion), which was 12 times the size of our GDP. The HKSAR has been striving to develop Hong Kong as a premier international asset and wealth management center in the Asia-Pacific region; and among the measures taken is the introduction of new fund structures, which includes the set-up of open-ended fund company (OFC), is of prior significance. Ever since commencement of the OFC regime, 88 OFCs have been set up or re-domiciled to Hong Kong, and the number of registered OFCs recorded a more than four-fold year-on-year increase as at end July this year. To further enhance the attractiveness of the OFC regime, a three-year grant scheme was launched in May 2021, and subsidies have been provided to 52 OFCs set up in/re-domiciled to Hong Kong. Significance: The HKSAR plays a proactive role in developing the asset and wealth management regime, given the advantages enjoyed by OFC as follows: (1) Tax concession (2) Cost-savings (3) Easy management (4) Facilitate international distribution (5) Cater for public/private funds (6) Eligible Products under the Cross-boundary Wealth Management Connect Scheme in the Greater Bay Area and ETF Cross-listing Scheme Coupled with the introduction of the grant scheme, and the fact that OFCs are qualified products under the Cross-boundary Wealth Management Connect Scheme, it is expected that market practitioners would be delighted to show great interest among the industry in this new fund structure and anticipate further growth of the OFCs ENFORCEMENT NEWS 4. SFC reprimands and fines TC Capital International Limited $3 million The SFC has reprimanded and fined TC Capital International Limited (TC Capital) $3 million for failing to discharge its duties as the sponsor in the listing application of China Candy Holdings Limited (China Candy). It is found that TC Capital failed to: a) conduct reasonable due diligence on the third party payments made on behalf of two top customers of China Candy; and b) maintain proper records of the due diligence work allegedly done in relation to the listing application Although TC Capital was aware of the third party payments, their RO and transaction team members did not make any further queries and assess if such payment method was legitimate or not; and no follow-up due diligence was conducted. Apart from the lack of proper records in due diligence, there was also no audit trail showing that TC Capital had turned its mind to the issues at all. Significance: It demonstrates to the market practitioners again the crucial importance of due diligence on any third party payments which are signal of red flags that necessitate serious attention and follow-up remedial action from licensed corporation in the eyes of SFC. 5. SFC commences MMT proceedings against hedge fund manager over alleged false trading The SFC has commenced proceedings in the Market Misconduct Tribunal (MMT) against Mr. Jonathan Dominic Iu Wai Ching, a responsible officer of Tarascon Capital Management (Hong Kong) Limited (Tarascon), for allegedly engaging in false trading in the shares of two Hong Kong-listed companies. The SFC alleges that Iu executed matched trades between the brokerage accounts of the hedge fund and of his mother between August and September 2014, which had the effect of creating a false or misleading appearance of active trading or of the price for dealings in the listed shares concerned. 6. SFC issues restriction notice to a broker to freeze client account linked to suspected insider dealing The SFC has issued a restriction notice to Bright Smart Securities International (H.K.) Limited (Bright Smart), prohibiting it from disposing of or dealing with certain assets held in a client account that holds proceeds of suspected insider dealing. Significance: The SFC considers that the issue of the restriction notice, which prevents dissipation of proceeds of suspected insider dealing held in the account, is desirable in the interest of the investing public or in the public interest. 7. Retail investors convicted and fined for illegal short selling The Eastern Magistrates’ Court today convicted Ms. Chan Siu Tai and her sister Ms. Janice Chan after they pleaded guilty to illegal short selling in prosecutions brought by the SFC. The sisters were fined a sum of $114,000 and ordered to pay the SFC’s investigation costs. 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 call us at (852) 39550277 . Unit 1104, 11/F, 299QRC, 287-299 Queen's Road Central, Sheung Wan, Hong Kong Tel: (852) 39550277 www.complianceone.hk To unsubscribe, please simply reply with “ I don’t like to know more about Compliance ”.

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. 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 – January 2023 ComplianceOne Newsletter – January 2023 The topics discussed in this monthly newsletter are as follows: 1. FUTU and TIGER were ordered by the China Securities Regulatory Commission (CSRC) to rectify their cross-border "illegal operations”; 2. "AML-CTF (Amendment) Ordinance 2022" will take effect on 1 June 2023; 3. HKEX Publishes "Review of Issuers’ Annual Reports - 2022"; 4. HKIDR will be launched shortly on 20 March 2023; and 5. SFAT affirms SFC decision to fine Cardinalasia Consulting Limited $1.5 million for failures in managing private fund. MARKET NEWS 1. FUTU and TIGER were ordered by the China Securities Regulatory Commission (CSRC) to rectify their cross-border "illegal operations" At the end of 2022, the CSRC made an announcement making it explicit that the activities conducted by the two firms, namely Futu Securities International (Hong Kong) Limited (“FUTU”) and Tiger Brokers (HK) Global Limited (“TIGER”), have been construed as engaging in illegal securities business without proper license in China. Though licensed in Hong Kong under the SFC, FUTU and TIGER are considered as conducting regulated activities in securities across the border in China (i.e. cross-border online brokerage) without acquiring approval from the CSRC. Both FUTU and TIGER had been reprimanded by the CSRC as having involved some sort of "cross-border regulatory arbitrage (跨境監管套利)", which means taking advantage of the great difference in political and regulatory systems between two regions by engaging in a less stringent regulatory regime and thus circumventing the onerous documentation process in the stringent regime in another region. SIGNIFICANCE: The regulatory measures taken by the CSRC seems like playing an art of reconciliation by deploying a “ 有效遏制增量，有序化解存量” towards FUTU and TIGER ; instead of an “once-off ban for all ”, a more pragmatic approach, has been adopted. In essence, it means the follow ings: (1) The two firms are not allowed to accept new customers and new accounts as these activities have been construed as conducting unlicensed regulated activities; (2) Both FUTU and TIGER can continue to serve the existing accounts on condition that no additional funds can be accepted which may constitute a breach of the foreign exchange restriction, which is implemented to prevent an outflow of funds from the country, imposed by the Chinese Government. 2. "AML-CTF (Amendment) Ordinance 2022" will take effect on 1 June 2023 The Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Ordinance 2022 (the Amendment Ordinance) will take effect on 1 June 2023. Apart from the introduction of new licensing regime, namely the Virtual Asset Service Providers (VASP), which deserves attention to brokers who are currently involved in virtual assets trading; there are other AML-CFT amendments which cannot be missed out as well. The key takeaways are as follows: (1) Under the Amendment Ordinance, Politically exposed person (PEP) is re-defined as " an individual who is or has been entrusted with a prominent public function in a place outside the People’s Republic of China Hong Kong ”. (2) Former politically exposed person (former PEP) , which means “ an individual who, being a politically exposed person, has been but is not currently entrusted with a prominent public function in a place outside Hong Kong ”, is introduced. With such amendment in place, the licensed corporations can be exempted from taking special requirements or additional measures in relation to a former PEP who happens to be a client onboarded. Instead, a risk-based approach can be adopted. (3) The use of a recognized digital identification system (“RDIS”) is allowed in situations where a customer is not physically present for identification purposes (i.e., non-face-to-face). If the Customer Due Diligence (CDD) requirements are met using reliable and independent digital identification systems, the Enhanced Due Diligence (CDD) requirements can be exempted. SIGNIFICANCE: With the amendment of definition of PEP , the special requirements apply not only to a PEP from a place outside “the People’s Republic of China” but also a PEP from a place “outside Hong Kong”. And with the new definition of former PEP , there is no longer a “once a PEP, always a PEP” scenario. Licensed corporations have the flexibilities to adopt a risk-based approach provided that there is sufficient assessment to justify that the former PEP no longer poses a high AML risk as before. The Amendment merely defines RDIS as " a digital identification system that is a reliable and independent source that is recognized by the relevant authority ”. However, no specific example or further detail has been provided in the Amendment. 3. HKEX Publishes Results of Review of Issures’ 2021 Annual Reports On 20th January 2023, the Hong Kong Exchanges and Clearing Limited (HKEX) published a report on the findings and recommendations in its Review of Issuers’ Annual Reports – 2022 (the “Report”). The Listing Division of the Exchange undertakes an on-going programme to review issuers’ annual reports as part of its monitoring activities. In the review, HKEX considered the actions taken by the issuers and their directors to safeguard company’s assets, and whether material information was disclosed to allow shareholders to properly assess the relevant matters reported on. HKEX also assessed issuers’ compliance with the Listing Rules and specific accounting standards in financial statements. In addition, HKEX also reviewed issuers’ compliance with annual report disclosure requirements under the Listing Rules. According to the Report, most issuers continued to achieve a high rate of compliance with annual report disclosure requirements with only a few issuers did not adequately substantiate the fairness of asset reported values (including loan receivables) due to deficiencies in their financial reporting, risk management and internal controls. HKEX also identified areas of improvement in some issuers’ disclosure of their material loan receivables and has made the following recommendations to issuers: (1) Financial reporting and related controls – deploy adequate resources to maintain risk management and internal controls, with special regard to the accounting estimates and the reasonableness of the assumptions behind. (2) Material lending transactions – critically assess the commercial rationale, whether their terms are fair and reasonable, and whether the use of funds is in the interests of the issuer and its shareholders. (3) Financial statement disclosure under accounting standards – maintain good communications with auditors on emerging issues identified during the audit, and take prompt actions to address auditors’ concerns. 4. HKIDR will be launched shortly on 20 March 2023 With reference to the Circular dated 12 December 2022, Relevant Regulated Intermediaries ( RRIs ) have to get themselves ready for launch of the HKIDR on 20 March 2023. RRIs are reminded to submit the BCAN-CID Mapping File that contains Broker-to-Client Assigned Number ( BCAN ) and client identification data ( CID ) of their clients to the SEHK effective 19 December 2022. RRIs are strongly advised now to ensure that they can login via the SEHK’s Electronic Communication Platform ( ECP ) web interface and / or the ECP ( SFTP ) interface, and submit the BCAN-CID Mapping Files as soon as possible so as to allow the SEHK with sufficient time to verify the data and rectify any error discovered during the file submission process For compliance with the applicable data privacy ordinance, RRIs should have obtained the necessary consent from the individual clients before submitting their BCAN and CID to SEHK. SIGNIFICANCE: Once again, the prioritized aim of the introduction of BCAN and HKIDR is to enhance the effectiveness of market surveillance by improving the transparency of the identity behind who initiates an order to the market, and reduce the investigation and execution costs of regulatory institutions. ENFORCEMENT NEWS 5. SFAT affirms SFC decision to fine Cardinalasia $1.5 million for failures in managing private funds The Securities and Futures Commission (SFC) has reprimanded and fined Cardinalasia Consulting Limited (CCL) $1.5 million over its failures in acting as a principal investment adviser to five private funds between August 2014 and October 2017. The licence of CCL’s responsible officer, Mr Edward Lee Shiu Lun, has also been suspended for nine months. The Securities and Futures Appeals Tribunal (SFAT) imposed a heavier penalty than proposed by the SFC, as the SFAT’s chairman the Hon Justice Hartmann said: “ The clear importance of an investment adviser in protecting the interests of investors lies in the simple, single fact that the person so appointed acts in an independent way ”, even the advice is contrary to that of the investment managers. Also, the SFC’s Executive Director of Enforcement, Mr Christopher Wilson, has said: “ This case serves as a timely reminder to fund managers and advisers of the high standards of conduct the SFC expects of them ”; and “ the SFC is determined to crack down on asset management misconduct and will impose harsher penalties going forward to deter such misconduct .” SIGNIFICANCE: The message delivered from the regulator is explicit that “ the role of an investment adviser is a role of real substance ” which seems to be perceived as a lesser role in conventional practice. The investment advisor should always uphold its independent role in giving advice even that advice is not in line with those higher in the delegated chain of management. 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 call us at (852) 39550277 . Unit 1104, 11/F, 299QRC, 287-299 Queen's Road Central, Sheung Wan, Hong Kong Tel: (852) 39550277 www.complianceone.hk To unsubscribe, please simply reply with “ I don’t like to know more about Compliance ”.

The topics discussed in this monthly newsletter are as follows: ComplianceOne Newsletter – February 2023 ComplianceOne Newsletter – February 2023 The topics discussed in this monthly newsletter are as follows: 1. The Asset and Wealth Management Activities Survey 2022; 2. SFC and CSRC enter into an MoU on regulatory cooperation; 3. SFC consults on proposals to regulate virtual asset trading platforms; 4. SFC reprimands and fines Jinrui Futures (Hong Kong) Limited $4.8 million; and 5. SFC bans Chan Wai Chun for life MARKET NEWS 1. The Asset and Wealth Management Activities Survey 2022 As an annual exercise to collect information on asset and wealth management activities in Hong Kong for regulatory and market facilitation purposes and to develop a better understanding of the state of the asset and wealth management industry in Hong Kong, the SFC has issued the Asset and Wealth Management Activities Survey 2022 (the “AWMAS”), and licensed corporations are expected to complete and submit on or before 21 April 2023. For those licensed corporations (LCs) which had gross operating income derived from: (i) asset management, (ii) giving advice on funds/portfolios, and/or (iii) private banking / private wealth management business in 2022; they are required to complete the whole questionnaire accordingly. In case where the licensed corporation did not engage in any of the above activities through the previous year, they are also required to fill in the part of General Information in the questionnaire as well. SIGNIFICANCE: The survey is like a full-fledged scrutiny of the AUM structure of the licensed corporation containing the following details: (1) Total AUM of the company; (2) AUM sub-contracted to related companies; (3) AUM managed in / outside Hong Kong; (4) AUM breakdown by means of asset classes, geographical locations; (5) AUM sourced from HK, or non-HK investors; (6) AUM sourced from Mainland China in the form of QDII / other investors; (7) AUM breakdown by client types, product types. By compiling the collected information, the SFC will be able to have a clearer picture in depth of the underlying structure and nature of AUMs under management by the existing LCs, as well as their financial soundness to sustain survivability in case a LC has no active AUM under management at all! 2. SFC and CSRC enter into an MoU on regulatory cooperation A Joint Announcement of the China Securities Regulatory Commission (CSRC) and the Hong Kong Securities and Futures Commission (SFC) was published with an aim to further strengthen cross-boundary regulatory cooperation on matters concerning the listing of Mainland enterprises in Hong Kong, the CSRC and the SFC have agreed to enter into a Memorandum of Understanding (MoU) which will come into effect on 31 March 2023. SIGNIFICANCE: The MoU clarifies the arrangements and procedures for share issuance and listing, cross-boundary enforcement, supervision of intermediaries, and exchange of information between the CSRC and the SFC. The MoU will facilitate the CSRC and the SFC in discharging their supervisory functions, jointly combating cross-boundary offences and misconduct, safeguarding the legitimate interests of investors and ensuring the steady and healthy development of both markets. It should also be noted that the CSRC had announced the《 證券經紀業務管理辦法 》which took effect on 28 February 2023, providing a more solid regulatory framework on cross-border sales solicitation of local Hong Kong based licensed corporations in Mainland China. 3. SFC consults on proposals to regulate virtual asset trading platforms The SFC published a Consultation Paper on the proposed regulatory requirements for virtual asset (VA) trading platform operators licensed by the SFC in preparation for the new licensing regime of centralized VA trading platform for trading of non-security tokens. The key takeaways are: (i) the Guideline for Virtual Asset Trading Platform Operators (VATP Guidelines) will supersede the previous VATP Terms and Conditions under the SFO; (ii) SFC’s proposal to allow retail access to Hong Kong licensed VA trading platforms subject to robust investor protection measures as proposed in the VASP Consultation Paper; (iii) VA trading platform operators should conduct reasonable due diligence on certain tokens to be traded to ensure that they fulfil the token admission criteria and be monitored on an ongoing basis that the token thus traded in the platform continue to fulfil the criteria as required; (iv) Pre-existing VA trading platforms which would like to be qualified provider must submit a completed license application online under the AMLO VASP regime between 1 June 2023 and 29 February 2024, and to demonstrate that it has the arrangements in place to ensure compliance with the regulatory requirements. For VA trading platforms which do not operate in Hong Kong immediately before 1 June 2023 must not carry on business in Hong Kong unless they have been formally licensed under the AMLO VASP regime; (v) DUAL Licenses: upon commencement of the AMLO regime in June 2023, the SFC will regulate the trading of security tokens under the existing SFO regime and regulate the trading of VA trading platforms (for non-security tokens) under the AMLO VASP regime. It is suggested that VA trading platforms to be dual licensed under both SFO And AMLO regime in order to ensure a sustainable business operation; (vi) External assessment report: to streamline the application process, the SFC proposes that VA trading platforms should engage an external assessor to submit a “Phase 1 Report” and a “Phase 2 Report” demonstrating the readiness of the VA trading platform operators before the SFC’s decision to grant a final approval upon satisfaction of the Phase 2 Report findings. SIGNIFICANCE: The past 12 months have been a turbulent year for the virtual asset markets, the collapse of the Luna token and Terra stablecoin, along with the subsequent collapse of the FTX, explicitly unveiled the underlying fragility of the regulatory regime of the VA markets. In the light of these adverse scenarios, most major jurisdictions are aware of the imminent need to take a more pro-actively approach in regulating the VA markets, particularly with the prior concern of protecting investors from engaging in fraudulent or unsound trading platforms. As advocated by the HKSAR government before of its stern determination to develop Hong Kong as one of the international financial hubs for virtual assets markets, the SFC is keen to launch the AMLO (Amendment) Bill which will be in effect in June, coupled with this consultation on VATP, the HK government is definitely on the right track to be a pioneer in nurturing a full-fledged regulated VA trading environment ahead of other financial centre over the world. Last but not least, the SFC is actively soliciting views, particularly on whether to allow licensed VA trading platforms to serve retail investors, and subsequently, the necessary measures to be implemented to ensure retail investors are adequately protected. ENFORCEMENT NEWS 4. SFC reprimands and fines Jinrui Futures (Hong Kong) Limited $4.8 million for failures in complying with AML/CFT The SFC has reprimanded and fined Jinrui Futures (Hong Kong) Limited (Jinrui Futures) $4.8 million for failures in complying with anti-money laundering and counter-terrorist financing (AML/CFT) and other regulatory requirements between April 2015 and June 2018. Apart from this, the licenses of two responsible officers of Jinrui Futures, namely, Shen Chun and Jiang Xiaoqing, were suspended for 6 months and 5 months respectively. The SFC’s investigation found that Jinrui Futures, which permitted 258 clients to use customer supplied systems (CSSs) for placing orders during the material time, had failed to conduct adequate due diligence on the CSSs; thus, was not in a proper position to assess and manage the AML-CFT risks with the use of CSSs. The SFC also found that some of the deposits made into four clients’ accounts were unusual and inconsistent with the clients’ declared net worth, and the subsequent follow-up enquiries were not sufficient to explain the issues. It was further found that Jinrui Futures had failed to comply with its account opening procedures which require its staff to conduct AML screening on its clients including identifying if the clients were politically exposed persons or under the terrorist sanction list before accounts were approved. Such omissions constituted a breach of the AML-CTF Ordinance, the Guideline on Anti-Money Laundering and Counter-Terrorist Financing and the Code of Conduct. SIGNIFICANCE: The underlying potential risk of granting clients the use of CSSs to connect with the BSS of the broker really poses high risks since these CSSs are developed by external system vendors where the brokers do not have sufficient knowledge of how the CSSs actually operate, and the true identities of the underlying users who place orders through the CSS from the clients’ side of the API which cannot be identified or detected, not to mention any due diligence on the users or the CSSs per se. It is the reason why the adoption of CSSs by the clients constitutes substantially high AML risk. The ironic dilemma is that those clients opting for their CSSs are always the dominant clients contributing a substantial portion of the commission incomes to sustain the LCs themselves! 5. SFC bans Chan Wai Chun for life The SFC has banned Mr Chan Wai Chun, a former customer relationship manager of Dah Sing Bank Limited (DSB), from re-entering the industry for life following his conviction for fraud. The District Court found that in March 2021, Chan persuaded an elderly customer of DSB to redeem her investment in a fund and reinvest the redeemed amount in another fund to earn higher interest yield. However, Chan never invested in any new fund for the customer even the documents were signed, and instead, later transferred $1,195,000 from the customer’s account to his personal account and used the money to repay his own debts. Chan is considered by the SFC as not a fit and proper person to be licensed or registered to carry on regulated activities as a result of his criminal conviction. 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 call us at (852) 39550277 . Unit 1104, 11/F, 299QRC, 287-299 Queen's Road Central, Sheung Wan, Hong Kong Tel: (852) 39550277 www.complianceone.hk To unsubscribe, please simply reply with “ I don’t like to know more about Compliance ”.

The topics discussed in this monthly newsletter are as follows: ComplianceOne Newsletter – September 2022 ComplianceOne Newsletter – September 2022 The topics discussed in this monthly newsletter are as follows: 1. Auditors from the Public Company Accounting Oversight Board (PCAOB) reached Hong Kong on issues of continual listing of Chinese stocks in US 2. SFC-HKMA’s joint product survey shows increasing participation of intermediaries and investors 3. What should investors do if their broker plans to cease operation? 4. SFC suspends a responsible officer for breach of KYC and AML/CFT for eight months 5. Court sets pre-trial review date for unlicensed activities prosecution 6. Court dismisses challenge to SFC’s power of issuing restriction notices 7. SFAT affirms SFC decision to suspend hedge fund manager Christopher James Aarons 8. Thirteen people charged following SFC and Police joint operation against ramp-and-dump syndicate 9. Kindly Reminder: Climate-related Risk Disclosure by Fund Mangers MARKET NEWS 1. Auditors from the PCAOB reached Hong Kong on issues of continual listing of Chinese stocks in US A team of auditing experts had arrived in Hong Kong by the end of Sep 2022 with a mission to scrutinize the audit records of the Chinese stocks listed in the US exchanges, following the insistence from Washington that US officials should be given access to the accounts of the Chinese companies listed; or otherwise, these stocks will be forced to delist as early as 2023. Some important messages required to know: (1) The US inspectors were sent to Hong Kong with an aim at resolving the long-standing argument over the access to audit records of Chinese companies which are held in China and not accessible for national security reasons. (2) All the inspectors and investigators are from Public Company Accounting Oversight Board (PCAOB), which will select a couple of companies for inspection with targets like Alibaba, Yum Chin, JD.com etc. (3) The inspections are conducted in Hong Kong with the necessary documents transferred across the border from China in both paper and electronic forms. However , there are still obstacles to get full access the audit records as some may be deemed as "restricted data" not to be disclosed, especially for those “state owned enterprise” where most data is considered as “state secret”! Significance: Beijing and Washington need to reach a consensus on the listing issues as a big stake is involved there. The amount raised through the Chinese companies in the US was around US$85 billion through primary and secondary offerings. A more subtle issue here is the diverse opinion of interpreting what is considered as “state secret” and “confidential information”. The China Securities Regulatory Commission (CSRC) and the Securities and Exchange Commission (SEC), under the premise that "each is serving its own master", both sides have to hammer out a solution on a sustainable basis for benefits of investors on both sides. 2. SFC-HKMA’s joint product survey shows increasing participation of intermediaries and investors A joint survey of the SFC and the HKMA show that notwithstanding the continued pandemic and difficult market environment, the number of investors who purchased investment products increased 5% to 770,000. The total number of firms engaged in the sale of investment products increased slightly to 390. Major findings from the survey included: (1) Structured products ($2,385 billion or 48%) remained the predominant product type sold by firms, followed by collective investment schemes (CIS) ($1,491 billion or 30%) and debt securities ($818 billion or 16%). (2) The total transaction amount of equity-linked structured products increased by 5% to $1,674 billion; while the sales of authorized CIS helped drive the 5% increase in the overall transactions in CIS to $1,491 billion. (3) Weighed down by uncertainties in interest rates outlook, the total transaction amount for debt securities dropped 23% to $818 billion. (4) A total of 70 firms used online platforms to distribute investment products, up 21% from the last survey. CIS remained the most popular product type, accounting for 91% of total online sales. The survey reveals increased retail participation in the investment market, notwithstanding the difficult market environment, and an increasing trend for firms to use online platforms for distribution,” and provides more useful information for regulators to better serve the interests of the retail investors. Significance: The findings reveal the resilience of the HK financial market and the observation that investors become more mature after the painful experience of crucial episodes especially after the 2008 credit default crisis. From the regulatory aspect, “this joint product survey strengthens the supervisory collaboration between the SFC and the HKMA, and enhances surveillance of the market by the regulators,” as added by Mr. Arthur Yuen, Deputy Chief Executive of the HKMA. 3. What should investors do if their broker plans to cease operation? Despite the SFC grants licences to intermediaries every year, there are still some licensed intermediaries which are determined to cease operation for their own business reasons. Here below are some useful hints investors concerned are supposed to know. Under the existing regulatory regime, intermediaries are required to maintain segregated client accounts to separate clients’ assets from their own asset. If a broker plans to cease operation, it is general practice to give advance notice to its clients of the subsequent arrangements, including things like the date where the services is to be terminated, the procedures of asset withdrawal, and the transfer of money back to designated banks of the clients. Clients should liaise with the broker about transferring the outstanding holding of stocks to any of their accounts maintained with other brokers. In order to facilitate the process, clients are advised to contact the broker, and to update their contact details such that the broker can keep them abreast of any remedial procedures. Under the circumstances where the broker cannot reach the its clients, the broker will apply for payment of the clients’ assets into the court under the Trustee Ordinance; and it incurs additional costs in terms of time and money for the broker and the clients themselves. ENFORCEMENT NEWS 4. SFC suspends a responsible officer for breach of KYC and AML/CFT for eight months The SFC has suspended Mr. Tang Kai Shing, responsible officer (RO) and managing director of Rifa Futures Limited (Rifa), for eight months from 2 September 2022 to 1 May 2023 for breach of KYC, AML/CFT and other regulatory requirements between May 2016 and October 2018. The SFC considers Rifa’s breaches were attributable to Tang’s failure to discharge his duties as an RO and a member of senior management. The investigation found that Rifa, without conducting adequate due diligence, was unable to assess the above -mentioned risks associated with allowing its clients to use their client supplied system (CSS) in placing orders. Besides, Rifa was also found to have failed to conduct adequate ongoing monitoring of clients’ fund movements to ensure they were consistent with the clients’ business nature , risk profile and source of fund. Significance: It demonstrates again the fact that intermediaries permitting the clients in using their own CSS poses serious potential regulatory risks to the intermediaries per se. It can be observed that the use of CSS is usually associated with abnormal fund movements and trading pattern differing from the clients’ own risk profile for reason that the ultimate persons who originated the orders cannot be identified under the use of CSS. 5. Court sets pre-trial review date for unlicensed activities prosecution The Eastern Magistrates’ Court today fixed the pre-trial review date for prosecutions against Mr. Tony Choi Yick Man and Mr. Ma Yau Tim after they pleaded not guilty to charges by the Securities and Futures Commission (SFC) for unlicensed activities. The SFC commenced criminal proceedings on 30 June 2022 against Choi for carrying on a business in asset management without a SFC licence between 2010 and 2019 and Ma for aiding and abetting Choi’s unlicensed activity. The pre-trial review is scheduled for 27 October 2022. 6. Court dismisses challenge to SFC’s power of issuing restriction notices The Court of First Instance has dismissed a judicial review application against the SFC relating to restriction notices issued in an ongoing investigation into a suspected “ramp-and dump” scheme; the review was brought by Mr. Tam Sze Leung, Ms. Kong Chan and Ms. Lee Ka Lo, who sought to challenge the restriction notices issued by SFC to freeze their assets in various trading accounts held with certain licensed corporations. “We welcome the Court’s decision, said by SFC’s Chief Executive Officer, Mr. Ashley Alder; and he further stated that the “restriction notes” were important during the course of investigation to the SFC in carrying out its function under the SFO, and they enable the SFC to take immediate action to protect investors and the public interest. Significance: The decision of the Court was justified in the sense that the assets of the suspects might be the proceeds from their “ramp-and-dump” scheme. And the protection of the statutory power of the SFC entitled from SFO should not be challenged, or otherwise more upcoming judicial reviews will be expected afterwards. 7. SFAT affirms SFC decision to suspend hedge fund manager Christopher James Aarons The SFC has suspended Mr. Christopher James Aarons, responsible officer (RO) and chief executive officer of Trafalgar Capital Management (HK) Ltd . (Trafalgar), for two years by the Securities and Futures Appeals Tribunal (SFAT) followed administrative proceedings against Aaron in South Korea. The Korean regulatory authorities found that Aarons had breached Korean legislation by dealing in the shares of a securities company listed on the Korea Exchange (KRX) based on material non-public information in circumstances that prohibited such dealing. The information concerned a block trade of shares of the KRX-listed securities company which Aarons had obtained from a sell-side broker during a “market sounding” call. Aarons was not wall-crossed during the call with the broker, but he arranged a short swap in the company’s shares to take advantage of the information, and derived a profit of KRW337.3 million as a result. Significance: As Mr. Ashley Alder, the Chief Executive Officer of SFC, had said: “The SFAT’s determination sends an unmistakable message to the market that both sell-side brokers and buy-side participants have obligations to uphold market integrity by maintaining the confidentiality of non-public information on block trades or private placements during the market sounding process. Misuse of such information and individuals who abuse the process warrant severe sanctions! 8. Thirteen people charged following SFC and Police joint operation against ramp-and-dump syndicate Thirteen suspects were charged with various criminal offences following an earlier joint operation of the Securities and Futures Commission (SFC) and the Police against a sophisticated ramp-and-dump syndicate . The alleged syndicate members organized and executed “ramp-and-dump” schemes in the shares of two target stocks by using different social media platforms and manipulated the trading of a large volume of those shares through the use of a substantial number of nominee accounts. Prices of the target stocks were driven up to lure investors to purchase those shares after which the syndicate then disposed of their shares aggressively at a profit, and the prices drastically collapsed as a result of such profit-taking by the syndicate. Significance: It is obvious that such “ramp-and -dump” scheme to lure investors into purchasing the target stocks, together with the drastic plunge afterwards can never to tolerated in the eyes of the SFC, particularly from which the public interests of the general investors were adversely and severely jeopardized; and more importantly, the integrity and fairness of the financial market status of Hong Kong must be upheld at all times! A Kindly Reminder: Climate-related Risk Disclosure by Fund Mangers With amendment of the Fund Manager Code of Conduct, Fund Managers are required to take the climate-related risks into consideration in constructing their investment and risk management process, and make appropriate disclosure according and commensurate to nature of their funds. Key elements are as below: I. Governance II. Investment Management III. Risk Management IV. Disclosure Fund Managers have to bear in mind of the following timelines: (1) Submission in AUG 2022: for LARGE Fund Managers with AUM>HKD8 billion (2) Submission in NOV 2022: for Fund Managers with less AUM size Apart from Baseline Requirements, the LARGE Fund Managers have to comply with additional “Enhanced Standards” with respect to Risk Management and Disclosure. Fund Managers are supposed to follow the guidelines published by the SFC in fulfilling their obligations in climate-related risk disclosure while bearing in mind the following key hints: (1) Is the fund managed delegated with investment discretion, and the extent of discretion entitled to the Fund Manager (2) Are climate related risks “relevant and material” to the fund? Relevancy and Materiality determine how far and to what extent the Fund Manager has to comply with the applicable requirements (3) Is the Fund Manager “responsible for overall operation of the fund” (ROOF)? 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 call us at (852) 39550277 . Unit 1104, 11/F, 299QRC, 287-299 Queen's Road Central, Sheung Wan, Hong Kong Tel: (852) 39550277 www.complianceone.hk To unsubscribe, please simply reply with “ I don’t like to know more about Compliance ”.

天匯合規協助大公國際香港成功申請香港信貸評級服務牌照（10號牌） 天匯合規協助大公國際香港成功申請 香港信貸評級服務牌照（10號牌） 天匯合規顧問有限公司(「天匯合規」) 協助大公國際資信評估有限公司（「大公國際」）旗下的香港全資子公司：大公國際香港有限公司（「大公國際香港 」） (中央編號: BUK036) 成功向香港證券及期貨事務監察委員會（「香港證監會」）申請獲准經營第10類受規管活動：信貸評級服務牌照（即10號牌）。大公國際香港成為近四年多以來香港證監會唯一批准的10號牌的公司，也是全香港第九家獲香港證監會批准並持有10號牌的公司（同時為第四家來自中國內地的信用評級公司）。大公國際香港於2023年第四季首次遞交申請，於2024年4月成功取得香港證監會下發的原則性核准函（Approval-in-principle, “AIP”），並於5月27日正式獲批牌照。 大公國際香港的控股股東為大公國際，成立於1994年，是中國人民銀行和原國家經貿委共同批准成立的全國性信用評級機構。成立30年以來，大公國際先後對70多個行業的近萬家企業進行信用評級，是最早在中國內地開展信用評級業務的公司之一，為多家工商企業、金融機構、主權國家、國際公司、資產證券化類產品等提供評級服務，位居產業前列。為提升公司在國際評級競爭中的地位，並滿足其自身發展需求，於2023年6月成立了大公國際香港，該公司主要專注於提供企業和金融機構評級服務以及結構化產品評級服務。 天匯合規作為大公國際香港的合規顧問，為本項目提供了全方位的合規服務，包括提供申請方案設計、合規建議諮詢、內部監控流程的設計、以及協助回復香港證監會對大公國際香港的牌照申請提問的回饋等綜合服務。天匯合規合夥人Tao Wong及Tommy Chung領銜的合規顧問團隊專注於香港境內的金融牌照申請、反洗錢系統、以及各類型合規顧問服務。天匯合規成立7年多以來已成功為數十家公司申請成為持牌法團, 以及為數以百計的各類型金融機構提供不同類型的合規顧問服務, 在香港首屈一指。 大公國際香港這次獲批出信貸評級服務牌照, 特别感謝香港證監會 (SFC) 以及香港投資推廣署 (InvestHK) 對本次申請活動的關注和支持。 2024年5月27日 ComplianceOne helped Dagong Global Hong Kong successfully apply for Type 10 license (providing credit rating services) in Hong Kong ComplianceOne Consulting Limited ("ComplianceOne") assisted Dagong Global Credit Rating Co., Ltd. ("Dagong Global”) 's wholly-owned subsidiary in Hong Kong, Dagong Global Hong Kong Limited ("Dagong Global Hong Kong"), in successfully applying from the Securities and Futures Commission of Hong Kong ("SFC") for approval of Type 10 regulated activity: credit rating services license. Dagong Global Hong Kong became the only company approved by the SFC for Type 10 license in nearly four years, and the ninth company in Hong Kong to be approved and hold a Type 10 license (also the fourth credit rating agency from mainland China). Dagong Global Hong Kong submitted its application in the fourth quarter of 2023, obtained the SFC's approval-in-principle (AIP) from the SFC in April 2024, and obtained the license on 27th May 2024. Dagong Global, the controlling shareholder of Dagong Global Hong Kong, was established in 1994. It is a nationwide credit rating agency approved jointly by the People's Bank of China and the former State Economic and Trade Commission. Over the past 30 years, Dagong Global has conducted credit ratings for nearly ten thousand enterprises in over 70 industries, making it one of the earliest companies to engage in credit rating business in mainland China. It provides rating services for various industrial and commercial enterprises, financial institutions, sovereign states, international corporations, asset securitization products, and more, ranking among the industry leaders. To enhance its position in the international rating competition and meet its own development needs. Dagong Global established Dagong Global Hong Kong in June 2023, which primarily focuses on providing rating services for enterprises and financial institutions, as well as structured product rating services in Hong Kong. ComplianceOne serves as the compliance consultant for Dagong Global Hong Kong, providing comprehensive compliance services for this project. This includes offering assessment of the application, compliance advisory consultations, designing internal control processes, and assisting in responding to inquiries from SFC of Hong Kong regarding Dagong Global Hong Kong's license application. The compliance advisory team, led by partners Tao Wong and Tommy Chung, focuses on financial license applications in Hong Kong, anti-money laundering (AML) systems, and various types of compliance consulting services. Over the past seven years, ComplianceOne has successfully assisted dozens of companies in becoming licensed corporations and provided various types of compliance consulting services to hundreds of financial institutions, establishing itself as a leader in Hong Kong. Dagong Global Hong Kong and ComplianceOne express special gratitude to the SFC and InvestHK for their attention and support during the application process for the Type 10 license. 27th May 2024

通過了解海關指引和執法、內部審核，有效維護金錢服務經營者牌照及取得業務持續性的成效。 天匯合規獲邀參與國際會計師公會香港分會主辦之可持續發展講座 我們很榮幸受邀參與由國際會計師公會香港分會主辦的可持續發展講座。王陶浚先生及陸博賢博士藉著剖析海關指引、執法和內部審核，分享有效維護金錢服務經營者（MSO）牌照及取得業務持續性成效的策略。 我們衷心感謝所有參加者的積極參與和寶貴提問，使這次講座取得圓滿成功。 期待在不久的將來舉辦更多講座，和大家分享、交流最新的金融科技及合規見解！ We're honored to have been invited by The Association of International Accountants to co-host this seminar focused on the effective maintenance of Money Service Operator (MSO) licenses through understanding customs guidelines, enforcement and internal audits. We’d like to extend our heartfelt gratitude to all participants for their active engagement and thoughtful questions, altogether making this seminar a pounding success. Stay tuned for future events where we continue to explore and share insights on compliance and business sustainability.

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 – October 2025 The topics discussed in this monthly newsletter are as follows: REGULATORY UPDATES PIBA Urges Compliance with IA's Referral Fee Guidelines for Participating Policies and Warns Against High-Risk Practices MARKET NEWS IA Introduces Framework for Domestic Systemically Important Insurers (D-SIIs) JD.com (京東集團) Obtains Insurance Brokerage License in Hong Kong ENFORCEMENT NEWS ICAC Charges Six Individuals, Including Police Officers, in HK$3 Million Insurance Fraud Scheme IA imposed 30-year ban on WONG Ka Keung for conspiring to defraud HK$27 million Regulatory News 1. PIBA Urges Compliance with IA's Referral Fee Guidelines for Participating Policies and Warns Against High-Risk Practices On 13 October 2025, the Professional Insurance Brokers Association (“ PIBA ”) issued the Memo, regarding to the IA circular dated 1 September 2025 , which sets out regulatory expectations for referral fees paid by licensed insurance broker companies on participating policies (those involving profit-sharing). For more detail, please refer to the Memo: PIBA Circulars - IA's regulatory expectation on referral fees Summary of the IA circular Effective from 1 October 2025, all licensed brokers and insurers must fully comply with these rules, which include a 50% benchmark limit on fees to unlicensed referrers to prevent excessive payments and promote fair practices. For more detail, please refer to ComplianceOne Insurance Newsletter – August 2025 (Topic 1) Summary of the PIBA Memo PIBA, having engaged closely with the IA during the guideline development, stressed the need for immediate action: reviewing and revising existing referral contracts to ensure alignment, confirming all arrangements (new or ongoing) meet the expectations, and establishing strong internal controls to avoid non-compliance. The IA has already contacted several broker companies and their Responsible Officers (“ RO ”) in September 2025 to emphasize adherence, indicating potential for stricter enforcement if violations occur. To enhance oversight, the IA plans to issue questionnaires on referral details, conduct on-site and off-site inspections for high-risk cases, scrutinize referral arrangements during license renewals, and apply similar reviews to insurers' due diligence processes. Focus areas include unusual financial statement items like Business Expenses; Large Marketing or Administrative Costs; Rapid Growth in Broker Volumes Reported by Insurers; and Market Intelligence from Complaints. High-Risk Practices The memo also includes an annex outlining high-risk practices to evade the rules, which PIBA strongly advises against due to their legal and regulatory risks. These include: Rumoured Fee Arrangement Potential Risk and Consequences (i) Pass-through payments via technical representatives Detectable through abnormal volumes and triggering AML scrutiny (ii) Misclassifying fees as fictitious services Exposed in audits (iii) Splitting fees across multiple referrers per policy Assessed on total fees (iv) Using offshore companies Ineffective against due diligence requirements (v) Supplementing fees with private profit distributions Inefficient post-tax (vi) Applying for multiple agency licenses to shift business Violating Insurance Ordinance sections 64j and 64k, a criminal offense SIGNIFICANCE: This comprehensive guidance from PIBA reinforces the IA's push for ethical referral frameworks, reducing risks of misconduct and supporting sustainable industry growth. By consolidating reminders on compliance, upcoming regulatory actions, and avoidance of evasion tactics, it equips brokers to prioritize professional standards, enhance transparency, and protect policyholders, ultimately bolstering trust in Hong Kong's insurance sector amid evolving market dynamics. Market News 2. IA Introduces Framework for Domestic Systemically Important Insurers (D-SIIs) On 17 October 2025, the IA announced the implementation of a new framework for classifying Domestic Systemically Important Insurers (“ D-SIIs ”). This macroprudential approach identifies insurers whose potential failure could significantly disrupt Hong Kong's local financial system, necessitating enhanced supervisory measures. The IA will recommend to the Financial Secretary that all D-SIIs be included under the Financial Institutions (Resolution) Ordinance (“ Cap. 628 ”) to enable comprehensive resolvability assessments and resolution planning. The list of Insurers classified as D-SIIs Under this framework, AIA Group Limited (“ AIA ”) and Prudential Corporation Asia Limited (“ Prudential ”) have been designated as D-SIIs. Both entities are recognized as Internationally Active Insurance Groups (“ IAIGs ”), complying with stringent standards within the IA's group-wide supervision framework. Annual assessments will be conducted to review and update classifications, aligning with international best practices. The following table summarizes the classified D-SIIs ( Last update 17 Oct 2025 ): Insurer Remarks AIA Group Limited Internationally Active Insurance Group; subject to group-wide supervision. Prudential Corporation Asia Limited Internationally Active Insurance Group; subject to group-wide supervision. The list shall be updated by the IA when needed, for the latest version, please visit: Domestic Systemically Important Insurers What is a D-SII? D-SIIs are insurers whose failure could cause significant disruption to Hong Kong's financial system due to their size, market importance, and interconnectedness. The IA's D-SII framework uses a two-step assessment process: Quantitative (evaluating size, substitutability, interconnectedness, and liquidity); and Qualitative (considering additional risks and mitigating factors). Designated D-SIIs face enhanced supervision, including resolution planning under the Cap. 628 and integration with frameworks like the IAIS Holistic Framework for systemic risk management. SIGNIFICANCE: This framework enhances financial stability by proactively addressing systemic risks in the insurance sector, ensuring that critical insurers are resilient and resolvable without widespread economic fallout. By designating AIA and Prudential as D-SIIs, the IA reinforces Hong Kong's alignment with global regulatory standards, such as those from the International Association of Insurance Supervisors. Insurers and stakeholders should prepare for heightened oversight, which promotes long-term market integrity and policyholder protection. 3. JD.com (京東集團) Obtains Insurance Brokerage License in Hong Kong On 23 October 2025, JD.com (京東集團) Hong Kong subsidiary - Jingdong Insurance Consultants (Hong Kong) Limited, was granted an insurance brokerage license by the IA in Hong Kong. Spotlight on the Climate Modelling Project Name (EN) Jingdong Insurance Consultants (Hong Kong) Limited Name (CN) 京東保險顧問（香港）有限公司 Licence No. GB1101 Line(s) of Business General & Long Term Business (including Linked Long Term Business) Licence Period Start Date: 14 Oct 2025End Date: 13 Oct 2028 Business Address Suite 603, 6/F., Laws Commercial Plaza, 788 Cheung Sha Wan Road, Kowloon, Hong Kong Responsible Officer(s) LAM Che Chuen (林志全) License No.: IA5762 For more details, please refer to Register of Licensed Insurance Intermediaries The license, which remains valid until October 2028, positions JD.com to expand into the local insurance market by offering brokerage services. The responsible officer for the licensed entity is LAM Che Chuen, a seasoned professional in the sector. This development follows reports of JD.com actively recruiting insurance personnel with relevant licenses and experience in Hong Kong's insurance industry, signalling a strategic push to build a local team. SIGNIFICANCE: JD.com , a major Chinese e-commerce giant with a market value of approximately US$52 billion, is leveraging this license to tap into Hong Kong's robust insurance landscape, which has seen significant growth from Mainland Chinese visitors contributing HK$62.8 billion in new business premiums in 2024. The move aligns with broader efforts by tech firms to integrate financial services, including insurance, into their platforms. JD.com 's entry into Hong Kong's insurance brokerage market enhances competition and innovation, potentially offering digital-first solutions to consumers amid rising demand from cross-border clients. This could drive product diversification and efficiency but also underscores the need for rigorous regulatory oversight to ensure compliance and protect policyholders. Licensed intermediaries and insurers should monitor such expansions for partnership opportunities while reinforcing internal controls against emerging risks in tech-integrated financial services. Enforcement News 4. ICAC Charges Six Individuals, Including Police Officers, in HK$3 Million Insurance Fraud Scheme On 8 October 2025, the Independent Commission Against Corruption (“ ICAC ”) charged LAM Hin Ho (林顯豪) (“ LAM ”), a 36-year-old police sergeant, along with five others, in connection with a fraud scheme that allegedly defrauded two insurance companies: Sun Life Hong Kong (香港永明金融) (“ Sun Life ”); and China Taiping Life Insurance (Hong Kong) (中國太平人壽保險(香港) (“ China Taiping ”)) The fraud scheme with approximately HK$3 million in commissions, bonuses, and allowances. The scheme involved recruiting dummy insurance agents and policyholders to submit 20 fraudulent policy applications between December 2016 and June 2024. The following table outlines the key timeline of events based on official ICAC disclosures: Timeline Event/Action Source/Link Dec 2016 - Jun 2024 Allegedly recruited dummy agents (family, friends, colleagues) and submitted 20 false policy applications; arranged falsified credentials for one participant. ICAC Press Release (8 Oct 2025) 8 Oct 2025 Charged by ICAC along with five co-defendants; bail granted. ICAC Press Release (8 Oct 2025) 9 Oct 2025 Court appearance at Eastern Magistrates' Court; case transferred to District Court. Case Number: ESCC 2632/25 ICAC Press Release (8 Oct 2025) 6 Nov 2025 ICAC update on ongoing case; confirmation of two fugitives implicated with arrest warrants issued. ICAC Press Release (6 Nov 2025) LAM faces 21 charges: 20 counts of fraud under Section 16A of the Theft Ordinance and one count of conspiracy to make false instruments. He allegedly conspired with an insurance company mid-level manager (who remains at large) to recruit family members, friends, and police colleagues as dummy insurance agents. False representations were made to induce the insurers to underwrite the policies and release payments totalling around HK$1 million from Sun Life and HK$2 million from China Taiping. Additionally, LAM is accused of arranging falsified academic credentials for one co-defendant to join China Taiping to facilitate the scheme. A recent ICAC update on 6 November 2025 confirmed the ongoing proceedings against the six charged individuals, with two additional suspects—a former mid-level manager at the involved insurers and another individual—implicated but currently at large. Arrest warrants have been issued for these fugitives. The defendants were granted bail and appeared in Eastern Magistrates' Court on 9 October 2025, with the case transferred to the District Court for further handling. SIGNIFICANCE: This case highlights the persistent risks of insurance fraud through manipulated agency structures and falsified documents, which undermine industry integrity and policyholder trust. It underscores the need for insurers to enhance due diligence in agent recruitment, policy verification, and commission disbursement processes. Regulatory bodies like the ICAC and Insurance Authority continue to prioritize enforcement to deter such schemes, reinforcing Hong Kong's reputation as a transparent financial hub. Insurers are advised to review internal controls and collaborate with authorities to mitigate similar vulnerabilities. 5. IA imposed 30-year ban on WONG Ka Keung for conspiring to defraud HK$27 million On 3 November 2025, the IA imposed a 30-year ban on Mr. WONG Ka Keung (王家強) (“ WONG ”) (Licence number: IE9049), prohibiting him from acting as an insurance intermediary. This disciplinary action stems from his involvement in a large-scale fraud scheme where he conspired with at least nine other individuals to defraud his appointed authorized insurer of approximately HK$27 million over a three-year period. Reasons for the Ban Imposed WONG arranged for patients suffering from critical illnesses to impersonate policyholders and submit false claims, personally profiting around HK$13.5 million. He also forged three sick leave certificates for one patient to support the deception, including forged medical records for a pair of sisters to fraudulently obtain insurance payouts and extend sick leave. Details of the Case - HCCC 182/23 : WONG was charged by the Independent Commission Against Corruption (“ ICAC ”). High Court Judge described WONG as the mastermind, noting that his critical role as an insurance agent constituted a severe breach of fiduciary duty. The judge highlighted that the fraud could have continued indefinitely if undetected, causing ongoing harm to AIA Group Limited (友邦保險香港). As a result, he was sentenced to six years and four months in prison. The IA highlighted that such misconduct constitutes a criminal offense, disrupts market operations, and undermines the legitimate interests of policyholders. The lengthy ban underscores the gravity of the violations. SIGNIFICANCE: This case exemplifies the IA's zero-tolerance approach to fraudulent activities within the insurance sector, reinforcing regulatory enforcement to maintain market integrity and protect policyholders. By imposing one of the longest bans on record, the IA sends a clear deterrent message to intermediaries, emphasizing the severe consequences of criminal involvement in false claims. This action supports broader efforts to enhance trust in Hong Kong's insurance industry, particularly amid rising concerns over misconduct, and aligns with ongoing initiatives to strengthen compliance and ethical standards. [End of ComplianceOne Insurance Newsletter – October 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 1605, 16/F, West Tower, Shun Tak Centre,168-200 Connaught Road Central, Sheung Wan, Hong Kong Tel: (852) 39550277 www.complianceone.hk

ComplianceOne Newsletter – March 2022The topics discussed in this monthly newsletter are as follows:1 SFC emph ComplianceOne Newsletter – March 2022 ComplianceOne Newsletter – March 2022 The topics discussed in this monthly newsletter are as follows: 1. SFC emphasizes the importance of Business Continuity Planning ( BCP ) amidst latest COVID-19 situation 2. The requirement of End-To-End (E2E) Test for systems relating to Hong Kong Investor Identification Regime ( HKIDR ) 3. SFC Waives the annual licensing fee 4. Reminder to complete BRMQ by 30 April 2022 5. SFC reprimands and fines HSBC Securities Brokers (Asia) Limited $6.3 million for regulatory breaches 6. SFC reprimands and fines Emperor Securities Limited and Emperor Futures Limited $5.4 million for breaches of anti-money laundering regulatory requirements MARKET NEWS 1. SFC emphasizes the importance of BCP amidst latest COVID-19 situation Amidst the acute situation of the fifth wave of COVID-19 infections in Hong Kong, the SFC again reminds licensed corporations to review and update their business continuity plan ( BCP ). As the HKSAR Government has announced its intention to implement a Compulsory Universal Testing ( CUT ) scheme, albeit its timing and details have not been announced yet, licensed corporations should start preparing now considering the number of actions that may need to be taken in advance. Specifically, licensed corporations should critically assess the impact of sudden disruptive events such as the scenarios of temporary staff shortages or reduced service offerings by essential vendors and service providers, as a result of positive cases identified before or during the CUT scheme, and take steps to manage associated risks to ensure that their business operations and client interests are not unduly affected. Significance: Even the number of infected victims decreased recently, and the CUT scheme is temporary postponed, a BCP which should still be in place for every licensed corporation as something as "need-to-do". Preparing a BCP commensurate with its operational scale poses an insurmountable burden for those small-size brokers within which there is only one staff for each functional role, or even one staff to take several roles. Having considered that there is still a regulatory requirement of "segregation of duties" which governs that a single staff cannot assume roles of front end and back office at the same time which further complicates any job rotations to fill the gap of infected staff of any designated role. 2. The requirement of End-To-End (E2E) Test for systems relating to HKIDR Reference is made to the Circular on 13 September 2021 regarding the roadmap to implement the HKIDR and Over-the-counter Securities Transactions Reporting Regime (OTCR). To enable Relevant Regulated Intermediaries (RRIs) to get ready for the implementation of the HKIDR, an E2E Test will start between mid-May and June 2022 . It is mandatory for all RRIs to participate in the E2E Test. The E2E Test will cover: (i) the submission of the BCAN-CID Mapping File and Reporting Forms to the Stock Exchange of Hong Kong’s (SEHK) data repository (applicable to all RRIs), as well as (ii) the test on BCAN tagging for order submission to the SEHK trading system (applicable to RRIs who are Exchange Participants only). The following two set of documents will be published by SEHK by the end of March 2022: 1. E2E Test package; and 2. HKIDR File Transfer Connectivity Guide The exact start date of the E2E Test will be further announced in mid-April 2022 . Significance: Currently when the SFC begins an investigation, it is only possible to identify exchange participants (i.e. the brokers) which place securities orders directly through the HKEX trading system. In case the SFC intends to detect any suspicious trading activities, it is necessary to obtain information from brokers in order to identify the actual individual or any entity behind the scene where trades orders are placed. With the introduction of the HKIDR, any relevant information concerning the individual/ entity who places orders can be spot out directly with reference to the submitted BCAN-CID information provided by the brokers. From the brokers’ point of view, there will be a great burden to kick off given the complicated operational and technical procedures to be fulfilled before they can participate successfully in the E2E Test, examples are the generation of BCANs, preparation of the BCAN-CID Mapping File as well as submission of the Reporting Forms. Brokers, especially the EPs, have to make good preparation in understanding the entire BCAN regime and requirements beforehand, or otherwise it will be very time-consuming to implement remedial measures to revert and start all over again! Most of all, failure to comply with the BCAN-CID requirements is construed as a breach of the HKEX trading rules and induces reprimand from the SFC! 3. SFC Waived the annual licensing fee The Securities and Futures Commission (SFC) will waive the annual licensing fees of all intermediaries and licensed individuals incurred during the period from 1 April 2022 to 31 March 2023. The SFC will not issue the usual demands for payment for annual licensing fees which would ordinarily become payable during this one-year period. Payments of all other fees, including for licence applications and transfers, will not be affected. 4. Reminder to complete BRMQ by 30 April 2022 Licensed corporations are reminded that the deadline to submit the Business and Risk Management Questionnaire (BRMQ) via WINGS, the latest common flatform for electronic forms and submission, is 30 April 2022. ENFORCEMENT NEWS 5. SFC reprimands and fines HSBC Securities Brokers (Asia) Limited $6.3 million for regulatory breaches The Securities and Futures Commission (SFC) has reprimanded and fined HSBC Securities Brokers (Asia) Limited ( HCCB ) $6.3 million for internal control failures and breaches of the Code of Conduct. The SFC found that between September 2018 and September 2021, HCCB failed to ensure compliance with the Rules of the SEHK (Rules of the Exchange) by making multiple errors: (a) in the assignment of the BCAN to its clients who traded A-shares through the China Connect Securities (CCS), (b) in the mapping of CID to BCAN, and (c) in the tagging of BCAN to the clients’ orders. As a result, incorrect BCAN and CID information in relation to 92 clients were submitted to SEHK, involving 3,379,065 orders and 4,202,534 trades . Significance: It was found that the errors were due to deficiencies in HCCB’s client onboarding and BCAN assignment, more seriously the manual nature of account creation procedures and the use of manual process in updating data between their systems with multi-layered data structure. It has been reminded and reiterated in the SFC circulars that the use of manual process should be kept to minimal as practicable as possible in order to avoid any human input errors and manipulations of data integrity. Moreover, it was also found that HCCB erroneously self-matched 370 warrant orders with their market making engine for reason of their insufficient knowledge of the system in handling live orders across trading sessions. It demonstrates expressly the failure of HCCB to act with due skill and diligence in conducting their business, either internally in market making activities, or externally in executing orders on behalf of their clients. 6. SFC reprimands and fines Emperor Securities Limited and Emperor Futures Limited $5.4 million for breaches of AML regulatory requirements The Securities and Futures Commission (SFC) has reprimanded and fined Emperor Securities Limited ( ESL ) and Emperor Futures Limited ( EFL ) (collectively, “ Emperor ”) $5.4 million for failures in complying with anti-money laundering and counter-terrorist financing (AML/CFT) regulatory requirements. The SFC found that Emperor failed to implement adequate and effective policies and procedures to mitigate the risks of money laundering with third party deposits and payments. In particular, (a) with third party fund transfers with no accompanying explanations yet approved, (b) no further inquiries for supporting documents for verification when these are required. Significance: It was obvious that Emperor adopted a lax attitude towards the clients in handling the third-party fund transfer. As a LC, the message from the SFC is so explicit that it would endeavor to combat any breach of AML regulatory requirements; and the continual connivance with facilitating clients in third party transfers is nothing other than a “one way ticket” to disciplinary action by the SFC! 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 cs@complianceone.hk or call us at (852) 39550277. 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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