The topics discussed in this monthly newsletter are as follows: ComplianceOne Newsletter - April 2024 The topics discussed in this monthly newsletter are as follows: 1. China considers to limit investment of offshore Chinese municipal bonds by QDLP 2. Asia’s First Spot Virtual Assets ETFs are launched in Hong Kong 3. HKEX announces the development of ORION Derivatives Platform 4. Hong Kong Government extends the subsidiary scheme for OFC and REIT 5. The joint SFC-HKMA thematic review of the distribution of non-exchange traded investment products 6. Climate-Related Disclosure requirements extended to listed companies 7. OSL as the first to be granted the AMLO license MARKET NEWS 1. China considers to limit investment of offshore Chinese municipal bonds by QDLP On 24 Apr 2024, a report from Reuters revealed the incidence of Mainland China to curb the lavish issuances of offshore bonds through the mechanism of Qualified Domestic Limited Partnership (QDLP) from local municipal governments which were already burdened by the huge local debts. The loosely regulated quota-based QDLP had been launched since 2012, and it has recently come to the attention of the central government that the use of such mechanism for local government offshore debts issuances would attenuate the Beijing government’s efforts to tackle the local debt risks. The China Securities Regulatory Commission (CSRC) made queries to asset managers holding the QDLP licenses of their exposure to offshore debts of “local government financing vehicles (LGFVs, also known as 地方政府融資平台 or 城投平台 ), and how the QDLP quotas were used. It was noticed that the total local government bond issuances reached a new high in January 2024 compared to the highest volume in Nov 2022. SIGNIFICANCE: For reason that the process of obtaining QDLP licenses and raising QDLP funds were handled by around 10 local governments (some examples like Tianjin, Liaoning, Guangxi, Chaongqing etc.) rather than the central government which subsequently made the mechanism one of the loose and flexible investment channels to be taken advantage with. The LGFVs were originally introduced to raise funds for infrastructure projects which recently turned out to be over-invested and aggravated by the plummeting property markets. The Beijing government has pushed forward remedial measures to contain the debt risks, and to halt some ongoing state-owned infrastructures projects as imminent solutions. 2.Asia ’s First Spot Virtual Assets ETFs are launched in Hong Kong On 30 Apr 2024, HKEX was pleased to announce the listing of Asia’s first Spot Virtual Asset (VA) (namely, Bitcoins and Ethereums) ETFs, increasing the diversity of products tradeable in the Hong Kong’s markets and further manifesting Hong Kong as the leading ETF marketplace in the region nearby. A snapshot of the Spot VA ETFs is as below: The three ETF issuers are China Asset Management (Hong Kong) Limited , Harvest Global Investments Co., Ltd , and Bosera Asset Management (International) Co., Limited . Following the successful launch of the VA Futures ETF in late 2022, turnover of the total three VA Future ETFs increased a few folds from HKD$8.9 million to HKD$51.3 million in the first quarter of 2024. The parallel launches of spot VAs and VA futures ETFs enhance the liquidity in the ETFs markets and provide more flexibilities to accommodate investors with variegated risk profiles and investment horizons. SIGNIFICANCE: The accesses to spot VAs through exposures in ETF channels provide an alternative to traditional investors, both professional investors and retail investors who are still sceptical and conservative to the new crypto exchanges, by directly participating through the conventional HKEX they are familiar with. Yet, brokers providing accesses to retail clientele should still be mindful of providing sufficient risk disclosure and assessment of the clients' knowledge in the products in a compliant manner as a matter of suitability requirements. Some interesting product features of these Spot VA ETFs from their futures ETF counterparts are that in-kind subscriptions and in-kind redemptions are available which facilitate investors who have already invested in spot VAs to shift to their corresponding proxy, i.e. the ETFs. 3. HKEX announces the development of ORION Derivatives Platform On 18 April 2024, the HKEX announced the development of the Orion Derivatives Platform ( ODP ), offering enhanced trading, clearing and risk management capabilities. This new in-house developed platform is expected to be launched in 2028, which will help elevate the competitiveness of the HKEX in the global derivative marketplace. The HKEx is dedicated to building “future-ready” technology platforms and operations as its priority to advocate the market participants in delivering long-term, sustainable growth and development. The ODP platform will be built on a modular architecture, making it easier to introduce new products, enhance microstructure and add new capabilities to the market. ODP will offer enhanced trading and clearing capabilities to clients, including the potential of near 24-hour trading, additional order types, an industry-standard interface, as well as an enhanced testing and onboarding experience. The launch of ODP demonstrates HKEX’s ongoing strategic commitment to driving innovations in our financial markets through the development of best-in-class technology platforms. SIGNIFICANCE: As the new HKEX Chief Executive Officer, Bonnie Y Chan, has said: “ Developing an in-house platform that is adaptable, efficient, and scalable, and would give us a unique competitive advantage in the global derivatives space. The launch of ODP will strengthen HKEX’s capability to support the needs of global investors, and cement Hong Kong’s leading position as Asia’s risk management centre and an international financial centre .” 4. Hong Kong Government extends the subsidiary scheme for OFC and REIT On 26 Apr 2024, the SFC announced the details of the three-year extension of the Government’s grant scheme to subsidise the setting up of open-ended fund companies (OFCs) and real estate investment trusts (REITs) in Hong Kong. To further attract the set-up of OFCs to be incorporated in or re-domiciled to Hong Kong and the SFC-authorized REITs, the extended scheme covers up to 70% of eligible expenses, subject to a cap of HKD$1 million per publicly offered OFC, HKD$500,000 per privately offered OFC and $8 million per REIT. The grant scheme has been well-received since its inception in May 2021. and the extension by the Government for another three years will definitely help boost Hong Kong’s competitiveness and development as a preferred fund domicile for such a diversified industry regime. Up to end of Apr 2024, there were 86 public OFCs and 877 private OFCs registered under the SFC. The extended scheme will be available for applications from 10 May 2024 to 9 May 2027 on a first-come-first-served basis. Detailed eligibility criteria of the scheme are enclosed in SFC Eligibility criteria of the grant scheme for OFCs and REITs for OFCs opting for it. 5. The joint SFC-HKMA thematic review of the distribution of non-exchange traded investment products On 18 Apr 2024, a thematic review conducted by HKMA and SFC jointly had identified some issues on intermediaries’ practices in performing product due diligence (“PDD”) and suitability requirement (“SBR”); remedial measures by intermediaries are required to address the issues accordingly. Some key findings of the review are as follows: (1) The assignments of risk rating to investment products as part of PDD do not incorporate crucial factors like the leverage deployed, credit events relating to the product issuers, heightened market risks, adverse political environments and the like. (2) Intermediaries were exposed to the risks of making inappropriate recommendations to clients if the risk return profiles of the products were not adequately assessed and accurately reflected in the product risk ratings used for the suitability assessment. (3) Structured products were the most prevalent type of non-exchange traded investment products sold by intermediaries; the risks inherent in the format the products were structured could be unlimited or far beyond what the investors have expected to bear. (4) Some salespersons may not have the required knowledge to explain to the investors the characteristics and risks of the structured products; and it is imperative for the intermediaries to provide adequate training to the relevant staff. (5) Intermediaries are reminded to exercise due skill, care and diligence in selecting investment products for different risk categories of clients and reach an assessment of the products commensurate with the client’s profile. (6) All intermediaries are reminded of their obligations to: (i) give due consideration to all the relevant circumstances specific to a client; (ii) disclose all the relevant information to a client in order that informed investment decisions can be made. 6. Climate-Related Disclosure requirements extended to listed companies On 19 Apr 2024, The Stock Exchange of Hong Kong (SEHK) published its consultation conclusions on the enhancement of climate-related disclosure (“CRD”) requirements for listed companies in HK. The new CRD requirements, effective from 1 January 2025, is the first step to align local sustainability disclosure requirements with the IFRS Sustainability Disclosure Standards . To facilitate the launch, SEHK has also published an Implementation Guidance to assist listed companies to kick off the new regime which will be implemented on a balanced and phased approach. SIGNIFICANCE: As Ms Julia Leung, SFC’s Chief Executive Officer, has said: “ The new regime on climate-related disclosures will give listed companies in Hong Kong a head-start in speaking the common international language of the International Sustainability Standards Board (ISSB) to the investing public and capital markets. ” The vogue for green finance has been sweeping over financial markets across various regions, the SFC has played the pioneer role in formulating guidelines for licensed corporations engaged in funds management to comply with the Climate-Related Risk Disclosure Requirements by the end of Nov 2022. 7. OSL as the first to be granted the AMLO license OSL Digital Securities Limited (“OSL”) is the first service provider to be granted a license under the AML and CTF Ordinances (“AMLO”) by the SFC on 19 April 2024. Up to now, only OSL is the first to be granted two licenses under the new dual licensing regime with both the SFO license (for security tokens) and AMLO license (for non-security tokens) at the same time. SIGNIFICANCE: To facilitate and ensure a seamless regulatory transition, a “dual licensing regime” had been introduced where existing services providers had to submit an application during the transition period from 1 Jun 2023 to 31 May 2024 with deadline for application submission on 29 Feb 2024. Those applicants which could meet the regulatory requirements were deemed to be licensed to operate on or after 1 Jun 2024 until a final decision has been made by the SFC on their license applications. If the SFC considers that some existing service providers (the applicants) cannot meet the relevant requirements of the transitional arrangement, a “No-deeming notice” will be issued to these applicants, together with those services providers which did not submit any applications before the deadline, will have to cease operation by 31 May this year. 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

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The topics discussed in this monthly newsletter for insurance are as follows: ComplianceOne Insurance Newsletter – April 2026 The topics discussed in this monthly newsletter are as follows: Market News Insurance Authority Hosts the Third Insurance-Linked Securities Conference IA Statistics Shows 29.7% Growth in Total Gross Premiums for the Year of 2025 HKFI Study Reveals Post-Pandemic Private Health Insurance Expenditure Surged by Over 60% in Four Years Enforcement News Police Arrest 53-Year-Old CEO of Licensed Insurance Broker Company for Alleged Theft of HK$43 Million Markets News 1. Insurance Authority Hosts the Third Insurance-Linked Securities Conference On the 22 of April 2026, the Insurance Authority (“IA”) hosted the third Insurance-linked securities (“ILS”) Conference in Hong Kong, gathering over 120 institutional investors, reinsurers, insurers and professional service providers. The event served as a platform to share market insights, foster industry partnerships, and advance Hong Kong’s strategic positioning as a leading Centre for alternative risk transfer. **Source: Insurance Authority Press Releases - 22 April 2026 **To understand more about ILS, please refer to the ILS website for further details. The event featured three panel discussions covering: i) global and Asian ILS ecosystems; ii) the strategic role of ILS in asset allocation for institutional portfolios; and iii) sharing of first-hand experience to clarify common misperceptions. Source Speech from Mr. Stephen YIU, Chairman of the IA Mr. YIU highlighted in his opening remarks that alternative investments are attracting unprecedented attention from institutional investors seeking balanced risk-adjusted returns amid rising global uncertainties, as reflected in the significant capital flows into ILS products globally. Mr. Yiu further noted Hong Kong’s unique competitive advantages for developing an ILS ecosystem, including its open and sophisticated financial market, it’s distinctive connectivity with Mainland China, and the presence of approximately 3,380 family offices, all of which position Hong Kong as an ideal platform to promote alternative risk transfer tools. SIGN IFICAN CE: This conference reinforces Hong Kong’s strategic position as a premier ILS hub in Asia. By convening key stakeholders and showcasing ILS as both an innovative alternative risk transfer tool and an attractive investment class, the IA continues to drive market development, attract global capital and strengthen the city’s role as a leading international risk management centre amid evolving global uncertainties. 2. IA Statistics Shows 29.7% Growth in Total Gross Premiums for the Year of 2025 On 24 April 2026, the IA released provisional statistics for the full year 2025. The data reflects continued robust performance across Hong Kong’s insurance sector, with total gross premiums reaching HK$827 billion, representing a 29.7% year-on-year increase. Long Term Business New office premiums surged 50.6% to HK$330.9 billion, primarily driven by Non-Linked individual business of HK$312.1 billion (up 49.9%). Within this, participating business rose 55.1% to HK$282.8 billion. Linked individual business increased 65.4% to HK$18.5 billion. Approximately 59,000 Qualifying Deferred Annuity Policies were issued, contributing HK$3.7 billion or 1.1% of total individual business premiums. In-force long-term business revenue premiums totaled HK$718.5 billion (up 33.7%), with claims and benefits paid amounting to HK$363 billion (up 3%). Total long-term assets grew to $5,398 billion, with net assets $744.3 billion. General Business Gross premiums reached HK$108.5 billion (up 8%) and net premiums HK$74.1 billion (up 6.3%). Gross claims paid totalled HK$55.4 billion (up 4.5%). Overall operating profit was HK$11.4 billion (up 39.7%), of which underwriting profit was HK$2.9 billion (down 12.5%). **For more details, please refer to the summary of the provisional statistics is at Annex .** SIGNIFICANCE: The 2025 provisional statistics underscore the resilience and strong momentum of Hong Kong’s insurance industry, with double-digit growth in long-term new business premiums—particularly participating policies—driven by sustained demand for protection and savings products. While general business operating profit improved overall, specific underwriting challenges (such as the Wang Fuk Court fire impact) were noted in certain segments. These figures reinforce Hong Kong’s position as a leading insurance hub in Asia and offer valuable insights for insurers, intermediaries, and policyholders ahead of the final audited results. 3. HKFI Study Reveals Post-Pandemic Private Health Insurance Expenditure Surged by Over 60% in Four Years On 28 April 2026, the Hong Kong Federation of Insurers (“HKFI”) announced the findings of the study titled “Determinants of Post-Pandemic Medical Inflation: An Analysis of Private Insurance Claims Data in Hong Kong”. Commissioned by the HKFI and conducted by the Centre for Ageing and Healthcare Management Research of The Hong Kong Polytechnic University’s College of Professional and Continuing Education (“PolyU CPCE”), the research analysed over ten million inpatient and outpatient claim records from 2019 to 2023. The study found that overall medical expenditure in Hong Kong’s private medical insurance market increased by over 60% in four years, representing a double-digit compound annual growth rate. The primary driver was a sharp increase of 68% in the frequency of inpatient claim (especially day procedures), rather than an increase in the unit price of medical services. Key Inpatient Claim Changes (2019 vs 2023) Metric Changes In 4 Years Overall Medical Expenditure Increase of over 60% Inpatient Claim Frequency Increased sharply by 68% in four years. Small to Medium Claims (i.e. HK$5,000–15,000) Number of cases grew by about 80%. Large Claims (i.e. over HK$100,000) Number of cases more than doubled. Room and Board Claims Grew by less than 30% (Primarily came from day procedures rather than traditional hospital stays.) The surge in claim frequency was most evident in digestive system diseases (e.g. gastritis, duodenitis and gastro-colonoscopy procedures) and viral conditions. Outpatient trends showed a shift toward higher-cost services: GP visits fell nearly 20%, while claims for Chinese medicine practitioners, physiotherapists and chiropractors rose 40–70%, with significantly higher average claim amounts. Policy Design Impact: Group plans recorded average inpatient claims approximately 40% lower than individual plans, and panel-doctor usage reduced costs by over 40%. Voluntary Health Insurance Scheme (VHIS) plans also showed modestly lower claims than non-VHIS individual policies. Demographic Pressures: Medical expenses rise sharply with age, with the 75+ group incurring the highest average bills. Females claimed more frequently, while males had higher average inpatient costs per claim. **For more details, please refer to the summary of the Executive Summary of Research Report and the Presentation Deck ** SIGNIFICANCE: The HKFI-PolyU study highlights a structural shift in Hong Kong’s private health insurance market. Post-pandemic behavioural changes and increased utilisation of day procedures and specialist services have driven sustained double-digit medical inflation. With an ageing population and rising chronic disease prevalence, the findings underscore the urgent need for multi-stakeholder collaboration among individuals, employers, insurers, healthcare providers and the Government to enhance cost control, promote prudent utilisation and ensure the long-term affordability and sustainability of private medical insurance. The research provides evidence-based insights to support policy discussions on medical network utilisation, product design and preventive care strategies. Prof. Peter YUEN, Dean of PolyU CPCE, stated: “This study clearly indicates that overall health insurance claims increased very substantially after the pandemic. Such an increase, if it continues at the same rate, will raise serious questions about private health insurance affordability for employers and individuals.” Ms Selina LAU, Chief Executive of the HKFI, said: “The results reveal that the continuous surge in Hong Kong’s medical expense is no longer an issue for the insurance industry alone but a heavy price for society as a whole to pay. We will discuss with the authorities and relevant stakeholders how to address this issue that affects the long-term well-being of Hong Kong.” Enforcement News 4. Police Arrest 53-Year-Old CEO of Licensed Insurance Broker Company for Alleged Theft of HK$43 Million On 13 April 2026, a 53-year-old woman surnamed HO (“HO”), the Chief Executive Officer of a licensed insurance broker company (which also operates as a wealth management firm), was arrested by the Hong Kong Police on suspicion of theft. The company is located at 18 Salisbury Road, Tsim Sha Tsui. **Source: MingPao Article - 14 April 2026 ** Case Summary According to reports, a shareholder discovered in January 2026 that the company’s bank account had insufficient funds, resulting in delayed payment of staff salaries and client commissions. Further investigation revealed that over HK$43 million had been transferred without authorisation from the company’s account to Ms. HO’s personal account. When questioned, Ms. HO admitted to taking the funds. The shareholder immediately reported the matter to the police. No disciplinary action or announcement has been issued by the IA. The matter remains under active police investigation with no court proceedings reported to date. SIGNIFICANCE: This case underscores the critical importance of robust internal controls, segregation of duties and independent oversight within licensed insurance broker companies. As a holder of an IA licence, the firm and its responsible officers are subject to strict fit-and-proper requirements under the Insurance Ordinance. Any proven misconduct of this nature could lead to licence suspension or revocation, in addition to criminal prosecution. The incident serves as a timely reminder to all licensed intermediaries and appointing principals to strengthen financial governance and early-detection mechanisms to protect client monies and maintain public trust in Hong Kong’s insurance intermediary sector. [End of ComplianceOne Insurance Newsletter – April 2026] 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

The topics discussed in this monthly newsletter for insurance are as follows: ComplianceOne Insurance Newsletter – December 2025 The topics discussed in this monthly newsletter are as follows: Market News IA Continues Coordinating with the Industry to Provide Assistance to People Affected by Wang Fuk Court Fire with Insurance Payouts Exceeding $257 Million Subdued Market Response to Indexed Universal Life (IUL) Products; Industry Seeks Improvements Key Summary of the 8th Asian Insurance Forum Market News 1. IA Continues Coordinating with the Industry to Provide Assistance to People Affected by Wang Fuk Court Fire with Insurance Payouts Exceeding $257 Million In the three weeks since the fire at Wang Fuk Court in Tai Po on 19 December 2025, the Insurance Authority (“ IA ”) has been actively coordinating with the insurance industry to deploy resources and provide appropriate assistance to the affected residents. According to the latest figures, total insurance payouts by insurers have already exceeded $257 million. Policies and Claims For life insurance, residents of Wang Fuk Court hold a total of approximately 10,660 policies issued by 36 insurers, primarily comprising whole life, annuity/endowment, and medical/critical illness plans. 17 insurers involved in claims cases have successfully contacted the relevant policy holders or beneficiaries regarding 149 claims. Of these, 109 claims have been settled with payouts totaling $41.5 million. Another 40 cases are being processed, involving an estimated claims amount of around $11.8 million. For general insurance, residents of Wang Fuk Court hold a total of approximately 1,800 policies issued by 35 insurers, primarily comprising home, medical, and personal accident plans. 34 insurers involved in claims cases have successfully contacted the policy holders or claimants regarding 1,038 claims, with total payouts of around $204 million. SIGNIFICANCE: Mr. Clement CHEUNG, Chief Executive Officer of the IA, said, “The IA will continue to enhance industry relief measures to proactively reach out to the people affected, helping them overcome this difficult time.” Ms. Selina LAU, Chief Executive of the Hong Kong Federation of Insurers (“ HKFI ”), said, "Within an exceptionally short period, insurance companies made special arrangements to disburse over $250 million in compensation to the fire victims, underscoring the vital role of insurance in times of crisis." 2. Subdued Market Response to Indexed Universal Life (IUL) Products; Industry Seeks Improvements 13 March 2025, the IA and Hong Kong Monetary Authority (“ HKMA ”) issued a circular to clarify the regulatory framework for Indexed Universal Life (“ IUL ”) products sold to Professional Investors (“ PIs ”), effectively greenlighting their launch in the Hong Kong market. Approximately six months after their introduction, market reception has been less enthusiastic than anticipated. The HKFI recently consulted industry stakeholders to review potential enhancements. Factors Contributing to Subdued Sales IUL products are restricted to PIs, with insurers prohibited from public promotion. The IA’s circular and practice note issued on 31 July 2025, stipulate that commissions to insurance intermediaries must be spread over several years, rather than concentrated in the first year, which may diminish intermediaries' motivation to sell these products. IUL products have a straightforward structure, typically tracking market indices with floor guarantees and return caps. Such products have performed well in markets like Singapore. However, in Hong Kong, the niche positioning limits appeal—PIs can already access similar overseas offerings through private banks or wealth managers. Some eligible individuals hesitate to declare PI status, fearing reduced protections in disputes, which adds to sales challenges. IA's Response and Ongoing Dialogue In response, the IA stated that the clarification aims to expand product options for high-net-worth clients while safeguarding policyholders. As the products are still relatively new to the market, time is needed for clients to become familiar with them. The IA maintains close communication with the industry, including through the HKFI, to gather feedback and explore ways to develop the high-net-worth product segment further, all while prioritizing policyholder protection to meet wealth management needs. Insights from Leading Insurers HSBC Insurance commented that the market for these products is gradually maturing, with advancements in product design, regulatory frameworks, and client services aligning with international standards. Looking ahead, the company plans to collaborate with industry peers and regulators to bolster Hong Kong's competitiveness in the IUL space, driving deeper and more professional market development to fuel long-term prosperity in the insurance sector. Sun Life emphasized its position as the first insurer in Hong Kong to offer IUL products, which strengthens its high-net-worth client strategy. This addition enriches its diversified product portfolio, providing PIs with comprehensive wealth planning solutions. SIGNIFICANCE: The lukewarm response to IUL products highlights the challenges of introducing innovative financial instruments in a regulated environment, particularly for niche segments like high-net-worth individuals. By addressing feedback on restrictions, promotions, and commission structures, the IA and industry can refine the framework to enhance adoption, fostering greater product diversity and competition. This evolution supports Hong Kong's ambition as a leading wealth management hub, balancing innovation with robust policyholder safeguards amid growing demand from sophisticated investors. 3. Key Summary of the 8th Asian Insurance Forum The 8th edition of the Asian Insurance Forum, organised by the IA, took place on 8 December 2025, attracting a record turnout of 4,000 participants attending either in person or online. The forum provided valuable insights into key issues shaping the future of the insurance industry. Please refer to the event website for more details. Chairman of the IA - Mr. YIU Stephen ("YIU") YIU highlighted the forum's theme, “Navigating Uncertainties and Embracing Innovation.” He noted that this theme captures the challenges faced by regulators in fostering development amid uncertainties such as climate change, demographic shifts, economic volatilities, geopolitical tensions, and trade disputes. “It compels us not only to navigate with foresight and agility, but also to embrace innovation with inclusion and governance,” he said. Vice Minister of the National Financial Regulatory Administration - Mr. XIAO Yuanqi ("XIAO") XIAO delivered a keynote speech sharing perspectives on several challenges confronting the global insurance sector, including interest rate risk management, climate change, AI applications, regulatory issues stemming from increasing interconnections between insurers and other non-bank financial assets, and evolving insurers’ business models. Mr. XIAO also emphasized the importance of enhanced collaboration between the Chinese Mainland and Hong Kong, stating, “Hong Kong has a highly advanced insurance industry. Its insurance density and penetration remain world-leading. The Mainland insurance industry is moving toward high-quality development. We will continue to strengthen bilateral cooperation with Hong Kong, and support its role as an international financial centre.” Deputy Secretary General and Head of Capital and Financial Stability of the International Association of Insurance Supervisors - Mr. PASEROT Romain ("PASEROT") PASEROT elaborated on the latest developments in standard setting and regulatory collaboration. “As the risks we face become ever more interconnected and cross-sectoral, collaboration with global policymakers and international fora is more vital than ever,” he said. “Whether it is implementing the Insurance Capital Standard, addressing structural shifts in the life insurance sector, or closing protection gaps, our shared challenges require shared solutions.” SIGNIFICANCE: This forum underscores the IA's leadership in promoting dialogue on critical industry issues, fostering international collaboration, and driving innovation to address global uncertainties. By bringing together regulators, experts, and stakeholders, it reinforces Hong Kong's position as a premier insurance hub, encouraging sustainable practices that enhance resilience, policyholder protection, and high-quality development in the sector. The record attendance reflects growing industry interest in these topics, signaling opportunities for ongoing cooperation between Hong Kong and the Chinese Mainland. [End of ComplianceOne Insurance Newsletter – December 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

The Hong Kong Government will implement enhanced regulations for licensed money lenders in two phases. The first phase in August 2026 introduces a Debt Servicing Ratio (DSR) cap for low-income borrowers and bans the use of loan referees. The second phase in June 2027 mandates... ComplianceOne's Impact Analysis : New Money Lending Regulations (Effective August 2026 and June 2027) - (March 2026) The Hong Kong Government will implement enhanced regulations for licensed money lenders in two phases. The first phase in August 2026 introduces a Debt Servicing Ratio (DSR) cap for low-income borrowers and bans the use of loan referees. The second phase in June 2027 mandates the sharing of borrower data with the credit reference platform "Credit Data Smart" (CDS). I. For Clients Applying for a Money Lender's Licence (ML) 1. Stricter Licensing Conditions (Impact on Business Model) The Government is amending the licensing conditions and administrative guidelines for money lenders. As a new applicant, you must demonstrate from the outset your ability to comply with the new DSR caps and credit data reporting requirements. Consequently, your business model and loan origination systems must be designed to automatically verify borrower income and accurately calculate the DSR cap. Borrower's monthly income Debt servicing ratio cap HK$6,000 or less Not exceeding 35% From HK$6,001 to HK$12,000 Not exceeding 40% Non-compliance will directly violate licensing conditions. 2. Mandated System Upgrades & Data Governance By June 2027, all licensees engaged in unsecured personal loans must join the CDS platform and upload borrower data (including credit limits and repayment records) every 30 days. For new licensees, this represents a significant operational and IT setup cost from the outset. You must establish robust systems for data collection, encryption, and secure transmission to meet strict data governance requirements. 3. Changes to Loan Portfolio & Risk Strategy The DSR cap effectively sets a maximum loan amount. For example, for a borrower earning HK$6,000, the maximum loan principal is approximately HK$22,246. This limits the potential revenue from low-income customers. This cap, combined with mandatory CDS data sharing, is designed to prevent borrowers from over-leveraging across multiple lenders. While this will reduce the risk of default due to hidden debts, it will also significantly shrink the total addressable market for high-risk, high-interest loans. The industry is expected to "shuffle", potentially leaving only compliant and high-quality finance companies sustainable. 4. Prohibition of Common Industry Practices The ban on requiring a "loan referee" removes a previously common method for contact and implicit pressure for repayment. You cannot rely on this practice. Your marketing and debt collection strategies must be comprehensively revised to comply with the new regulations. II. For Clients Using Our External Audit Services 1. Verification of Compliance with New Regulations Revenue Recognition & Allowance: Auditors will need to verify that loans issued to low-income borrowers (monthly income below HK$12,000) comply with the legal DSR caps. Loans issued in violation may be considered unenforceable or subject to interest rebates, directly impacting the valuation of the loan portfolio and requiring specific impairment provisions. Compliance Testing: A key area of audit will be testing your company's internal controls for verifying borrower income and calculating the DSR. The audit opinion will need to consider whether the company has effective systems to ensure compliance with these new licensing conditions. 2. CDS Data Reconciliation The new regulations require licensees to upload data to the CDS. Auditors will need to reconcile a sample of the loan book against the data submitted to the credit platform to ensure completeness and accuracy of reporting. This becomes a new area of regulatory reporting that requires audit assurance. 3. Assessment of Going Concern & Business Model If your company's business model relies heavily on high-interest, multi-loan lending to low-income borrowers, you may face significant revenue declines and increased compliance costs. This will directly impact management's assessment of the company's ability to continue as a going concern. 4. Review of Marketing & Collection Practices With the ban on loan referees, auditors will review the company's updated debt collection policies to ensure that the licensee has revised relevant policies and operational procedures in accordance with the regulatory measures. The new requirement for risk warning statements (as specified by the Companies Registry) in advertisements also falls under the purview of a compliance audit. [End of ComplianceOne's Impact Analysis: New Money Lending Regulations (Effective August 2026 and June 2027) – March 2026] 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

The topics discussed in this monthly newsletter are as follows: ComplianceOne Newsletter - November 2023 The topics discussed in this monthly newsletter are as follows: 1. SFC provided detailed guilelines on Tokenised Securities-related Activities 2. HKEX published consultation paper on securities and derivatives trading under severe weather conditions 3. SFC’s Circular to licensed corporations on prudent risk management in providing IPO subscription services 4. The Hong Kong Institute of Certified Public Accountants (“HKICPA”) report on ESG development & assurance 5. China treasury bond futures to be launced in Hong Kong 6. SFC reprimanded and fined Lion Futures Limited $2.8 million for failures in complying with anti-money laundering and counter-terrorist financing (AML/CFT) 7. SFC commenced legal proceedings against First Credit Finance Group Limited ( 8215.HK ) and its former directors 8. SFC commenced legal proceedings against AMTD Global Markets Limited for non-compliance in IPO-related investigations MARKET NEWS 1. SFC provided detailed guilelines on Tokenized Securities-related Activities In the light of growing interest in tokenising traditional financial instruments in the global financial markets, and with an increasing number of intermediaries entering the space to explore the tokenisation of securities and the distribution of Tokenized Securities (“ TKS ”) to their clients; the SFC posted two circulars dated 2 November 2023 to providing guidance to intermediaries in addressing and managing the new risks arising from the use of this new tokenisation technology so that the tokenisation marketplace could be developed in a healthy, responsible and sustainable manner. Tokenisation generally involves the process of recording claims on assets that exist on a traditional ledger onto a programmable platform, which includes the use of distributed ledger technology (“ DLT ”) in the security lifecycle. For simplicity, TKS are traditional financial instruments (e.g. bonds or funds) that are “securities” as defined in section 1 of Part 1 of Schedule 1 to the Securities and Futures Ordinance (Cap. 571) (“ SFO ”) which utilise DLT (such as blockchain technology) or similar technology in their security lifecycle. Given the nature of TKS are fundamentally traditional securities with a tokenisation wrapper , the existing legal and regulatory requirements governing the traditional securities markets continue to apply to TKS. Some key takeaways to bear in mind: (i) There are several common archetypes of DLT networks, including: (a) private-permissioned, closed-loop private network; (b) public-permissioned network with restricted access; (c) public-permissionless network with no restricted access. Ownership risks vary depending on the type of DLT network adopted. (ii) Given that the intermediaries have the new technology in place where the risk of using technology has been mitigated , and tokenization itself should not alter the complexity of the underlying security; whether a Tokenised Security is a complex product or not is based on an assessment of the complexity of its underlying traditional security. (iii) Intermediaries intending to engage in TKS-related activities should have the necessary manpower and expertise to perform due diligence on the TKS based on all the available information to identify the key features and risks involved. (iv) In assessing the risks related to the technical and other aspects of TKS, an intermediary is suggested to take into account the list of non-exhaustive factors set out in Part A of the Appendix of the circular published by SFC for guidelines in details. (v) Intermediaries should make adequate disclosure of relevant material information specific to TKS (including the risks of the TKS) and communicate such information in a clear and easily comprehensible manner to the clients. (vi) The SFC is of the view that there would be no need to impose a mandatory Professional Investor (“ PI ”) only restriction; YET, it should also be noted that an offer of TKS that is not authorized under the Part IV of the SFO or which has not complied with the prospectus regime under the Companies (Winding Up and Miscellaneous Provisions) Ordinance (“ C(WUMP)O ”) could only be made to PIs or pursuant to any other applicable exemption under the Public Offering Regimes; (vii) The SFC would not impose the Terms and Conditions on fund managers managing portfolios investing in TKS meeting the “de minimis threshold” (i.e. 10% of the GAV of the fund) unless the portfolios also invest in virtual assets meeting the “de minimis threshold”; (viii) The VATPs are required to put in place a compensation arrangement approved by the SFC to cover the potential loss of security tokens in compliance with paragraph 10.22 of the Guidelines for Virtual Asset Trading Platform Operators. And the VATP is also required to demonstrate to the SFC’s satisfaction that the risk of financial loss to its clients can be effectively mitigated if the TKS become lost. (ix) TKS are a subset of a broader set of Digital Securities, and in case where Digital Sec which are not TKS are likely to be regarded as “complex products” not be accessible to retails investors. SIGNIFICANCE: Intermediaries which are interested in engaging in any activities involving any Digital Securities (including TKS) should notify and discuss their business plans with their case officer in the SFC in advance. They are further advised to have relevant personnel who possess the knowledge and experience in TKS to ensure compliance with the prevailing regulations and guidelines; and the technological knowhow required to tackle the intrinsic risks in the use of DLT networks as well as related remedial measure to mitigate the hacking risks exposed. 2. HKEX published consultation paper on securities and derivatives trading under severe weather conditions The Hong Kong Exchanges and Clearing Limited (HKEX) published a Consultation Paper on 30 Nov 2023 on the proposed operational model and related arrangements for Hong Kong's securities and derivatives markets to remain operational during severe weather conditions. The consultation will last for eight weeks, ending on 26 January 2024. As HKEX Chief Executive Officer Nicolas Aguzin has said: “ Hong Kong is a major global financial market, as well as being the go-to global risk management and asset allocation centre for the region. …There is proven trusted technology in place to facilitate safe, secure and seamless operations remotely, so it is now time to bring the market in-line with global peers. " Under HKEX's proposals, severe weather conditions will no longer have automatic consequential impact on the continuity of trading. HKEX intends for its securities and derivatives markets, including Southbound and Northbound Stock Connect, derivatives holiday trading and afterhours trading, to be open and available to all local, regional and international investors during severe weather conditions. During a severe weather event, the trading, post-trade and listing arrangements will be substantially the same as those during regular trading days, with some necessary adjustments needed to ensure the market’s operational resilience, and the safety of market participants, as the provision of some services provided via physical outlets would be unavailable HKEX, along with the SFC and HKMA, and with the support of the HKSAR Government, formed a Severe Weather Trading Task Force ( “Task Force” ) in 2023 to solicit responses from the market participants for feasibility of continuous trading under severe weather conditions. In working with the Task Force, the Hong Kong Association of Banks and the Hong Kong Interbank Clearing Limited have confirmed that, during a severe weather event, relevant banking services, such as e-cheque clearance and electronic money transfer channels, will be available from the designated banks and settlement banks of relevant clearing houses of HKEX, to fully support Clearing Participants' operations and money settlement requirements. SIGNIFICANCE: Despite the need to maintain aligned with global markets for a seamless operation of the financial markets under severe weather conditions, personnel safety remains a key consideration in the consultation; and market participants have to work remotely where possible during severe weather events given such devices are in place for the LCs. The priority here for HKSAR as an international financial centre is to ensure a regime of seamless and continuous trading arrangement where investors over the world are able and continue to manage their portfolios and relevant risks, particularly when other overseas underlying markets are still open. According to paragraph 103 of the Consultation Paper, the effective implementation time of the Severe Weather Trading will be in July 2024 , allowing a six-month preparation lead time beforehand. A Summary of the Arrangements is enclosed as APPENDIX I for reference in details in the original circular. 3. SFC’s Circular to licensed corporations on prudent risk management in providing IPO subscription services In the circular 8 November 2023, the SFC reminded licensed corporations (“ LCs ”) to prudently manage their risks in providing initial public offering (“ IPO ”) subscription services and financing to clients with the newly launched “Fast Interface for New Issuance” (“ FINI ”) on 22 November 2023. Despite the modifications of the pre-funding mechanism under the FINI, LCS are required to ensure a prudent risk management and control when providing IPO subscriptions and financing services to their clients. The relevant measures should cover the following areas: I. Prudent credit risk management: (i) ensure that clients have sufficient financial resources to settle obligations related to their IPO subscriptions in full by imposing upfront deposits before accepting the subscription orders; (ii) formualte a prudent credit policy by setting appropriate credit limits for clients having regard to financial capability of the LC, and prevailing market atmosphere amid the IPO process; (iii) properly justify any deviation from the existing credit policy II. Liquidity risk management and safeguarding client subscription deposits: (i) prepare sufficient cash and credit facilities with banks to avoid any settlement defaults; (ii) enusre that house money is sufficient to finance the clients in case the value of shares alloted far exceed the amount of the subscription deposits of the clients; (iii) adequately safeguard clients' subscription deposits by keeping in segregated bank accounts of the LCs. III. Financial risk management: (i) avoid excessive bank borrowing and IPO financing beyond financial capability of the LCs; (ii) critically assess the potential impact of IPO on the liquid capital position, especially the financial resources requirements of the SFO. SIGNIFICANCE: Under the FINI, a clearing participant will only have to arrange its designated bank to confirm the availability of funding for settlement of its subscriptions without actual fund transfer to the issuer until after pricing and balloting. Though benefitted by the FINI arrangement which provides financial facility and flexibility to LCs in IPO business, the LCs should have prudent risk management policies and control procedures in place in return, and the designated banks are also supposed to follow suit for fear that the contingent liabilities from settlement defaults of any clients of the LCs are spilt over to counterparty banks as well. 4. The Hong Kong Institute of Certified Public Accountants (“HKICPA”) report on ESG development & assurance On 14 November 2023, the Hong Kong Institute of Certified Public Accountants (“ HKICPA ”) released a study which found that among the 31 December 2022 year-end companies, amounting to 1882 companies, 141 (7.5%) of the companies had adopted external assurance, compared with the only 85 companies in 2021. The increase was even more obvious in large-market-capitalized companies, jumping from 20% (2021) to 41% (2023), indicating that larger companies are more responding to the fast-moving ESG environment. While the HKICPA pointed out that the slow take up from listed companies can be attributed to the following factors: (i) the assurance is not mandatory; (ii) they are not confident in their own ESG data analysis and collection process; (iii) so far, there has been no widely-adopted set of international standards for ESG reporting. In addition, there are some key findings: (1) The largest companies tend to set clear carbon targets, in particular the HSI companies, which have greater visibility and face more pressure from investors and stakeholders for commitment to sustainability and EGS practices. (2) CPA firms tend to act as external assurers on EGS reports due to their intrinsic training and expertise in the relevant areas. (3) It is suggested to have a board-level ESG committee with an executive director with accounting qualifications to ensure an appropriate priority to ESG issues and their alignment with company values, strategies. SIGNIFICANCE: The findings are extracts from ESG Assurance in Hong Kong 2023: An evolving landscape which provides an indispensable reference for EGS assurance with insightful quantitative findings and guidelines. 5. China treasury bond futures to be launced in Hong Kong On 24 November 2023, the SFC announced that China treasury bond futures contracts would be launched in Hong Kong. Hong Kong Exchanges and Clearing Limited (“ HKEX ”) is making preparations for the launch, including proposing amendments to relevant rules, details and the launch date will be announced soon. The amount of China treasury bonds held by offshore investors has increased steadily since the launch of Bond Connect in 2017. The Mainland Government and regulators strongly support the launch of the China treasury bond futures in Hong Kong as it provides an important risk management tool to facilitate further participation by offshore institutional investors in the Mainland treasury market. SIGNIFICANCE: As Ms Julia Leung, Chief Executive Officer of the SFC, has said, “ This is a key milestone in developing Hong Kong as a premier risk management centre, especially for hedging equities and fixed income products with Mainland assets underlying .” The launch of futures contracts in line with its underlying instruments provides effective risk and hedging tools for easier risk assessment and management, and more opportunities for institutional investors to participate. ENFORCEMENT NEWS 6. SFC reprimanded and fined Lion Futures Limited $2.8 million for failures in complying with anti-money laundering and counter-terrorist financing (AML/CFT) In any announcement on 22 November 2023, the SFC reprimanded and fined Lion Futures Limited (“ LFL ” ) HKD2.85 million for failures in complying with anti-money laundering and counter-terrorist financing (“ AML/CFT ”) and other regulatory requirements between May 2017 and July 2019. The SFC’s investigation found that LFL did not conduct any due diligence on the customer supplied systems (“ CSSs ”) used by five clients for placing orders during the material time. Since these CSSs were connected to LFL’s broker supplied system (“ BSS ”) through the APIs where LFL was not in a position to properly assess and manage the money laundering and terrorist financing risk as users of the sub-accounts under the CSS cannot be easily monitored. In addition, the SFC also found that LFL’s failure to put in place an effective ongoing monitoring system to detect suspicious trading patterns in client accounts resulted in its failure to detect 1,098 self-matched trades in five client accounts. SIGNIFICANCE: LFL is the 7th broker involved in the CSS issues which was connected with a software called Xinguanjia (XGJ) developed and/or provided by Hengxin Software Limited through which a number of sub-account users can operate and trade under the camouflage of an account maintained by a single client of the licensed corporation. A common observable audit trail detectable of this CSS scenario is a large number of self-matched trades under a single account with no discernible trading purposes. The AML Guideline specifies the entry of matching buys and sells in particular securities and futures as an example of situations that might give rise to suspicion of money laundering, as it might create the illusion of trading and be an indication of market manipulation. 7. SFC commenced legal proceedings against First Credit Finance Group Limited ( 8215.HK ) and its former directors On 22 November 2023, the SFC announced its decision to commence legal proceedings under section 214 of the SFO in the Court of First Instance to seek disqualification orders against five former directors (Mr Sin Kwok Lam, Mr Tsang Yan Kwong, Mr Leung Wai Hung, Ms Ho Siu Man, Mr Tong Tai Man Hin) and a former de facto director (Mr Cho Kwai Chee) of First Credit Finance Group Limited (“ First Credit ”) for allegedly breaching their fiduciary duties. The SFC’s investigation found that from December 2015 to June 2017, Cho acted as a de facto director of First Credit. In January 2016, Cho was a placee in a share placement conducted by First Credit, and himself with his brother were also a subscriber; yet First Credit’s respective announcements stated that all the placees and subscribers were independent third parties. The investigation led to the SFC’s allegations that Sin, Tsang, Leung, Ho and Cho breached their duties towards First Credit by (i) failing to disclose Cho’s de facto directorship; and (ii) causing the company to publish false and/or misleading information in the announcements regarding the independence of Cho and/or his brother. As part of the legal action, the SFC was also seeking an order for First Credit to publish the court’s findings in the proceedings so that shareholders of the company would be informed of Cho’s former de facto directorship in the company and the false and/or misleading disclosures made by the company in the announcements. 8. SFC commenced legal proceedings against AMTD Global Markets Limited for non-compliance in IPO-related investigations On 23 November 2023, the SFC announced its decision to commence legal proceedings asking the Court of First Instance to inquire into the circumstances of non-compliance by AMTD Global Markets Limited (“ AMTD ”, currently known as orientiert XYZ Securities Limited) and its former executives with the SFC’s notices in initial public offerings (IPOs)-related investigations. The SFC’s investigations related to suspected employment of fraudulent or deceptive schemes and/or disclosure of false or misleading information in the IPOs of certain listed companies where AMTD was involved as bookrunner, lead manager and underwriter. The SFC issued notices to AMTD seeking records, and AMTD did not fully comply with the notices. If the Court was satisfied with the petition from SFC, AMTD would be ordered to produce the specified records and its former executives to attend interviews, and the Court could punish them as if they had been guilty of contempt of court. 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 To unsubscribe, please click “ unsubscribe ”.

天匯合規線上培訓課程更新（2025）及證監會CPT 要求 天匯合規網上培訓平台 2025年的課程已全面更新，同時符合香港證券及期貨事務監察委員會（證監會）對持續專業培訓（CPT）的要求。 網上培訓課程不僅是對持牌代表（LRs）及負責人員（ROs）主要義務的提醒，這些規定源自證監會的《持續專業培訓指引》，目的是確保從事受規管活動的個人維持專業能力、道德操守，並緊跟行業發展，從而保持其適當性與合適性。 要求 持牌代表（LRs） 負責人員（ROs） 每個曆年最低CPT小時 10小時 （不論從事受規管活動的數量或類型） 12小時 （包括額外2小時專注於監管合規主題） 與受規管活動直接相關的主題小時 至少 5 小時: 涵蓋持牌受規管活動相關主題（例如合規規定、立法與監管標準、業務操守、市場動態、新金融產品、風險管理系統；按各活動佔比分配） 同LRs 道德或合規小時 每年至少 2 小時: （成為LR後首12個月後），涵蓋道德操守（例如誠信、公平、盡責、善意、客觀、客戶最佳利益、公平對待客戶、避免利益衝突、客戶資訊保密）或合規議題（例如金融業法律框架、行為準則、行業指引、內部政策） 同LRs 從事保薦人工作的個人小時 每年至少 2.5 小時: 專注保薦工作相關主題（例如監管規則的技能、知識及其更新），可計入5小時受規管活動要求 同LRs 從事收購守則交易工作的個人小時 每年至少 2.5 小時: 專注收購守則諮詢相關主題（例如監管規則的技能、知識及其更新），可計入5小時受規管活動要求 同LRs 其他注意事項 i. 新入行者（成為LR或RO的首12個月）: 必須完成2小時道德培訓。此可計入年度CPT總小時，但不可用於RO額外2小時或豁免勝任力要求。此項不按比例調整。 ii. 年中首次獲牌的按比例計算: CPT小時（道德要求除外）可依持牌期間比例計算（例如7月1日獲牌為50%）。獲牌前而又是同年完成的培訓，若有相關考試通過證明，可計入CPT小時。 iii. 轉換僱主: 前僱主完成的CPT小時可結轉。新僱主可依賴個人聲明及證據，不需為先前不合規負責，但須確保之後合規。無需按僱傭期分配小時。 iv. 可接受CPT活動: 涉及相關活動的時間，須具實質知識或實務內容及互動性，包括：參與課程、工作坊、講座或研討會（面對面或網上）；附作業的遠距學習；附獨立評估的自學或網上課程（例如評核或測試）；行業研究；發表論文；演講；授課或教學；對行業諮詢文件提供意見；參與證監會監管委員會或正式工作組；午餐講座（計0.5小時）。記錄須證明完成度及持續時間。 v. 非CPT活動: 日常工作、在職訓練、金融新聞或文獻的一般閱讀、無互動活動、語言課程（一般情況）、相同內容的重複CPT活動。超額小時不可轉至下一年。 vi. 記錄保存: 個人須保存CPT活動記錄（例如證書、出席證明、考試成績）至少3年，供證監會查閱。 vii. 年度確認: LRs及ROs須每年透過電子申報向證監會確認前一曆年的合規狀況（或說明不合規原因）。 viii. 額外要求: 證監會可在特定情況下要求額外CPT小時，例如豁免認可行業資格或本地監管框架考試（詳見《勝任指引》）。 **若未能滿足這些要求，可能影響您的適當性及合適性，並導致證監會採取紀律措施。建議提前規劃培訓，確保全面遵守。** 2025年天匯合規線上培訓平台更新 天匯合規線上培訓平台 在2025年已全面更新課程！您可隨時通過以下鏈接： 瀏覽最新課程 選購所需培訓 線上自主學習 即時下載證書及保存記錄 中文版 https://complianceone.thinkific.com/collections/cptzh 英文版 https://complianceone.thinkific.com/pages/cpten 如有進一步查明，歡迎通過以下方式與我們聯絡： 1) WhatsApp: +852 5490 8117 2) 微信: CompOneCS 3) 電郵: cs@complianceone.hk ComplianceOne’s Online Training Course Updated (2025) – CPT Requirements We at ComplianceOne Consulting Limited are committed to supporting your ongoing compliance with the regulatory requirements set forth by the Securities and Futures Commission (“ SFC ”) of Hong Kong. As part of our dedication to excellence, we would like to remind you of the key obligations regarding Continuous Professional Training (“ CPT ”) for Licensed Representatives (“ LRs ”) and Responsible Officers (“ ROs ”). ComplianceOne’s online training platform has updated its 2025 CPT courses - align with the guidelines. These requirements, outlined in the SFC's Guidelines on Continuous Professional Training are designed to ensure that individuals engaging in regulated activities remain competent, ethical, and up-to-date with industry developments. Key SFC CPT Requirements Requirement Licensed Representatives (LRs) Responsible Officers (ROs) Minimum CPT Hours per Calendar Year (Total) 10 hours 12 hours (including 2 additional hours on regulatory compliance topics) Hours on Regulated Activities At least 5 hours: on topics directly relevant to the licensed regulated activities (allocated proportionally to time spent in each activity) Same as LRs Hours on Ethics or Compliance At least 2 hours: per year (after the first 12 months in the industry) on topics like integrity, fairness, conflict avoidance, client confidentiality, legal frameworks, codes of conduct, and internal policies Same as LRs Specialized Hours for Sponsor Work At least 2.5 hours: per year on relevant topics (e.g., regulatory rules for listings), countable toward the 5 hours on regulated activities Same as LRs Specialized Hours for Codes on Takeovers Transactions At least 2.5 hours: per year on relevant advisory topics, countable toward the 5 hours on regulated activities Same as LRs Additional Considerations i. New Joiners (First 12 Months as an LR or RO): Must undertake 2 hours on ethics. This counts toward the annual CPT requirement but cannot be counted toward the 2 additional hours for ROs or used for exemptions from competence requirements. This requirement is not pro-rated. ii. Pro-Ration for Individuals First Licensed During the Year: CPT hours (excluding the ethics requirement for new joiners) can be pro-rated based on the licensed period (e.g., if licensed on July 1, 50% of annual hours apply). Training attended prior to licensing but in the same calendar year can count if a pass in a relevant examination is proven. iii. Change of Employer: CPT hours from the previous employer can be carried forward. The new employer can rely on the individual's declaration and evidence; it is not accountable for prior non-compliance but must ensure ongoing compliance. No need to apportion hours by employment periods. iv. Acceptable CPT Activities: Time spent on relevant activities with significant intellectual/practical content and interaction, including: attending courses/workshops/lectures/seminars (face-to-face or virtual); distance learning with assignments; self-study/online courses with independent assessments (e.g., evaluations or tests); industry research; publication of papers; delivery of speeches; giving lectures/teaching; providing comments to industry consultation papers; attending SFC regulatory committees or formal working groups; luncheon talks (0.5 hour credit). Records must demonstrate fulfillment and duration. v. Unacceptable Activities: Normal working activities, on-the-job training, general reading of financial press or literature, activities without interaction, language courses (generally), repeated CPT activities with the same content. Excess hours cannot be carried forward to the next year. vi. Record-Keeping: Individuals must retain records of CPT activities (e.g., certificates, attendance proofs, examination results) for at least 3 years, available for SFC inspection upon request. vii. Annual Confirmation: LRs and ROs must confirm compliance (or explain non-compliance) annually via electronic returns to the SFC for the previous calendar year. viii. Additional Hours Requirements: The SFC may impose additional CPT hours in certain cases, such as for exemptions from recognized industry qualifications or local regulatory framework papers (refer to Guidelines on Competence). **Failure to meet these requirements may reflect adversely on fitness and properness, potentially leading to disciplinary action by the SFC. We encourage proactive planning to ensure full adherence.** Updated ComplianceOne Online Training Platform for 2025 ComplianceOne’s Online Training Platform has been fully updated in 2025! You can now: Browse the latest courses Purchase required training courses Complete courses online at your own pace Download certificates and keep record English Version: https://complianceone.thinkific.com/pages/cpten Chinese Version: https://complianceone.thinkific.com/collections/cptzh For further inquiries, please contact us via: 1. WhatsApp: +852 5490 8117 2. WeChat: CompOneCS 3. Email: cs@complianceone.hk

Review of Custody of Virtual Assets Compliance Impact Alert: Custody of Virtual Assets Aug 2025 Disclaimer: Contents contained in this document including should not be regarded as a substitute legal and / or compliance advice in any circumstances and shall not be reproduced (in whole or in part), distributed or otherwise passed on to any other person without our prior written consent. Language: English version only I. INTRODUCTION Overview The Securities and Futures Commission (“ SFC ”) has issued a guidance on expected standards for the safe keeping of client’s virtual assets held by SFC-licensed virtual asset trading platform (“ VATP ”) operators and their associated entities (collectively, “ VA Operators ”). Compliance with the guidance will address potential vulnerabilities exposure and provides good market practices to VA Operators. General We do not accept or assume responsibility for the ongoing update of the contents of this Compliance Impact Alert document in accordance with the applicable regulatory requirements nor to any person reliance upon the contents of this document. For the avoidance of doubt, the information contained in this document is for reference only and should not be considered as a complete set of regulatory requirements. In case there is any conflict regarding contents or understanding between this document and the Full Circular, the Full Circular shall prevail. For all purposes, the English version of this document shall be original. In the event of any subsequent translation into any other language, this English language version shall prevail. Construction Unless the context otherwise requires, all terms used in this document shall bear the same meaning as in the Guidelines for Virtual Asset Trading Platform Operators (“ VATP Operator Guideline ”), Management, Supervision and Internal Control Guidelines for Persons Licensed by or Registered with the Securities and Futures Commission (“ Internal Control Guidelines ”).All singular terms and expressions shall have the same meanings in plural forms, and vice versa. A reference to any gender also denotes to other genders. II. OVERSEAS INCIDENTS ON VA PLATFORMS Below highlights the reported cybersecurity incidents affecting overseas virtual asset platforms which resulted in substantial financial losses. 1. Compromised third-party wallet solutions – attackers injected malicious code which altered platform user interface. 2. Inadequate access control – allowed unauthorized access to approval devices. 3. Insufficient systematic and independent verification of transactions – failed to prevent fraudulent activities. 4. Blind approval of transactions - signers approved forged transactions without verifying the details of the content. These incidents highlight critical vulnerabilities in virtual asset custody and offer actionable lessons for institutions, exchanges, and individual users. The SFC conducted a targeted review of VA Operators’ custody control measures to assess their resilience against similar vulnerabilities. Based on its findings, the SFC determined that key control measures implemented by VA Operators were insufficient. To address these gaps, the SFC established minimum requirements as a guide aiming to foster a standardized framework and promoting best practices in virtual asset custody. III. SFC EXPECTED STANDARDS The following standards elaborate on the SFC’s guidance in its VATP Operator Guideline and related FAQs and thematic guidance. Scope Expected Standards 1. Senior Management Responsibilities Ensure effective policies, procedures and internal control are in place. Suitable, qualified and experienced individuals are appointed to oversee the daily operation of the business. At least, one Responsible Officer or Manager-in-Charge to oversee the daily operation related to VA custody. 2. Client Cold Wallet Infrastructure Establish and implement strong internal controls and governance procedures for private key management to ensure all cryptographic seed and private keys are securely generated, stored and backed up. Perform appropriate due diligence on Hardware Security Modules (“ HSM ”) provider before engagement and an ongoing basis. Conduct proper due diligence to ensure that HSM vendor is capable of continuous and committed in maintaining HSM security. 3. Client Cold Wallet Operation Using air-gapped devices for seed and private key generation and safeguarding. Conduct a regular review on any material changes or modifications to processes, systems or authorized personnel before implementation. Implement a robust systematic control to prevent unauthorized transactions from the cold wallet. Using a dedicated device with restricted functionality and limited connectivity for transaction approval, with integrity checks and physical access restrictions. Displaying transaction details in a clear, human-readable format allowing signers to review the information before proceeding. 4. Use of Third-party Providers Maintain continuous oversight, evaluating security controls, incident reporting, and disaster recovery capabilities. Strict segregation of duties and oversight mechanisms for wallet system code management. Establish emergency procedures and conduct regular Business Continuity Plan (“ BCP ”) drills. 5. Ongoing Real-time Threat Monitoring Real-time reconciliation of on-chain client assets with the ledger balance. Ensure alert thresholds are effectively calibrated for timely detection of potential issues. Robust mechanisms to detect unauthorized intrusions to critical wallet infrastructure. Monitoring processes should cover both custody system and its dependencies. Security Operations Centre (“ SOC ”) or equivalent function should ensure 24/7 monitoring on its security processes. Develop a structured framework for handling security alerts and managing incidents according to severity and risk levels. 6. Training and Awareness Transaction signers must undergo comprehensive training to fully understand verification requirements and appropriate handling procedures. Effective manual transaction review or approval to prevent blind signing. These expected standards apply to VA Operators only. However, VA custody expectations tend to be replicated across regulated sectors in Hong Kong. Therefore, it is recommended that anyone providing custody services or custody technology solutions consider these requirements and expected standards to mitigate associated risks. IV. KEY ACTIONS AND RECOMMENDATIONS VA Operators must continuously update their systems and process. Below are the key actions recommended in custody of client’s virtual assets. 1. Evaluate custody framework: Strengthen custody controls aligning with the SFC’s guidance for VA Operators. 2. Conduct regular compliance reviews: Integrate expected standards into periodic evaluations. 3. Monitor developments: Stay updated on evolving best practices and regulatory changes, especially as new threats and vulnerabilities surface. 4. Engage with regulators: Consult the SFC when considering adjustments to existing approaches. The ongoing consultation on virtual asset custodian services presents a timely opportunity for such engagement. V. How We Can Help Our team comprises experienced professionals with deep expertise in compliance, risk management, and policy review and development in identifying gaps between the regulatory expectations in the circular and your current policies and procedures. We understand the complexities of regulatory requirements and provide tailored solutions to meet your specific needs and close any material gaps. Our expertise ensures adherence to regulatory standards and enhances overall compliance practices. If you have any questions, please feel free to reach out to your manager-in-charge or our Compliance Support, or Contact Us .

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

Considering the amendments to the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Chapter 615), a new registration regime for Dealers in Precious Metals and Stones (“DPMS”) on 1 April 2023. Online Training Program for - Dealers in Precious Metals and Stones (DPMS) 貴金屬及寶石交易商 (DPMS) - 線上持續培訓課程 Considering the amendments to the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Chapter 615), a new registration regime for Dealers in Precious Metals and Stones (“DPMS”) on 1 April 2023. The Hong Kong Customs and Excise Department (the “Customs”) is responsible for implementing this system and supervising the compliance of registered dealers with anti-money laundering and counter-terrorist financing (“AML-CFT”) regulations. To help regulated cooperate (including DPMS) stay updated on the latest regulatory requirements, we have launched a series of online courses. These courses are designed to ensure that dealers can grasp and adhere to the latest compliance standards, with content that is continuously updated and revised. Click Thinkific platform link - About the Precious Metals and Stones Dealers Training 根據《打擊洗錢及恐怖分子資金籌集條例》（第615章）的修訂，香港於2023年4月1日引入了貴金屬及寶石交易商（DPMS）的註冊制度。香港海關負責該制度的執行，並監管註冊交易商在打擊洗錢及恐怖分子資金籌集方面的合規性。 為了幫助貴金屬及寶石交易商持續了解最新的法規要求，我們特別開設了一系列在線課程。這些課程旨在確保交易商能夠掌握並遵守最新的合規標準，並會持續更新及修訂内容。 點擊Thinkific平台連結 - 關於貴金屬及寶石交易商培訓課程 Training Program Each session lasts 1 hour and is conducted through the Thinkific platform. After completing the training and passing a short quiz, participants will receive a certificate of participation. You can also log in to Thinkific at any time to review your training records. Intended Audience: Dealers in precious metals and stones Management personnel Compliance officers Money laundering reporting officers Frontline staff Back-office staff New employees Training Topics Include: Registration Guide for DPMS Overview of the registration background for DPMS Obligations and responsibilities AML-CFT requirement Duties for senior management Joint Financial Intelligence Unit - Reporting Suspicious Transactions How to identify suspicious transactions Reporting process and requirements Protective measures and legal responsibilities Case studies and practical applications Conduct and Ethical Definition and importance of business ethics Conduct and integrity Compliance and ethical decision-making Case discussions and industry best practices 關於培訓課程 每節課程為1小時，透過Thinkific平台參與課堂。培訓結束後，只要通過簡短的測驗，即可獲發參與證書。你亦可隨時登錄Thinkific檢閱培訓記錄。 適用人士 : 貴金屬及寶石交易商 管理人員 合規主任 洗錢報告主任 前線職員 後勤職員 新入職人員 課程的題材範圍包括: 貴金屬及寶石交易商註冊指引 金屬及寶石註冊制度的背景簡介 註冊人的責任 相關法例和法定責任 反洗錢系統/制度/核心要求 各職位的責任 聯合財富情報組 - 舉報可疑交易 如何識別可疑交易 舉報流程及要求 保護措施及法律責任 案例分析與實務操作 商業行為和道德標準 商業道德的定義與重要性 職業操守與誠信 法規遵循與道德決策 實例討論與行業最佳實踐 Why ComplianceOne? Professional : Our courses are specifically designed for DPMS to ensure your acknowledgement of the latest compliance knowledge and skills. Flexible: You can log in to Thinkific platform to start or review your training records, anytime, anywhere. Easy access: The Platform supports multiple devices, no installation needed, all you need is a browser. Certification : After finished the training, certificate will be provided for enhancing your professional credentials and credibility. Payment Method: Convenient payment methods by using Visa credit card or PayPal. Courses are valid for 365 days after purchase. During this period, you can log in to Thinkific platform to take course or print certificates at any time. 為什麼選擇天匯合規的網上持續培訓平台？ 專業培訓 ：我們的課程專為貴金屬及寶石交易商設計，確保您獲得最新的合規知識和技能。 靈活學習 ：您可以根據自己的時間安排進行學習，並隨時登入平台檢閱培訓記錄。 簡單易用 ：網上持續培訓平台支援多種裝置，無需安裝，操作簡單。 獲得認證 ：通過簡短測驗後即可獲得參與證書，提升您的專業認證和可信度。 支付方式 ：接受 Visa信用卡或PayPal方式支付，方便快捷。 課程在購買後365天內有效。在此期間，您可以隨時登入Thinkific平台參加課程或列印證書。

The topics discussed in this monthly newsletter are as follows: ComplianceOne Newsletter – Jan 2025 The topics discussed in this monthly newsletter are as follows: REGULATORY UPDATES 1. SFC extends swift licensing process to new VATP applicants 2. Onshore RMB bonds accepted as margin collateral in OTC Clearing Hong Kong Limited 3. SFC expands listed structured fund offerings in Hong Kong MARKET NEWS 4. InvestHK brought a record-breaking number of new companies to Hong Kong in 2024 5. Enhancing sponsors’ expertise to drive GEM advancement 6. HashKey Exchange's Trading Volume Increased by 85% in 2024 7. Hong Kong joins LME global warehouse network ENFORCEMENT NEWS 8. Hang Seng Bank Limited is fined $66.4 million for misconduct in selling investment products 9. Associate Director of SFC charged by ICAC with conspiracy to pervert course of justice 10. The first solicitor convicted of breaching secrecy provision by the SFC 11. Enforcement action against FingerTango Inc. and its former directors by concerted effort of SFC and HKEX 12. MMT sanctions chauffeur and wife for insider dealing before a takeover announcement Regulatory Updates 1. SFC extends swift licensing process to new VATP applicants ON 16 January 2025, the SFC announced that all new virtual asset trading platform (“ VATP ”) applicants can now seek licences under its swift licensing process. This new licensing approach requires VATP applicants to implement their policies, procedures, systems and controls before conducting an external assessment on these measures. The SFC will become a party to the engagement to supervise the overall external assessment process. This extension is made in light of the effectiveness of the SFC’s direct engagement and communication with deemed-to-be-licensed VATP applicants on the regulatory standards during its risk-based on-site inspections of all such applicants. It should be noted that all VATP applicant submitting license applications after 18 December 2024 should refer to the new Circular (dated 16 January 2025) for the updated swift licensing process. Key takeaways of the revamped swift licensing process are as follows: the SFC continues to adopt its engagement and communication with the VATP applicants through the process as before; the new VATP applicant has to submit its licensing application bundle to the SFC for assessment through WINGS, and to engage an external assessor (“ EA ”) to perform an external assessment; after an initial assessment by the SFC of the key personnels of the applicant, and upon acceptance of the license application, the applicant will proceed to deploy its relevant systems and controls; while the applicant is ready for an external assessment, a tripartite agreemen t with the SFC and the EA should be entered; the SFC will scrutinize and be assured that the policies, procedure and system controls (“ P&P ”) of the applicants are suitably designed and implemented; in case of any findings or exceptions, these should be resolved during the external assessment process; upon completion of the external assessment and all other outstanding matters such as capital injection, the SFC will grant a licence to the VATP applicant if it is satisfied that the applicant is then fit and proper to be licensed. What to know about the revamped external assessment? it is expected that there will be substantial changes to P&P of the VATP applicant from its conventional operational routines; as such it would be important to conduct external assessment only after the VATP deploys its systems and controls and evaluate itself if it fully adapts its P&P to ensure that they can operate as intended/ designed; it is also important for the EA to assess if the P&P are suitably designed and implemented by the VATP applicant even though the P&P can operate as intended; the SFC requires opinion from the EA that VATP applicant’s P&P are suitably designed and implemented to comply with the Guidelines specified for VATPs; the SFC, the EA and the VATP applicant should agree on the terms and scope before commencing the assessment. SIGNIFICANCE: The SFC has just granted licences to four deemed-to-be-licensed VATPs in December last year under the newly introduced swift licensing process, the determination of the Commission to give a greenlight in the licensing process to the new applicants is quite obvious. Subject to the new circular in January 2025, new VATP applicants are only required to conduct one external assessment throughout the streamlined licensing application process. 2. Onshore RMB bonds accepted as margin collateral in OTC Clearing Hong Kong Limited Effective 13 January 2025, the OTC Clearing Hong Kong Limited (“ OTC Clear ”) started accepting the Ministry of Finance and Mainland policy banks onshore bonds held under Northbound Bond Connect (“ CGB ”s) by offshore investors as margin collateral for Northbound Swap Connect (“ NBSC ”) transactions. Under the arrangement, the SFC, the People’s Bank of China (“ PBoC ”) and the Hong Kong Monetary Authority (“ HKMA ”) reached a consensus that offshore investors can use CGBs as margin collateral for all other eligible derivative transactions cleared in OTC Clear. In the Circular posted by HKEX dated 16 December 2024, the new eligible collateral can be used to cover initial margin requirements of NBSC , providing greater flexibility to international investors and enhancing their capital efficiency. Ever since its launch in May 2023, the Swap Connect has evolved with smooth operations and steady growth in trading volume, adding vibrancy to the region’s financial markets. SIGNIFICANCE: As Mr Rico Leung, the SFC’s Executive Director of Supervision Markets, has said, “ Global institutional investors can benefit from further reduction in liquidity cost with more efficient use of their onshore RMB bonds as non-cash collateral when clearing with OTC Clear. ” He further added that the new measures strengthen HK’s position as a leading global offshore RMB hub and advancing development of its fixed income market. 3. SFC expands listed structured fund offerings in Hong Kong On 23 January 2025, the SFC sets out new regulatory requirements for product issuers, with a view to broadening the range of listed structured funds that may be offered to the public in Hong Kong, notably adding to their product mix Single Stock Leveraged and Inverse (L&I) Products and Defined Outcome Listed Structured Funds (“ P&F ”). There has been growing interest among the product issuers in launching the P&F in HK amid their appeal to investors. The P&F offer investors who are looking for trading and hedging tools for popular individual stocks listed overseas, as well as for seeking price discovery tools for overseas exposure during Asian trading hours. One distinctive feature of the P&F is that they provide investors with a more customised investment exposure than the prevailing conventional products. In balancing the potential benefits and risks associated with exposure to these complex and novel products, the SFC has in place enhanced regulatory framework with additional safeguards and measure for protecting HK investors. For example, with respect to Single Stock L&I Products, only those referencing a highly liquid mega-cap stock listed on a major overseas exchange is accepted by the SFC, and is subject to a maximum leverage factor of 2X to -2X only. SIGNIFICANCE: With the protective constraints on Single Stock L&I Products imposed by the SFC, it excludes overseas listed stocks which may be dually listed in Hong Kong and stocks listed on any Mainland exchange which are not overseas exchanges; while only a lower leverage factor is accepted aiming to reduce exposure to any single stock volatility. For details of additional requirements, reference can be made to the circular post the same day. Market News 4. InvestHK brought a record-breaking number of new companies to Hong Kong in 2024 On 20 January 2025, the Invest Hong Kong (“ InvestHK ”), a government department of Hong Kong Special Administrative Region (HKSAR) which aims to strengthen Hong Kong’s status as the leading international business location in Asia, announced that the department achieved a record-breaking year of foreign direct investment (“ FDI ”) in 2024, assisting 539 overseas and Mainland companies to set up their business in Hong Kong, which represents a 41% increase compared with 2023, further reflecting the appeal of HK as a leading business hub in the region. The strong FDI performance was driven by investment in diversified and high-valued industries which is estimated to bring to HK over HKD67.7 billion, a record high of near 10 % increase over 2023’ around 6,864 job opportunities are expected to be created during the first year of operation. Taking a look at the figures, the top five locations of origins of these new companies ranked in order are Mainland China, United States, France, The United Kingdom and Singapore; the results reflect full confidence in HK from these enterprises in selecting the city as their base to capture the unique opportunities brought by HK as a “super connector” and a “super value-adder” . Furthermore, more than 800 applications were received through the New Capital Investment Entrant Scheme (“ New CIES ”) by the end of 2024 since its launch last March, bringing around HKD24 billion of investments to the city. SIGNIFICANCE: As Ms Alpha Lau, Director-General of Investment Promotion, has said, “ It demonstrates HK's resilience and adaptability and businesses' strong confidence in the city as the preferred base to expand in the region. ” 5. Enhancing sponsors’ expertise to drive GEM advancement At the seminar “ Hong Kong Capital Market – The Future of GEM ” organised by theAssociation of Hong Kong Capital Market Practitioners, Dr Kelvin Wong, Chairman of the SFC, delivered a keynote speech entitled Enhancing Sponsors’ Value Proposition to Drive GEM Advancement . He emphasised the importance of GEM to small and medium enterprises (SMEs) and Hong Kong’s listing market development. He also discussed how the sponsors of initial public offerings (IPOs) should enhance their value proposition by leveraging their unique roles to strengthen the corporate governance and resilience of companies for their longer-term success. The key points of the speech are as follows: Importance of a robust GEM to SMEs and listing market the secondary board of GEM has served as a source of long-term capital for SMEs to pursue innovation, value creation and business growth, testifying hundreds of both local and Mainland SMEs. SMEs are the backbone of the HK economy and accounted for 98% of the total number of businesses, and employing around 44% of the workforce. GEM enhancements in 2024 there were three GEM lPOs in 2024 raising a total of HK$235 million with a total initial market capitalisation of HK$720 million at listing; under the new streamlined transfer mechanism, three GEM issuers’ applications to transfer to the Main Board had been received by the HKEX; the average sponsor fees increased to HK$6.8 million in 2024, up by 25% compared to 2020. Enhancing sponsors’ value proposition the roles of sponsors and corporate financial advisors are essential in helping their clients ensure regulatory compliance and navigate the complexities of the IPO journey, and in conducting due diligence on the listing applicant’s business to ensure fulfilment of the SFC’s stringent standards, their recommendations are conducive to the sustainable development of companies long after their IPO; sponsors should also critically assess the commercial viability of a company’s business model and ensure the disclosure of accurate and sufficient information to investors. Facilitating corporate sustainability and governance beyond the IPO sponsors can help shape a culture of good corporate governance by discussing the internal control inadequacies with the listing applicant’s board of directors and recommending remedies; finding of research indicates that strong value proposition of reputable sponsors can always bring smaller under-pricing at IPO and lower price volatility post IPO; sponsors can conduct a range of investor relation initiatives and ensuring continuous equity coverage by research analysts, exposing the newly listed companies to persistent scrutiny by public eye through which is then transformed into a driving force for the companies to improve their operations, accountability, disclosure standards, corporate governance, as well as shareholder returns post IPO. Importance of governance to long-term corporate success it must be emphasised corporate governance is crucial to the long-term success of corporates post IPO. Research findings also indicated a high correlation between corporate governance and a company’s profitability and sustainability, a competent board of directors, robust internal controls and management systems as well as effective risk management are indispensable elements for success. Sponsor failures and good practices since sponsor’s rigor of due diligence is pivotal in sustaining HK’s reputation as an international fund-raising hub, the SFC is committed to combating sponsor misconduct with zero tolerance; always alert that any weakening in investors’ confidence would increase difficulties and costs for companies to raise capital. 6. HashKey Exchange's trading volume increased by 85% in 2024 As investors’ interests in virtual assets remain keen, the HashKey Exchange, one of the licensed VATPs in Hong Kong, continues to records with robust growth with its trading volume exceeding HKD 600 billion last year, marking an 85% year-on-year increase. As commented by Mr. Xiao Feng, Chairman and CEO of the parent company HashKey Group, the company is expected to reach breakeven by 2025. Currently, HashKey Exchange offers four cryptocurrencies for retail investors: Bitcoin (BTC), Ethereum (ETH), Avalanche (AVAX), and Chainlink (LINK). Its Chief Risk Officer Mr. Ru Haiyang anticipates more cryptocurrencies will be made available to cope with increasing interests at retail level. The introduction of derivative contracts, options or leveraged trading are still under communication with the regulatory bodies. SIGNIFICANCE: As HaskKey Exchange remains bullish on Bitcoin, the most popular and actively traded crypto to retail investors, trading volume is expected to grow sustainably in 2025. 7. Hong Kong joins LME global warehouse network The London Metal Exchange (“ LME ”) has confirmed, on 20 January 2025, its approval of HK as an LME warehouse location, HK will now join the LME’s existing network of 32 locations over the USA, Europe and Asia. Matthew Chamberlain, LME CEO, said, “The addition of Hong Kong to our global warehousing network is an exciting development, providing warehouse facilities closer to the metals hubs of Mainland China than ever before. The driving factors for such approval are: (i) Hong Kong provides the natural hub for connectivity to the Chinese market which is the world’s largest consumer of metal; (ii) there are keen interests from warehouse, landlords and metal owners in seeing HK as a metal delivery point; (iii) China is a largest net consumption area which is in vicinity to HK; (iv) established local fiscal and regulatory system and access to good transport network are in place in HK. SIGNIFICANCE: At the initial stage, HK is permitted to store LME-registered aluminium alloy, primary aluminium, copper, lead, nickel, tin, and zinc, and it will become an active warehouse location three months after the approval of the first warehouse company. This approval marks another cornerstone in the development of metal trading industry in HK since the HKEX acquired the LME in 2012 for USD2.2 billion. Enforcement News 8. Hang Seng Bank Limited is fined $66.4 million for misconduct in selling investment products The SFC reprimanded and fined Hang Seng Bank Limited (“ HSB ”) $66.4 million for serious regulatory failures in relation to the bank’ s sale of collective investment schemes (“ CIS ”) and derivative products and overcharging its clients and making inadequate disclosure of monetary benefits to them during various periods over the course of nine years between February 2014 and May 2023. A snapshot of the findings: (1) Sales practices in relation to CIS 111 client accounts were found to have executed 100 or more CIS transactions during the material period from 1 June 2016 to 30 November 2017; 46 clients were solicited into conducting excessively frequent transactions which contradicted to their investment perspectives/ horizon; HSB’s internal controls were deficient in monitoring the sales of CIS by their relationship managers. (2) Sales and distribution of derivative products from 17 February 2014 to 19 December 2018, it was found that 388 clients with no knowledge of the nature and risk of derivative products had purchased derivative funds in 629 transactions; while some products were of higher risk levels than the client’s tolerance levels. (3) Overcharging and inadequate disclosure of monetary benefits retained monetary benefits from client transactions in breach of regulatory standards; charged higher transaction fees from clients; failed to adequately disclose trailer fee arrangements to clients; HSB received at least HKD22.4 million in excess benefits/ fees from these transactions from the clients. SIGNIFICANCE: The SFC is of the view that the misconduct of HSB was serious and systemic, and its failure to act with due care and diligence, further aggravated by the lack of proper monitoring of sales distributions and compliance with disclosure requirements, all amounted to the adverse influence on the best interests of its clients. 9. Associate Director of SFC charged by ICAC with conspiracy to pervert course of justice The ICAC announced on 9 January 2025 that Deng Yingxia (“ DENG ”), a then Associate Director of the SFC, was charged by the ICAC with conspiracy to pervert the course of public justice by allegedly providing advice to subjects of an SFC investigation into suspected market manipulation in relation to a listed company on how to conduct themselves in the probe, including destroying potential evidence. The ICAC investigation stemmed from a corruption complaint. After investigation, the ICAC arrested DENG in an operation jointly carried out with the SFC in April 2024. It was alleged that between July 15 and 27, 2022, DENG had conspired with a subject of a Market Manipulation Investigation (relating to China Gas Industry Investment Holdings Company Limited ( 01940.HK )), she met with that person and other subjects of the investigation, and advised them how to answer possible questions posed by the SFC as well as advising them to destroy potential evidence. SIGNIFICANCE: The SFC was committed to render full assistance to the ICAC during investigation of the case. The ICAC, which stands itself out as emblem of upholding the integrity of HK’s financial market, shares the same mission of the SFC; their concerted effort to combat misconduct in the case is a good example to testify to the public that HK remains as a hub of justice and integrity. 10. The first solicitor convicted of breaching secrecy provision by the SFC A Hong Kong practicing solicitor, Mr Tse Yin Fung (“ TSE ”), was convicted today at the Eastern Magistrates’ Courts for violating the secrecy provision under the Securities and Futures Ordinance (“ SFO ”) following a prosecution brought by the SFC, and was fined HKD25,000 together with the payment for investigation costs of the SFC. In the case, TSE, acting as the legal representative of an individual, received confidential information regarding a restriction notice that the SFC had disclosed to that individual, which was subject to the secrecy provision under the SFO. After receiving the confidential information, TSE disclosed the information to two other individuals on 9 February 2021. SIGNIFICANCE: This case marks the first occasion in which a Hong Kong practicing solicitor has been convicted of an offence for contravening the secrecy provision under the SFO. No matter what intention or reason TSE had, as a legal professional, he should maintain the highest standard of professional conduct amid conducting his entrusted duty for his client. 11. Enforcement action against FingerTango Inc. and its former directors by concerted efforts of SFC and HKEX On 16 January 2025, the SFC and the Stock Exchange of Hong Kong Limited (“ Exchange ”) have joined hands in an enforcement action that resulted in the Exchange’s disciplinary actions against a Mainboard-listed FingerTango Inc. (“ Finger ”) ( 06860.HK ) and its eight former directors for misconduct and breach of their duties towards the company and its subsidiaries. Meanwhile, the SFC also sought disqualification and compensation orders from the Court of First Instance (“ CFI ”) for the same alleged misconduct. Snapshot of the legal action: the investigation was concerned with the directors’ misconduct in relation to problematic investments and loans to external parties; at the time of listing, all then directors, including independent non-executive directors, resolved to adopt a policy that would allow certain investment decisions to bypass board approval ; since then, Finger used the proceeds from its IPO to: (i) invest HKD450 million in a fund without knowledge of the board; (ii) partially redeemed the fund and invested another HKD250 million in loan notes (“2019 Loan Notes”); which later turned to be default with a loss of HKD258.75 million; (iii) between May 2020 and March 2021, another 20 loan agreements were entered by Finger and its two subsidiaries with 15 borrowers, totalling HKD500 million (the “2020-21 Loans”), which turned out later with a loss of HKD424 million in default; in the light of the above findings, the SFC expanded the scope of misconduct to include the 2020-21 Loans, with focus on the former directors’ failure to carry out proper procedures and due diligence before entering into loan agreements; SFC is of the view that the losses resulting from the 2019 Loan Notes and 2020-21 Loans were attributable to breaches of the duties of the former directors of Finger, rendering them liable to the compensate the company and its subsidiaries for the incurred losses. SIGNIFICANCE: As SFC’s Executive Director of Enforcement, Mr Christopher Wilson, had commented that corporate directors have the obligations to oversee the activities of management and ensure adequate internal control policies and procedures operate effectively. A lax policy adopted by the directors cannot be considered as an excuse to alleviate their responsibilities. It also conveys the message to the directors and audit committees that they should be mindful of their duties to prevent loss or misuse of listed corporations’ assets. 12. MMT sanctions chauffeur and wife for insider dealing before a takeover announcement The Market Misconduct Tribunal (“ MMT ”) had ordered Ms Choi Ban Yee (“ CHOI ”), the wife of a chauffeur, Mr Sit Yuk Yin (“ SIT ”), who worked for the family of the chairman of Tian An China Investments Company Limited at the material time, to disgorge illicit profit gained from insider dealing in the shares of Asiasec Properties Limited, formerly known as Dan Form Holdings Company Limited (“ Dan Form ”) ( 00271.HK ), before a takeover involving the companies was announced. The MMT was satisfied that SIT was in possession of inside information about the takeover by 13 September 2016 before the announcement was made on 22 September 2016, and he procured his wife to trade the Dan Form shares for a profit of HKD106,968. As a result of the judgement, the MMT imposed against CHOI and SIT cold shoulder orders for 16 months, cease and desist orders and to pay the costs incurred by the government and the SFC. [End of ComplianceOne Newsletter –January 2025] For more details, please click on the title of the topic above. ================================= ~ Make It Right Today, Better Tomorrow ~ ================================= The Newsletter is for general information purpose only and is not intended to constitute legal or other professional advice. For enquiries, please email to support@complianceone.hk or WhatsApp us at (852) 95164607 . Unit 1104, 11/F, 299QRC, 287-299 Queen's Road Central, Sheung Wan, Hong Kong Tel: (852) 39550277 www.complianceone.hk

The topics discussed in this monthly newsletter for insurance are as follows: ComplianceOne Newsletter – August 2025 The topics discussed in this monthly newsletter are as follows: REGULATORY UPDATES IPO and securities trading growth powers Hong Kong ahead as global financial hub: SFC Quarterly Report Latest updates on Stablecoin-related Development MARKET NEWS SFC and HKMA to co-organise Hong Kong Fixed Income and Currency Forum 2025 ENFORCEMENT NEWS SFC Fines HSBC $4.2 Million for Disclosure Failures in Research Reports SFC Fines Deutsche Bank $23.8 Million for Various Regulatory Breaches during 2020 to 2023 Regulatory Action Against Nerico Brothers Limited involving Misappropriation of Client Assets SFC Revokes Amber Hill Capital’s License and Bans Senior Management for Life Due to Misappropriation of Client Funds and Dishonest Fund Management Practices SFC Seeks Court Order to Freeze $62.5 Million in Assets for Investor Compensation in Eggriculture Ramp-and-Dump Case SFC and HKEX Take First-Ever Joint Action Against Former TOMO Directors for Non-Cooperation SFC Bans Zhu Hong for 12 Months and Fines Her $400,000 for Fund Management Failures Regulatory Updates 1. IPO and securities trading growth powers Hong Kong ahead as global financial hub: SFC Quarterly Report The SFC published its second Quarterly Report (April to June 2025) in August with promising figure. Below are key takeaways of the achievements : Hong Kong solidified its global leadership in IPO , with 51 IPOs and total funds raised surging over 60% year-over-year (“yoy”) to HKD128 billion; The securities market demonstrated with resilience against the extreme volatility in April to restore orderly and normal operations; the HSI rebounded and reached 3-year high with average daily turnover up 85% to HKD243.7 billion in the first seven months; The number of license applications increased 16% yoy for the second quarter; For the asset management sector, the HK-domiciled funds recorded with a growth of 39% in AUM, and the number of open-ended fund (OFC) was up 56%; For virtual asset (“VA”) , the number of SFC-authorized VA spot ETF increased from six to nine, with further steps forward for approval of three VA spot ETF to engage in staking service with investor safeguards; and the number of SFC-licensed VATP increased to 11 together with 57 licensed corporations approved to provide VA dealing service; SIGNIFICANCE: The SFC plays a proactive role as a regulatory institution to provide full-fledged obligations in monitoring and revitalizing the regulatory regime in Hong Kong, balancing the drive for innovation and the indispensable mission of investor protection. 2. Latest updates on Stablecoin-related Development Reminder from Regulatory Institutions in the joint statement Regulatory bodies like SFC and the HKMA issues a joint statement on the recent market movements in relation to stablecoins. Investors are advised to pay attention to the following reminders in making an informed investment decision when encountered with a corporation/ entity which: demonstrates its intention to explore the feasibility of stablecoin issuance; indicates an interest to apply for stablecoin license; claims to have any ongoing communication with the HKMA; Investors should remain cautious that the above procedures are merely part of the licensing process, and the granting of license will be determined by the fulfilment of the licensing requirements of the entity where uncertainties of the final outcome remain. The SFC and HKMA further urge the public to exercise caution and refrain from making irrational investment decision based on the recent euphoria over movements in the market. Recent Updates Since the Stablecoin Ordinance came into effect on 1 st August 2025, all issuers of stablecoin are required to obtain licenses from the Hong Kong Monetary Authority (“HKMA”) in accordance with the “Explanatory Note on Licensing of Stablecoin Issuers”. This regulatory requirement poses a hurdle for the OTC (Over-the-Counter) crypto shops which would find it difficult to comply; yet transactions through the OTC play a significant role as well, particular in providing liquidity of stablecoins like USDT and USDC. There is a common belief that OTC crypto shops are not allowed to “offer” stablecoins, either to retail or professional investors. And the meaning of offering stablecoin is also subject to ambiguities in interpretation. According to the Ordinance, between two individuals, person A communicates with person B and presents sufficient information on all of the following matters enabling person B to acquire the stablecoins; namely: the stablecoins to be offered; the terms on which the stablecoin will be offered; the channels through which the stablecoin will be offered; then the action of person A will be constituted as “ making an offer ” (“要約提供”) to person B. To avoid the action of “making an offer”, some OTC shops do not explicitly display the quotes of the stablecoins, whereas the making of offer is initiated by the clients; it is still considered as a “breach” for reason that the Ordinance does not specify whether person A is the services provider or the client. Ambiguities in comprehending the ordinance pose more uncertainties to market participants. Conditions where the requirement for a stablecoin license is triggered Engaging in “regulated stablecoin activity” means: issuing a specified stablecoin in HK in the course of business; issuing a specified stablecoin in a place outside HK and the specified stablecoin derive its value with reference to HK dollars ; holding out itself as carrying a regulated stablecoin activity, including marketing to HK public, either in or outside HK. Please be noted that only specified stablecoins issued by stablecoin licensees can be offered to retail investors. And a licensee can engage a “ permitted offeror ” to offer specified stablecoins, currently, a permitted offeror can be: (i) a licensee itself; (ii) an authorized institution; (iii) an SFC type 1 licensed corporation (iv) a licensed virtual asset trading platform (“VATP”); (v) a Stored Value Facilities licensee (“SVF”) SIGNIFICANCE: Alike the virtual asset regime, development and evolution of the stablecoin regime is no exception, more mutual communication and interaction at inception stage is indispensable while regulations and guidelines are being finetuned to navigate and rectify any deviations throughout the process. Market News 3. SFC and HKMA to co-organise Hong Kong Fixed Income and Currency Forum 2025 The Hong Kong Fixed Income and Currency (“FIC”) Forum 2025, jointly organised by the Securities and Futures Commission (“SFC”) and the Hong Kong Monetary Authority (HKMA), will take place on 25 September 2025. As a leading Asian international bond issuance hub and the 4 th largest global foreign exchange market, Hong Kong is actively exploring ways to solidify and advance its position in the FIC markets. Many FIC market participants, senior executives from financial institutions, senior government official and regulators are invited to join this dynamic and multilateral forum, with the intention to facilitate sharing of strategic insights and vision for development of the FIC markets in HK. Details of the event programme and other relevant information can be accessed via our dedicated webpage and the Event Progromme webpage . Enforcement News 4. SFC Fines HSBC $4.2 Million for Disclosure Failures in Research Reports On 26 Aug 2025, the SFC in collaboration with the HKMA, has reprimanded and fined the Hongkong and Shanghai Banking Corporation Limited (“HSBC”) $4.2 million for failing to comply with disclosure requirements in research reports on Hong Kong-listed securities. The breaches, spanning from 2013 to 2021, highlight significant lapses in HSBC’s data systems and controls. Key Details of the Case Nature of the Breach: Following a self-report by HSBC, an investigation by the SFC and HKMA revealed that HSBC failed to disclose, or made incorrect disclosures about, its investment banking relationships with companies featured in over 4,200 research reports . These reports, published between 2013 and 2021 , covered Hong Kong-listed securities. The issues stemmed from deficiencies in HSBC’s data recording and mapping systems. Regulatory Violation: The breaches violated Paragraph 16.5(d) of the Code of Conduct for Persons Licensed by or Registered with the SFC, which mandates that firms disclose any investment banking relationships with issuers or new listing applicants in their research reports. The SFC found that HSBC did not exercise due skill and care or implement effective systems to ensure compliance and accuracy in these disclosures. Disciplinary Action: The SFC imposed a $4.2 million fine and a reprimand, reflecting HSBC’s failure to meet regulatory standards. For more details of the case, please refer to the Statement of Disciplinary Action . SIGNIFICANCE: In determining the penalty, the SFC considered: No evidence of client losses resulting from the disclosure failures. HSBC’s proactive reviews to identify the root causes and scope of the breaches. Steps taken by HSBC to enhance its systems and controls to prevent future issues. HSBC’s cooperation with the SFC and HKMA during the investigation. This case underscores the importance of robust systems and controls in ensuring accurate disclosures, which are critical for maintaining transparency and investor trust in financial markets. The SFC’s action serves as a reminder to financial institutions to prioritize compliance with regulatory standards to avoid similar penalties. 5. SFC Fines Deutsche Bank $23.8 Million for Various Regulatory Breaches during 2020 to 2023 On 28 Aug 2025, the SFC reprimanded and fined Deutsche Bank Aktiengesellschaft (“ DB ”) $23.8 million for multiple regulatory violations spanning several years. The breaches include overcharging clients on fees, incorrect valuations of debt instruments and funds, failure to disclose investment banking relationships in research reports and incorrect assignment of product risk ratings. These issues, identified through DB’s self-reports between December 2020 and December 2023, highlight significant lapses in compliance and internal controls. Key Details of the Case Between November 2015 and November 2023, DB’s operational shortcomings led to significant overcharges totalling approximately $39 million: Overcharging management fees in Discretionary Portfolio Management accounts: In 39 Discretionary Portfolios managed by DB, the clients were overcharged with management fees due to DB’s failure to apply agreed discounted rates, caused by flawed processes and implementation. Incorrect valuations of floating rate debt instruments: 392 floating rate debt instruments were incorrectly valued using “fixed” interest rates, inflating portfolio valuations and leading to overcharged custodian and management fees for 92 clients. Incorrect valuation of funds: Valuations of 16 private equity funds and three real estate funds were misstated in monthly statements to 233 clients due to an external vendor’s oversight and DB’s lack of controls, resulting in overcharged custodian fees for 32 clients. Failure to disclose investment banking relationships in research reports: Failed to disclose investment banking relationships in 261 single stock company reports and 1,590 industry reports on Hong Kong-listed companies. This was due to deficiencies in DB’s research disclosure system, which did not account for certain investment banking mandates. Incorrect assignment of Product Risk Ratings: From August 2012 to December 2020, DB assigned incorrect lower risk ratings to 40 exchange-traded funds (“ETFs”), affecting 93 clients and 265 transactions. After correcting the ratings, 10 transactions were found to have risk levels exceeding clients’ risk tolerance. For more details of the case, please refer to the Statement of Disciplinary Action . SIGNIFICANCE: The SFC concluded that DB failed to: Act with due skill, care, and diligence in the best interests of clients and market integrity. Ensure accurate and non-misleading representations to clients. Comply with disclosure requirements for research reports. Adhere to regulatory requirements to promote clients’ best interests. The SFC imposed a $23.8 million fine and a reprimand, taking into account: DB’s reviews to identify the root causes and extent of the breaches. Remediation efforts, including strengthened internal controls and systems. Full refunds of overcharged fees to affected clients. The inadvertent nature of the breaches, with no evidence of deliberate misconduct. DB’s cooperation with the SFC and acceptance of the findings and disciplinary action. This case emphasizes the SFC’s commitment to enforcing compliance with regulatory standards, particularly in ensuring accurate client information and transparent disclosures. Financial institutions must prioritize robust systems to prevent similar lapses, which can undermine investor trust and market integrity. 6. Regulatory Action Against Nerico Brothers Limited involving Misappropriation of Client Assets On 28 August 2025, the SFC revoked the licence of Nerico Brothers Limited (“ NBL ”) due to severe misconduct involving the misappropriation of client assets and the provision of false or misleading information. Additionally, the SFC imposed a lifetime ban on NBL’s director, Jerff Lee Cheuk Fung (“Jerff Lee”), prohibiting him from engaging in any regulated activities. Key Details of the Case: Misuse of Client Funds Between June 2020 and January 2021, NBL allegedly misused over US$68 million from a client's account on six occasions. These funds were used to subscribe for shares in two segregated portfolios of a Cayman-incorporated fund for NBL's own benefit. The firm retained profits from these subscriptions and only returned the principal amounts by June 2021—all without the client's knowledge, authorization, or consent, violating the client agreement. Facilitation of Misappropriation NBL is accused of aiding a scheme led by Neo Ng Yu (“Neo Ng”) and his associates, resulting in the misappropriation of approximately US$154 million from the same client's funds starting in January 2021. From January to August 2021, NBL transferred nearly all the client's assets to a sub-fund for the supposed purchase of "liquidity provider units." However, no such units were issued or held by the sub-fund. Instead, a large portion of the funds was diverted to Neo Ng and his entities. To cover this up, NBL used fabricated transaction documents and account statements. False Information to Regulators During the SFC's inquiry, NBL provided two conflicting explanations about the funds' usage, supported by fabricated documents. Both narratives were proven false, confirming that the funds were misappropriated rather than invested as claimed. Senior Management Accountability The SFC attributes NBL's misconduct directly to Jerff Lee, who was the key figure orchestrating these actions and had close ties to Neo Ng. Lee also personally violated the SFO by providing false or misleading information in SFC interviews. The firm was wound up by the Hong Kong High Court on 3 May 2022. Although Jerff Lee was not personally licensed during the period, he qualifies as a "regulated person" due to his management role. For more details of the case, please refer to the Statement of Disciplinary Action . SIGNIFICANCE: Neo Ng became a substantial shareholder in the client's holding company in December 2020 and briefly served as a director from July 2021 to January 2022. NBL claimed clients needed "liquidity provider units" from a fund to trade currencies, but this was part of the deceptive scheme. This case highlights the SFC's zero-tolerance approach to asset misuse and fraud in the financial sector. It also connects to related actions against Amber Hill Capital Limited and its former executives, Neo Ng and Simon Ng She Chun (see SFC press release dated 28 August 2025 , for details).” 7. SFC Revokes Amber Hill Capital’s License and Bans Senior Management for Life Due to Misappropriation of Client Funds and Dishonest Fund Management Practices On 28 Aug 2025, the SFC took a decisive action against Amber Hill Capital Limited (“ AHCL ”), revoking its license and imposing lifetime bans on its former senior management, Neo Ng Yu and Simon Ng She Chun, for facilitating the misappropriation of funds and engaging in dishonest practices. These measures address serious misconduct that undermined market integrity and caused significant investor losses. Key Details of the Case License Revocation and Bans: The SFC revoked AHCL’s license for its role in facilitating the misappropriation of approximately US$154 million from a client of Nerico Brothers Limited (“ NBL ”) through a Cayman-incorporated fund’s segregated portfolio (Sub-fund), managed by AHCL from October 2017 to September 2021. Neo Ng and Simon Ng, key figures in AHCL’s management, have been permanently banned from all regulated activities due to their direct involvement. Misappropriation Scheme: The SFC investigation revealed that Neo Ng orchestrated a scheme to misappropriate funds through the Sub-fund. Between January and August 2021, NBL transferred client funds to the Sub-fund for the purported purchase of “liquidity provider units,” which did not exist. AHCL accepted these funds and directed the Sub-fund to transfer a significant portion to a corporate vehicle owned by Neo Ng, with most of the remaining proceeds used for the Sub-fund’s own purposes. False Information and Fabricated Documents: AHCL misrepresented to the Sub-fund’s auditors and administrators that NBL was a broker for the Sub-fund and that most of its cash assets were held in an NBL account. Additionally, AHCL claimed Neo Ng subscribed US$297 million for Sub-fund shares via his corporate vehicle, with proceeds held in the non-existent NBL account. These claims inflated the Sub-fund’s cash position by up to US$451 million between November 2019 and May 2021. AHCL also provided fabricated auditors’ reports and documents to mislead investors and prospective investors during this period. For more details of the case, please refer to the Statement of Disciplinary Action . SIGNIFICANCE: Neo Ng, a director and sole shareholder of AHCL, masterminded the scheme and personally benefited from the misappropriated funds and inflated Sub-fund valuations. Simon Ng, his brother and a senior manager, facilitated the scheme by processing the funds, authorizing their transfer to Neo Ng’s vehicle, and providing false information. Their actions were deemed profoundly dishonest, falling far below the standards expected of licensed corporation management. The SFC’s sanctions reflect: The egregious nature of the misconduct, damaging investor and public confidence in market integrity. Significant losses to NBL’s client. The clean prior disciplinary records of AHCL, Neo Ng, and Simon Ng. This case is linked to the SFC’s actions against NBL and its director, Jerff Lee Cheuk Fung, announced on the same date (see SFC press release, 28 Aug 2025 ). The SFC’s actions underscore its commitment to rooting out dishonest practices in the financial sector. The lifetime bans and license revocation send a strong message about accountability, particularly for senior management, in safeguarding investor interests and market integrity. 8. SFC Seeks Court Order to Freeze $62.5 Million in Assets for Investor Compensation in Eggriculture Ramp-and-Dump Case On 29 Aug 2025, the SFC took decisive action to protect investors by applying for a court order to freeze assets up to $62.5 million. This move aims to secure funds for compensating investors affected by a sophisticated ramp-and-dump scheme involving Eggriculture Foods Limited (8609.HK) (“ Eggriculture ”). Key Details of the Case: Asset Freeze Application: On 29 August 2025, the SFC filed an application with the Court of First Instance to restrain the disposal of assets belonging to one of the suspected ringleaders. The assets, valued up to $62,566,773, represent the estimated losses suffered by investors due to alleged market manipulation of Eggriculture shares between August and November 2018. Market Manipulation Allegations: The SFC's legal action targets six individuals, including suspected ringleaders, accused of manipulating Eggriculture Foods Limited’s shares. Eggriculture was listed on the Growth Enterprise Market (“ GEM ”) of the Stock Exchange of Hong Kong Limited on 7 September 2018. The manipulation allegedly occurred shortly after the listing, exploiting the market to the detriment of investors. Court Proceedings: The Court of First Instance held its first hearing on the SFC’s application, issuing directions and adjourning the substantive hearing to a later date to be determined. This ensures a thorough review of the application to freeze assets for investor compensation. Parallel Criminal Trial: In a related development, a criminal trial is scheduled to begin on 13 July 2026, at the District Court. Five of the six individuals involved in the SFC’s civil proceedings face charges of conspiracy to defraud and conspiracy to employ a scheme with intent to defraud or deceive in securities transactions. SIGNIFICANCE: As the legal proceedings are active, the SFC has stated it will refrain from further comments to maintain the integrity of the judicial process. This case underscores the SFC’s commitment to combating market misconduct and ensuring investor protection. By seeking to freeze assets, the SFC aims to secure potential compensation for affected investors, reinforcing trust in Hong Kong’s financial markets. The parallel civil and criminal proceedings highlight the multifaceted approach to addressing sophisticated financial crimes. 9. SFC and HKEX Take First-Ever Joint Action Against Former TOMO Directors for Non-Cooperation In a landmark enforcement action, the SFC and HKEX have collaborated to discipline two former directors of TOMO Holdings Limited (6928.HK) (“ TOMO ”) for failing to cooperate with regulatory investigations. This marks the first time the Exchange has taken disciplinary action against directors for non-cooperation, highlighting the strength of the SFC-HKEX partnership in upholding market integrity. Key Details of the Case Disciplinary Action On 12 August 2025, the Exchange publicly censured Ms. Ma Xiaoqiu, a former executive director, and Mr. Jin Lailin, a former independent non-executive director of TOMO, declaring them unsuitable to serve as directors or in senior management roles at TOMO or its subsidiaries. This action addresses their failure to cooperate with investigations by both the SFC and the Exchange’s Listing Division. Investigation Context The SFC investigated potential violations under the SFO involving TOMO and related parties, issuing notices under section 183 to Ma and Jin for relevant information and documents. Simultaneously, the Exchange’s Listing Division probed whether the directors fulfilled their obligations under the Listing Rules. Both Ma and Jin failed to respond to either investigation. Regulatory Breach The Listing Rules mandate that directors of listed issuers cooperate with SFC and Exchange investigations, an obligation that persists post-tenure. The Exchange’s Listing Committee found that Ma and Jin’s non-cooperation constituted a serious breach of these rules. The SFC’s investigation into TOMO-related matters continues, with further details pending. For more details of the case, please refer to the Disciplinary Action . SIGNIFICANCE: Christopher Wilson, SFC Executive Director of Enforcement , emphasized that non-cooperation undermines regulatory oversight and investor protection, highlighting the SFC’s commitment to robust enforcement through its partnership with the Exchange to ensure accountability. Catherine Yien, HKEX Head of Listing Regulation and Enforcement emphasized that collaboration plays a critical role in maintaining a fair and informed securities market, and underscored the HKEX's zero-tolerance stance on such misconduct and its commitment to market quality. This unprecedented joint action demonstrates the SFC and HKEX’s coordinated approach to tackling regulatory non-compliance. By leveraging the Exchange’s disciplinary powers under the Listing Rules, the regulators are sending a clear message: directors who fail to cooperate face severe consequences, including reputational and operational sanctions. 10. SFC Bans Zhu Hong for 12 Months and Fines Her $400,000 for Fund Management Failures On 18 Aug 2025, the SFC imposed a 12-month ban and a $400,000 fine on Ms. Zhu Hong, a substantial shareholder, director, and former manager-in-charge (“ MIC ”) of Kylin International (HK) Co., Limited (“ Kylin ”). The disciplinary action, effective from 16 August 2025, to 15 August 2026, addresses Zhu’s failures in managing private funds and ensuring compliance with anti-money laundering and counter-terrorist financing (“ AML/CTF ”) obligations. Key Details of the Case The SFC banned Zhu from engaging in any regulated activities and fined her $400,000 for lapses in her duties as a director and MIC at Kylin. Between August 2018 and July 2021, Kylin served as the investment manager and/or consultant for sub-funds of a Cayman-incorporated fund. Zhu was responsible for approving borrowing agreements and implementing AML/CTF internal controls but failed to discharge her duties as a director of Kylin and MIC for the AML/CTF in managing the funds. Kylin was licensed under SFO for Type 9 (asset management) activities from 4 April 2014, until its license was revoked on 22 January 2025, following its cessation of regulated activities on 31 December 2023. From 30 April 2019 to 22 January 2025: Zhu, while not a licensed person, qualifies as a “regulated person” under section 194(7) of the SFO due to her management roles: i. MIC of AML/CTF; ii. MIC of Risk Management; and iii. MIC of Finance and Accounting SIGNIFICANCE: The SFC considered Zhu’s acceptance of liability, her expressed remorse, and her clean disciplinary record in determining the sanctions. The disciplinary action against Zhu is linked to an ongoing SFC investigation into another related entity concerning the same funds, with further details to be released upon its conclusion. This case highlights the SFC’s commitment to holding individuals accountable for failures in fund management and compliance, particularly in critical areas like AML/CTF. It serves as a reminder to financial professionals of the importance of robust oversight and adherence to regulatory standards to protect investors and maintain market integrity. 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