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2026年7月24日，財政部、國家稅務總局聯合發布《關於離岸信託個人所得稅有關事項的公告》（財政部稅務總局公告2026年第21號，簡稱“21號文” ） ... 國稅局據報加強培訓，離岸信託徵稅新規進入實操階段 2026年7月24日，財政部、國家稅務總局聯合發布《 關於離岸信託個人所得稅有關事項的公告 》（財政部稅務總局公告2026年第21號，簡稱“21號文” ） ，同日國家稅務總局發布信託公告（國家稅務總局公告2026年第15號），第一個國家稅務總局的個人徵管公告（國家稅務總局公告2026年第15號），首次全所得稅系統徵管。 新規明確：居民個人將財產裝入離岸信託，以財產裝入時的市場價值扣除財產原值和合理費用後的餘額為應納稅所得額，按照「財產轉讓所得」申報繳納個人所得稅， 適用20%稅率 。離岸信託存續期間產生的收益，無論是否實際分配，均以該居民個人為納稅人，按年申報繳納個人所得稅。 根據 CN B C 報道，多位境內外稅務律師透露， 國家稅務總局正在對地方稅務官員進行大規模培訓，以統一對離岸信託徵稅的解釋 。訓練涵蓋範圍相當廣闊，涉及省級、市級以至村鎮級別的政府員工。同時，稅務總局已向境內律師事務所和會計師事務所發送指導意見草案，計劃未來幾週舉行諮詢會議。 然而，新規在實操層面仍有許多 待解問題 ： 2023年之前設立的離岸信託，持有人需要追溯申報多少年的信託資產，目前尚不清楚； 是否適用3至5年的標準時效，未有定論； 申報需要提供多詳盡的文件才會被接受或拒絕，尚無統一標準； 10月份的截止日期究竟是申報截止日期還是全額繳稅截止日期，有待釐清。 稅務顧問估計，未來幾週地方當局對這些細節的解讀，將與國家稅務總局的解讀基本一致。 此外，稅務顧問也警告，許多信託資產可能違反7月發布的外國投資申報規則，可能引發外匯管理部門審查，以了解資金最初是如何流出中國的。 小結 ：離岸信託稅新規已正式落地，國稅局正全力推動統一執行口徑。但對於已設立多年信託的持有人而言， 追溯期限、文件要求、截止日期等關鍵細節仍有待進一步明確 。建議相關人士密切注意未來數週稅務總局發布的配套指引及地方稅務機關的具體執行解讀，及時評估自身合規狀況。 關於離岸信託稅務新規的更多細節與實操影響，我們在先前的文章中已作初步梳理，點擊回顧👉 《 離岸信託「免稅時代」 結束？新規明確20%個稅，哪些人要關注？ 》 建議結合本文一併閱讀，更全面掌握新規要點及對高淨值客戶的潛在影響。後續如有進一步解讀或實操指引，我們也將第一時間更新，歡迎持續關注「天匯合規顧問」。 參考資料：中華人民共和國財政部、 CNBC等 [完結 - 國稅局據報加強培訓，離岸信託徵稅新規進入實操階段 ] For more details, please click on the title of the topic above. ================================= ~ Make It Right Today, Better Tomorrow ~ ================================= The article 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

2022年5月26日，政信產業聯盟與中國政信國際開發集團有限公司聯合舉辦的「跨境投融資實務操作系列講座之香港金融牌照優勢解析」在線上成功 聚焦出海之路|「跨境投融資系列講座之香港金融牌照優勢」線上成功舉辦 2022年5月26日，政信產業聯盟與中國政信國際開發集團有限公司聯合舉辦的「跨境投融資實務操作系列講座之香港金融牌照優勢解析」在線上成功舉辦。 本次講座特別邀請天匯合規顧問有限公司合夥人王陶浚先生為大家解析香港金融牌照優勢，帶來更多創富靈感和投資機會。 王陶浚先生畢業於美國堪薩斯大學工商管理與金融學系，曾任職海通國際十餘年，有全方位牌照公司運營管理經驗，並專業為客戶設計策略性規劃、提供量身企業服務方案、申請相關金融牌照服務等，具備專業、豐富的金融實操經驗。 香港作為中資企業出海的橋梁，在公開交易市場完善度、經營環境成熟度以及金融產品豐富度等層面，都處在國際金融市場的優勢地位。隨著中國經濟的快速發展，不少中資企業通過赴港開展金融業務，獲得了參與國際金融活動的機會。而後疫情時代，眾多投資者希望通過香港作為跳板投資海外市場。 王陶浚先生分別從香港金融牌照「申請概況」「申請要求」等環節，介紹了香港主要金融監管機構、金融牌照的基本情況，重點闡述了香港金融牌照的優勢。他表示，香港金融牌照具備成本低、國際背書效果強、可承接承做更多國際業務、背靠全球頂尖的資本市場的優勢。 最後，結合具體案例講解，王陶浚先生進一步講解，如何通過香港的美元債券市場，為各省市的基建項目籌集到低成本的資金；如何通過香港的金融市場，為國內高凈值的客戶進行海外資產配置及家族顧問服務等，通過對案例進行分析拆解，讓與會嘉賓對跨境投融資業務有了更加直觀具體的認識，為企業開展境外發債、拓展跨境融資渠道提供了經驗分享和專業建議。 當下，隨著「走出去」步伐加快，跨境融資是眾多中資企業拓寬融資渠道、降低融資成本、優化境內外兩個市場資源配置的「新藍海」。作為政信投資集團海外業務中心，中國政信國際開發集團有限公司，以香港地區為戰略支點，依托政信面向全球開展國際開發，發揮香港節點作用，促進「外循環」，為內地政信項目構建基金融資平臺，對接海外機構投資者，致力實施集團國際化戰略。 未來，中國政信國際開發集團有限公司也期待與更多合作夥伴積極溝通交流，探索多樣化的活動形式，共同賦能更多中資企業出海。

The topics discussed in this monthly newsletter for Licensed Corporations are as follows: ComplianceOne Newsletter – December 2025 The topics discussed in this monthly newsletter are as follows: Regulatory Updates FSTB and SFC conclude consultations on virtual asset dealer and custodian regimes Market News A quarter of connecting, innovating and diversifying Hong Kong markets: SFC Report Enforcement News - Intermediary SFC Suspends Loretta LEE Si Kar for Three Months and Two Weeks Over Neglect of Duties in Safeguarding Client Assets at Tung Tai Securities SFC Reprimands and Fines EFG Bank AG $10.85 Million for Regulatory Breaches and Internal Control Failures Enforcement News - LISTCO SFC Convicts and Sentences Former Vice President of Computershare to Imprisonment and Fine for Insider Dealing SFC Obtains Order to Freeze $101 Million Belonging to Suspected Shadow Director in Corporate Misconduct Case Involving Teamway (1239.HK) SFC Secures Conviction and Eight-Month Prison Sentence in False Trading Prosecution Involving China All Access Shares SFC Suspends Dealings in Dashan Education (9986.HK) Shares over Significant Overstatement of Corporate Bank Balances Regulatory Updates 1. FSTB and SFC conclude consultations on virtual asset dealer and custodian regimes The Financial Services and the Treasury Bureau (“ FSTB ”) and the SFC published two consultation conclusions on legislative proposals to regulate virtual asset (VA) dealing and custodian service providers in Hong Kong; and also proceed for further consultation on new regimes to cover VA advisory and management services providers adopting the familiar philosophy of “same business, same risks, same rules” principle, these new regimes are formulated on the model base of similarities with the securities market. For VA dealers , the regime will be aligned closely with that for Type 1 (dealing in securities) regulated activity, some key takeaways from the consultation conclusions are as follows: Scope and Coverage : still adhering to the principle of“same business, same risks, same rules”; Regulatory Requirement : SFC-licensed VATPs are permitted to integrate with intra-group liquidity via a shared order book while still upholding an appropriate balance between investor protection and market development; Transitional Period : no plan for any deeming arrangement to existing VA dealing service providers; Expedited Licensing Process : SFC-licensed VATPs and licensed corporations currently providing VA dealing services will be subject to an expedited approval process; Prohibition : any person is prohibited from actively marketing its VA dealing services, whether in Hong Kong or elsewhere, to the public of Hong Kong, unless that person is licensed by with the SFC; Powers of Regulatory Authorities : the SFC and the HKMA would be provided with the proposed powers. For VA custodians , the new regime will focus on managing risks related to safekeeping private keys of client VAs in Hong Kong, to secure client assets and protect investors. Key takeaways from the consultation conclusions are as follows: Scope and Coverage : target entities safekeeping private keys which represent the core risk area in VA custody; Activities Allowed : safekeeping of VAs and provision of staking services; Financial Resource Requirements: subject to the similar financial requirements as an LC carrying on Type 13 regulated activity of providing depositary services; Transitional Arrangement : no plan for any deeming arrangement to existing VA custodian service providers; Prohibition : any person is prohibited from actively marketing VA custodian services, whether in Hong Kong or elsewhere, to the public of Hong Kong, unless the person is licensed by with the SFC; Powers of the Regulatory Authorities : the SFC and the HKMA would be provided with the proposed powers. SIGNIFICANCE: As Julia Leung, CEO of the SFC, said: “ The significant progress in our VA regulatory framework ensures Hong Kong remains at the global forefront of digital asset market developments by fostering a trusted, competitive and sustainable ecosystem .” Meanwhile, Mr. Christopher Hui, the Secretary for Financial Services and the Treasury, said: “ The proposed licensing regimes strike a prudent balance among fostering market development, managing risks and protecting investors. ” Market News 2. A quarter of connecting, innovating and diversifying Hong Kong markets: SFC Report In the Jul-Sep 2025 Quarterly Report, it showed Hong Kong’s capital markets continued to deepen connectivity with Mainland and overseas markets, while driving advanced financial innovation and diversification. Some key takeaways of the Report on the financial areas are as follows: The SFC signed six MOUs in 2025 (three in the quarter) with overseas and Mainland markets to strengthen global asset management ties and reinforce Hong Kong’s super‑connector role. Swap Connect, with its product expansion, recorded a 56% year-on-year (“ YoY ”) increase in trading volume as of November 2025, with aggregate transactions exceeding RMB9.3 trillion since its 2023 launch. The SFC collaborating with the HKSAR Government to finalize two new virtual asset (“ VA ”) regulatory regimes, namely , in dealing and custodian areas. VA spot ETFs authorized by the SFC reached $5.47 billion in market cap (+33% YoY) increasing to 11 ETFs as of end‑November; tokenized retail money market fund hit $5.48 billion AUM (+557% since the first launch this year) with eight funds in total. To support Hong Kong as an offshore renminbi and fixed‑income hub, the SFC and HKMA issued a RMB fixed income and currency roadmap in September and are preparing a detailed workplan for implementing the roadmap initiatives. The 24 IPOs in the quarter raised over $70 billion, more than 70% higher YoY, keeping Hong Kong among global leaders by IPO funds raised. Hong Kong‑domiciled funds recorded net inflows of $46.9 billion; their AUM grew 35.9% YoY to $2.27 trillion as of September, while SFC‑authorized ETFs’ market capitalization rose 31.8% YoY to $653.5 billion, accounting for 13% of daily turnover. 2,799 new SFO license applications were filed in the period (+12% YoY); SFC‑licensed corporations and individuals increased to 3,379 and 46,457 respectively (+2.7% and +3.6% YoY). The SFC and HKMA issued a joint statement highlighting the development of the stablecoin regime. On the regulatory landscape, we can take a look at the table below relating breaches noted during the SFC on-site inspections. Quarter ended 30.9.2025 Six months ended 30.9.2025 Six months ended 30.9.2024 YoY change (%) Breach of the Code 72 180 193 -6.7 Breach of FMCC 40 99 56 +76.8 Non-compliance with AML guidelines 55 113 142 -20.4 Internal control weakness 176 341 472 -27.8 It is obvious that there was an increasing trend in deficiencies found in asset management regulatory regime in 2025 as contrast to the other categories where the figures were decreasing. SIGNIFICANCE: As Julia Leung, CEO of the SFC, said: “ Our capital markets delivered another quarter of steady and diversified growth despite global headwinds and volatility. ” On the regulatory side, the acute increase in breaches of FMCC signalled the need to have more comprehensive guidelines and implementable measures to safeguard compliance from market participants. Enforcement News - Intermediary 3. SFC Suspends Loretta LEE Si Kar for Three Months and Two Weeks Over Neglect of Duties in Safeguarding Client Assets at Tung Tai Securities On 3 December 2025, the SFC announced the suspension of Ms Loretta LEE Si Kar (“ LEE ”), a responsible officer (“ RO ”), manager-in-charge (“ MIC ”), and director of Tung Tai Securities Company Limited (“ Tung Tai ”), for three months and two weeks, effective from 1 December 2025 to 14 March 2026 (see Statement of Disciplinary Action ) Case Details This action stems from LEE's neglect of her supervisory duties, which contributed to Tung Tai's failures in handling unauthorized instructions from a bogus email, leading to the sale of client securities and improper transfers totaling US$3,301,740 to undesignated overseas accounts. Despite red flags such as rejected telegraphic transfers (“ TTs ”) and inconsistent beneficiary details, Tung Tai processed the transactions without client verification, breaching requirements to safeguard assets and maintain effective internal controls against theft or fraud. Enforcement Act Following the incident, Tung Tai compensated the affected client, implemented remedial measures, and engaged independent reviewers to strengthen procedures. The SFC factored in LEE's cooperation, clean record, and the seriousness of the lapses when determining the sanction, after previously reprimanding and fining Tung Tai HK$900,000 for related violations (see the SFC’s press release dated 13 November 2025 ). For more details of the background, please refer to ComplianceOne Newsletter (Nov) - Topic 6 SIGNIFICANCE: This disciplinary measure reinforces the SFC's emphasis on senior management's responsibility to uphold robust internal controls and vigilance against fraud in securities firms. It serves as a reminder for financial intermediaries, including those in related sectors, to prioritize client asset protection through proactive verification and risk management, as lapses can result in significant financial losses, regulatory penalties, and reputational harm. The case may prompt firms to review email authentication protocols and TT processes to mitigate similar cyber-enabled threats. 4. SFC Reprimands and Fines EFG Bank AG $10.85 Million for Regulatory Breaches and Internal Control Failures On 11 December 2025, the SFC reprimanded and fined EFG Bank AG (“ EFG ”) $10.85 million for failures in product due diligence, record-keeping, and late reporting during the period from January 2015 to December 2020 (the “ Relevant Period ”). The SFC’s action followed an investigation triggered by a self-report from EFG and findings referred by the Hong Kong Monetary Authority (“ HKMA ”). Case Details EFG, registered to conduct regulated activities including dealing in securities, advising on securities, and asset management under the Securities and Futures Ordinance, failed to adequately assess special features of 322 bonds during product due diligence. It also neglected to update internal policies promptly in line with regulatory changes and did not provide customers with sufficient information or warning statements for certain complex products prior to transactions. Additionally, EFG did not maintain product due diligence records for 141 bonds and delayed reporting its suspected failures to the SFC, despite identifying them in July 2020. These breaches contravened the Code of Conduct for Persons Licensed by or Registered with the SFC and the Management, Supervision and Internal Control Guidelines for Persons Licensed by or Registered with the SFC. Enforcement Act In determining the sanctions, the SFC considered EFG’s remedial actions to strengthen its product due diligence framework, its cooperation with the HKMA and SFC investigations, and its commitment to implement Enhanced Complaint Handling Procedures (“ ECHP ”). Under the ECHP, EFG will review complaints from customers who acquired any of the 351 affected products during the Relevant Period, ensuring fair resolution. An impact assessment by EFG indicated potential failures in considering special features for these 351 products. For more details of the background, please refer to Statement of Disciplinary Action (appended with a list of the 351 products) SIGNIFICANCE: This enforcement action highlights the SFC’s emphasis on robust internal controls, timely compliance with evolving regulations, and proactive self-reporting in the financial sector. For institutions like EFG, which intersect with banking, securities, and potentially insurance-linked activities, such failures can erode investor trust and expose clients to undue risks. The case serves as a reminder for all regulated entities to prioritize comprehensive due diligence, accurate record-keeping, and swift disclosure of issues to maintain market integrity and avoid severe penalties. The implementation of ECHP demonstrates a balanced approach, allowing for remediation while reinforcing accountability. Enforcement News - LISTCO 5. SFC Convicts and Sentences Former Vice President of Computershare to Imprisonment and Fine for Insider Dealing SFC’s press release dated 4 December 2025 & 18 December 2025 . The SFC prosecuted Mr. CHOI Chun Wai (“ CHOI ”), former Vice President of Computershare Hong Kong Investor Services Limited (“ Computershare ”), a global provider of share registration and investor services, for insider dealing in the shares of ENM Holdings Limited (“ ENM ”) ( 128.HK ), listed on the Main Board of the Stock Exchange of Hong Kong Limited since 1972. Computershare was engaged by ENM to despatch and collect proxy forms, and to act as the scrutineer for the voting process at a court meeting related to ENM's proposed privatisation. CHOI, while employed as a vice president of Corporate Services, was involved in coordinating and monitoring the voting process. He accessed inside information indicating the privatisation would fail and sold his shares ahead of the public announcement, avoiding a significant financial loss. Case Details Date Event 2 June 2023 ENM and the Offeror (Solution Bridge Limited) jointly announced a proposed privatisation of ENM by way of a scheme of arrangement under section 673 of the Companies Ordinance, offering $0.58 per share for cancellation of approximately 55.72% of ENM's issued share capital, subject to 75% approval from disinterested shareholders at a court meeting scheduled for 26 September 2023. 22 September 2023 CHOI learned from proxy forms that the required voting threshold for the privatisation could not be met, constituting inside information. 25 September 2023 CHOI sold all his 1,500,000 ENM shares, despite knowing the inside information. 27 September 2023 ENM announced the lapse of the privatisation, causing ENM’s share price to fall 10.26% to close at $0.35, resulting in CHOI avoiding a loss of around $289,500. Court Order On 4 December 2025, the Eastern Magistrates’ Courts convicted CHOI of insider dealing following a prosecution by the SFC. CHOI pleaded guilty. The Eastern Magistrates’ Courts then sentenced CHOI to two months of imprisonment on 18 December 2025. He was ordered to pay a fine of $289,500 (equivalent to the losses avoided) and the SFC's investigation costs of $120,407. The Court noted that although CHOI showed remorse, insider dealing is a serious offense warranting an immediate custodial sentence. SIGNIFICANCE: The SFC’s Executive Director of Enforcement, Mr. Michael DUIGNAN, stated: “ The conviction underscores the SFC’s commitment to tackle insider dealing and enhance the integrity of Hong Kong’s financial markets. The immediate jail sentence by the Court serves as a strong deterrent. The misuse of non-public information for personal gain, particularly market professionals in a position of trust, is unacceptable and will have serious consequences. The SFC will continue to take robust enforcement action to protect investors and uphold a level playing field for all market participants. ” 6. SFC Obtains Order to Freeze $101 Million Belonging to Suspected Shadow Director in Corporate Misconduct Case Involving Teamway (1239.HK) On 16 December 2025, the SFC obtained a court order from the Court of First Instance to freeze more than $101 million in cash held in the personal bank account of Mr NG Kwok Fai (“ NG ”), a suspected shadow director of Teamway International Group Holdings Limited ( 1239.HK ) (“ Teamway ”). This action was taken by consent between the SFC and NG in ongoing legal proceedings under section 214 of the SFO, stemming from allegations of corporate misconduct. The freeze follows NG and others agreeing to pay $192 million in compensation to independent public shareholders of the delisted Combest Holdings Limited (“ Combest ”) for related misconduct. Case Details The SFC's investigation revealed that NG and Mr YANG Zhihui (“ YANG ”) allegedly gained control of Teamway and acted as shadow directors, transforming it into a "listed shell" for injecting new businesses while prejudicing the company's interests through a series of transactions. The SFC claims that the below individuals breached their fiduciary duties by approving these transactions or allowing NG and/or YANG to dominate company affairs: Name Position/Role Mr LIU Liangjin; Mr HE Xiaoming; Ms XIE Yan; Mr LING Zheng; Ms NGAI Mei; Mr XU Gefei; and Ms DUAN Mengying The seven former executive directors (“ ED ”) Mr CHAN Chun Kau; Mr LAM Chi Wai; and Mr Joshua LEE Chi Hwa The three Former independent non-executive directors (“ NED ”) Additionally, the former company secretary, Ms CHOI Yee Man (“ CHOI ”), is accused of negligence or recklessness in her duties. This case spans several years, involving interconnected corporate actions and related proceedings. Below is a timeline of key events: Date Event 2015 NG and YANG acquired a 75% interest in Teamway through a nominee, becoming shadow directors and planning to transform it into a "listed shell" by injecting new businesses to replace its original packaging operations. 2015–2022 NG and YANG, as shadow directors, allegedly engineered prejudicial transactions, with former directors approving them and the company secretary failing in oversight duties. May 2020 SFC commenced court proceedings under sections 212 and 214 of the SFO against NG, Mr LIU Tin Lap (“ LIU ”), and Mr LEE Man To (“ LEE ”) for misconduct related to Combest. Source: SFC’s press release dated 21 May 2020 . 8 November 2022 SFC initiated section 214 proceedings against Teamway and 13 individuals, including NG, YANG, the seven EDs, three NEDs, and the company secretary. September 2024 SFC and Combest, NG, LIU, and LEE reached an agreement via the Carecraft procedure to dispose of Combest proceedings. Source: SFC’s press release dated 16 September 2024 . 2 June 2025 Court ordered NG, LIU, and LEE to pay $192 million in compensation to Combest's independent public shareholders. Source: SFC’s press release dated 2 June 2025 . Enforcement Act The SFC is seeking compensation orders totaling $532 million against NG, YANG, and the 10 former directors for losses incurred by Teamway and its subsidiaries, along with disqualification orders against them and CHOI from serving as directors or managing any listed or unlisted corporation in Hong Kong. The asset freeze against NG remains in effect until the proceedings are resolved or further court order. SIGNIFICANCE: This enforcement action highlights the SFC's commitment to combating corporate misconduct in listed entities, particularly where shadow directors exploit control to prejudice company and shareholder interests. By freezing assets and seeking substantial compensation and disqualifications, it underscores the importance of fiduciary duties, transparency, and accountability in Hong Kong's financial markets. Company with listed affiliations should review governance practices to mitigate similar risks, as such cases can erode investor confidence and trigger broader regulatory scrutiny across financial sectors. 7. SFC Secures Conviction and Eight-Month Prison Sentence in False Trading Prosecution Involving China All Access Shares On 4 December 2025, the Shatin Magistrates’ Courts convicted Ms WONG Yuk Lan (“ WONG ”), Administration Controller of China All Access (Holdings) Limited (former stock code: 633.HK ) (“ China All Access ”), for false trading in the company’s shares, following a prosecution initiated by the SFC. Case Details The case stemmed from WONG’s actions as the “Spouse” of Mr Chan Yuen Ming, the company’s Chairman, who held a beneficial interest in 381,400,000 China All Access shares through a securities margin account under Creative Sector Limited, a company he wholly owned and controlled. Between 29 and 31 December 2014, WONG placed a series of bid orders for China All Access shares via her personal securities account. These orders were executed in the final minutes before market close and at prices above prevailing market levels. The court determined that WONG had no genuine intent to purchase the shares but aimed to create a false or misleading appearance of market demand to alleviate margin call pressures on Creative’s account. Court Order This offense violates section 295 of the SFO, which prohibits actions intended to create a false or misleading appearance regarding the market for, or price of, securities. Magistrate Mr Jeffrey SZE Cho Yiu emphasized during sentencing that WONG’s misconduct harmed market integrity by fabricating an illusion of active trading. WONG was subsequently sentenced to eight months in prison on 17 December 2025, and ordered to pay the SFC’s investigation costs. SIGNIFICANCE: This enforcement action underscores the SFC’s dedication to preserving market integrity and deterring manipulative practices that undermine investor confidence in Hong Kong’s financial markets. By securing a conviction and prison sentence for false trading, it highlights the severe consequences of creating artificial market appearances to evade financial pressures, such as margin calls. Financial professionals and firms should strengthen internal controls and compliance measures to prevent similar misconduct, as such cases can lead to reputational damage, regulatory penalties, and broader scrutiny across interconnected sectors. 8.SFC Suspends Dealings in Dashan Education (9986.HK) Shares over Significant Overstatement of Corporate Bank Balances On 3 December 2025, the SFC directed The Stock Exchange of Hong Kong Limited (“ Stock Exchange ”) to suspend dealings in the shares of Dashan Education Holdings Limited ( 9986.HK ) (“ Dashan ”) effective from 9:00 am, under the Securities and Futures (Stock Market Listing) Rules (“ SMLR ”). This measure aims to maintain a fair and orderly market and protect investors amid an ongoing SFC investigation into suspected financial irregularities. Case Details The SFC's inquiry revealed discrepancies in bank statements related to a software development project (April 2022 to November 2023) and a UK company acquisition (September 2022), including omitted circular fund flows and overstatements of bank balances totaling RMB36.4 million as of 30 June 2023 (19% of net asset value) and RMB76.3 million as of 31 December 2023 (55% of net asset value). These findings suggest the transactions may not have been genuine or at arm's length, with potential fabrication of documents to conceal issues, raising concerns about management integrity, particularly involving executive director Mr. ZHANG Hongjun (“ ZHANG ”), internal controls, and market disclosures. Follow-up Action Dashan has not provided satisfactory explanations, and the SFC suspects the September 2024 trading resumption was based on misleading information. Trading had been halted at Dashan's request since 28 November 2025 pending inside information release. See HKEX News 28 November 2025 for more information. SIGNIFICANCE: This suspension emphasizes the SFC's role in upholding market transparency and investor protection by addressing potential financial misrepresentations in listed companies. It highlights risks associated with overstated assets, inadequate internal controls, and management accountability, which could impact stakeholder confidence and prompt enhanced due diligence for financial intermediaries dealing with similar entities. As the investigation continues, it may lead to further regulatory actions, underscoring the need for robust compliance frameworks in Hong Kong's capital markets. [End of ComplianceOne 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 1104, 11/F, 299QRC, 287-299 Queen's Road Central, Sheung Wan, Hong Kong Tel: (852) 39550277 www.complianceone.hk

The topics discussed in this monthly newsletter are as follows: ComplianceOne Newsletter - June 2024 The topics discussed in this monthly newsletter are as follows: 1. HKEX to implement severe weather trading in securities and derivatives markets 2. SFC marks its 35-year history as the guardian of Hong Kong financial markets 3. SFC’s deficit nearly tripled to 298 million ending in March 2024 4. SFC enforcement report shows 175 completed cases in 2023-2024 5. SFC suspends PICC’s former licensed representative for seven months for failures in managing a private fund 6. WONG Ming Chung was convicted for providing investment advice on Telegram without a licence 7. SFC disciplined WU Chao for circumventing personal dealings MARKET NEWS 1. HKEX to implement severe weather trading in securities and derivatives markets Hong Kong Exchanges and Clearing Limited (HKEX) announced on 18 June 2024 that the Severe Weather Trading (SWT) will commence on 23 September 2024 in both securities and derivatives markets, the consultation conclusions received from market participants showed strong support for the implementation. The SWT covers Stock Connect, derivatives holiday trading, and after-hours trading, during severe weather events; and to ensure safety, remote working and the use of online services are strongly encouraged. Some adjustments are also required to ensure the market’s operational resilience as certain services may not be available during SWT day. As HKEX Chief Executive Officer, Bonnie Y Chan, had said: “ This is an important step that will make Hong Kong's markets always available to regional and international investors during trading hours, whatever the weather, and underscores HKEX’s commitment to supporting the resilience and competitiveness of Hong Kong as a world-class financial centre. ” Besides, the Hong Kong Association of Banks and the Hong Kong Interbank Clearing Limited have confirmed that, during SWT days, banking services, such as electronic money transfer channels, will be available from designated banks and settlement banks of relevant clearing houses of HKEX to facilitate the operations and settlement process. To allow small-and-medium-sized brokers adequate preparation time, HKEX plans to offer special arrangements to eligible participants requiring assistance, for example by temporarily fulfilling margin payment or settlement obligations for these participants on a SWT day. The above special arrangements will be in place from the SWT effective date until the end of 2024. SIGNIFICANCE: During the SWT day, HKEX's trading, clearing, settlement and market data systems will be fully accessible via remote networks; and HKEX has made enhancements to its infrastructure and operational arrangements to reduce the need for physical access among participants, and will arrange testing sessions before the launch of SWT to ensure readiness of market participants. Severe Weather Trading is no doubt a bold step of the HKEX to achieve a seamless trading environment uninterrupted by any unfavourable weather conditions, thus providing more opportunities and protections to investors to manage their risks and exposures along with the global market conditions. 2. SFC marks its 35-year history as the guardian of Hong Kong financial markets SFC issued an Annual Report on 19 June 2024 which highlighted various initiatives to promote the resilience and sustainable growth of Hong Kong’ s capital markets as well as laying out the roadmap to prepare the capital markets for future opportunities and challenges. As SFC’s CEO Ms Julia Leung has said: “ To remain a world-class regulator and lead Hong Kong’ s capital markets to new heights in decades to come, the SFC must strengthen its dual role as protector and enabler , by staying agile and vigilant as well as harnessing new opportunities from sustainability and new technologies, without compromising investor protection. ” Also, cherishing to enhance the super-connector role of Hong Kong has been one of the top initiatives, the SFC has been endeavouring to collaborate with the China Securities Regulatory Commission (CSRC) to deepen the mutual market access. The flagship Stock Connect scheme has recorded a 20-fold advance in average daily trading since 2014; together with the ETF Connect, the Swap Connect, which strengthen the role of HK as an offshore risk management hub. To lead financial market transformation via technology, the SFC has pioneered in launching the VA licensing regime to facilitate the trading of VAs and its VA-related spot ETFs accessible to retail investors. More details in other areas are delineated in the Annual Report 2023-24 for public interests. 3. SFC’s deficit nearly tripled to 298 million ending in March 2024 With reference to the Annual Report posted on 19 June 2024, the SFC recorded a deficit of HK$298 million for the year ending in March 2024 as over the past three years, staff costs were up 8% and total expenses up 5% (page 142); the recorded loss in the previous fiscal year was HK$101 million. The total income for the year was HK$1835 million, down 6% from HK$1942 million last year, owing to decrease in securities market turnover with resulting levy income went down 19% from last year to $1,390 million. Apart from the above, the SFC still has to complete the transaction for acquiring nine office floors as its permanent office, and HK$2.3 billion form the property acquisition reserve has been utilized. As of 31 March 2024, the reserves still stood at $7.6 billion, of which $1.2 billion has been set aside to support the acquisition of three additional floors and future principal bank loan repayments. SIGNIFICANCE: Despite of the above financial figures, the SFC remains as the robust regulatory body in Hong Kong with irreplaceable role as regulator and facilitator in maintaining the integrity and governing regime of this international financial centre. 4. SFC enforcement report shows 175 completed cases in 2023-2024 In the Annual Report 2023-2024 of the SFC, 183 investigation cases had been launched with 175 cases completed, and 24 cases were brought to criminal proceedings. A landmark of investigation cases in 2023 was the highly organized, large scale and sophisticated market manipulation case with several individuals involved and charged with various criminal offences at the High Court in May last year. Moreover, following the investigation by the SFC, cases of two suspects of the key members of a "ramp-and-dump" syndicate were transferred to the District Court. As Mr Tim Lui, Chairman of the SFC, had stated the SFC had gained valuable experiences and achieved remarkable results in the past years, and would continue to ensure the integrity, stability and resilience of the financial markets in Hong Kong amid the emerging challenges over the world. ENFORCEMENT NEWS 5. SFC suspends PICC’s former licensed representative for seven months for failures in managing a private fund On 20 June 2024, the SFC has suspended Mr Shum Wai Nap, former licensed representative of PICC Asset Management (Hong Kong) Company Limited (PICC), for seven months from 20 June 2024 to 19 January 2025 for fund management failures. The investigation found that Shum was the investment manager of a Cayman-incorporated fund (the “Fund”) under PICC between May 2018 to April 2020, and he failed to: (i) properly manage the Fund in line with its investment objectives and restrictions; and (ii) properly manage the risks of the Fund with PICC’s policies. Taking a thorough scrutiny of the Statement of Disciplinary Action of what Shum had done, it serves as a negative example to illustrate how funds should be properly managed ! (1) Failure to adhere to the Fund’s investment strategy, objectives and investment restrictions: the memorandum of the Fund was capital preservation with steady capital appreciation in a diversified portfolio; SHUM only held 1 to 3 stocks with highly concentrated positions, including a Stock X which was NOT in the approved stock pool under the internal policies of PICC’s Investment Committee with respect to the investment mandate. (2) Failure to mitigate the risks associated with the Fund’s holding of an unsuitable stock: Shum continued with several requests to add the Stock X to the stock pool despite repeated rejections from the Investment Committee with “SELL” only restriction to him, and Shum declined to follow. (3) Failure to manage liquidity risks: under the guideline of illiquid assets (ie, assets that required more than 30 days to sell), holding of illiquid assets should not exceed 20% of a Fund’s portfolio; under Shum’s management, the ratios were as high as 80.7 % and 91.69%! (4) Failure to manage concentration risks: according to PICC’s policies, holding of a single stock should not exceed 20% of the Fund’s total NAV; and the holding of Stock X and others under Shum far exceeded 20%. (5) Failure to comply with PICC’s stop loss procedure: there is a guideline for stop-loss of more than 50% of a particular single stock; and Shum did not follow the instructions to execute forced sales of the Stock X within three trading days as required. SIGNIFICANCE: Shum’s repeated failure to properly manage the Fund and his deliberate intention NOT to comply with PICC’s risk management policies was in breach of General Principle 2 (diligence) of the Code of Conduct which requires a licensed person to act with due skill, care and diligence, in the best interests of his clients and the integrity of the market in conducting business activities. The mal-practices of Shum are typical incidences a licensed corporation in asset management should endeavour to avoid as remedial measures to mitigate potential regulatory breaches! 6. WONG Ming Chung was convicted for providing investment advice on Telegram without a licence On 20 June 2024, the Eastern Magistrates’ Court today convicted Mr WONG Ming Chung (WONG) for providing investment advice on a subscription-based chat group on Telegram he hosted without a licence in a prosecution brought by the SFC. WONG pleaded guilty to the charge and was fined HKD10,000 together with the SFC’s investigation costs. The investigation found that between 2 January 2018 and 21 May 2019, WONG hosted a chat group on Telegram named “ FRANKY - 即市直播谷 ” which was opened to members of the public on a subscription by payment basis. SIGNIFICANCE: Despite that WONG was licensed under the SFC to conduct with Type 1 (dealing in securities) and Type 4 (advising in securities) regulated activities, the CRUX of the conviction was that the Telegram group was not operated on behalf of the licensed corporation WONG was accredited to, but for his own remunerations. 7. SFC disciplined WU Chao for circumventing personal dealings On 26 June 2024, the SFC prohibited Mr WU Chao (“WU”), a former responsible officer, manager-in-charge (MIC) and chief operations officer of DA International Financial Service Limited (DA), from re-entering the industry for three years and seven months from 26 June 2024 to 25 January 2028. The investigation found that between February and April in 2022, WU concealed from DA his beneficial interest in and direct control over a securities margin account held by a third party at DA without obtaining DA’s prior approval. WU’s conduct circumvented DA’s employee dealing policy from being monitored under personal trading activities. In all, the unauthorised transactions conducted in the account at the material time totalled $7.3 million. WU also abused his right as a member of DA’s senior management to make 33 unauthorised adjustments to the margin loan limits of the account and the margin financing ratios to facilitate his trading activities. The SFC considers that WU’s conduct was dishonest and it called into question his fitness and properness to be a licensed person. SIGNIFICANCE: No matter how comprehensive and stringent are the prevailing rules and guidelines, there are always loopholes to be abused, in particular by anyone who is in authority to circumvent and override the existing regulatory framework for his own advantages.” For more details, please click on the title of the topic above. ================================= ~ Make It Right Today, Better Tomorrow ~ ================================= The Newsletter is for general information purpose only and is not intended to constitute legal or other professional advice. For enquiries, please email to support@complianceone.hk or WhatsApp us at (852) 95164607 . Unit 1104, 11/F, 299QRC, 287-299 Queen's Road Central, Sheung Wan, Hong Kong Tel: (852) 39550277 www.complianceone.hk

The topics discussed in this monthly newsletter for insurance are as follows: ComplianceOne Insurance Newsletter – Jan 2025 The topics discussed in this monthly newsletter are as follows: 1. Hong Kong Solidifies Insurance-linked Security Leadership with First Multi-Peril Catastrophe Bond 2. Insurance Sector Pivots to Silver Economy as Population Ages 3. Key highlights of provisional business Q1–Q3 2024 Statistics 4. Revision of the Mainland China Visitors Definition 5. SFC bans Chan Ka Him for life for insurance fraud IA News Updates 1. Hong Kong Solidifies Insurance-linked Security Leadership with First Multi-Peril Catastrophe Bond The IA announced the successful issuance of a catastrophe bond by Taiping Reinsurance Company Limited through its special purpose insurer, Silk Road Re Limited. This bond marks a milestone as the first insurance-linked security (“ ILS ”) in Hong Kong covering multiple perils and triggers, offering three-year protection against named storms in the United States and earthquakes in Mainland China from 1 January 2025. Key Highlights: This is the sixth ILS issuance in Hong Kong since the launch of the city’s dedicated regulatory framework and pilot grant scheme in 2021. Total ILS transactions in Hong Kong now stand at US$748 million (HK$5.86 billion), reflecting robust growth in the region’s insurance-linked securities market. SIGNIFICANCE: The bond highlights Hong Kong’s evolution into a versatile ILS hub capable of structuring complex, multi-jurisdictional risk solutions. By covering both U.S. and Mainland China perils, it demonstrates the city’s ability to attract global investors while supporting regional resilience against climate-related risks. Note: ILS are different from Investment-Linked Assurance Schemes (“ ILAS ”); ILS: Financial instruments linked to insurance events like natural disasters, transferring risk to capital markets; ILAS: Life insurance policies combining investment and insurance, focused on long-term savings and retirement planning. 2. Insurance Sector Pivots to Silver Economy as Population Ages The IA spearheaded a critical dialogue on the role of insurance in harnessing opportunities within the silver economy at the Asian Financial Forum (“ AFF ”). Titled “Navigating the Silver Economy: Insurance Sector Opportunities in an Aging Society,” the panel convened industry leaders and academics to address challenges and innovations in serving aging populations, both locally and across the Greater Bay Area (“ GBA ”). Key Highlights: Demographic Shifts: Explored Hong Kong’s rapidly aging population and the growing demand for tailored insurance solutions. Protection Gaps: Identified unmet needs in elderly healthcare, retirement planning, and long-term care coverage. Cross-Border Potential: Emphasized opportunities for Hong Kong insurers to collaborate with GBA partners to deliver integrated services. Education & Literacy: Stressed the need to boost public understanding of retirement planning and insurance products. SIGNIFICANCE: With over 20% of Hong Kong’s population projected to be aged 65+ by 2030, the panel underscored the urgency for insurers to develop products that address longevity risks, chronic care, and income security. The discussion also highlighted Hong Kong’s strategic role in leveraging GBA integration to create region-wide solutions. For more details, please refer to AFF full programme here . 3. Key highlights of provisional business Q1–Q3 2024 Statistics The IA’s released the provisional business statistics for the first three quarters of 2024, which highlights trends of long-term business, general business, and regulatory shifts critical for insurance licensees. Mainland Visitor Business: Adapt to Shifting Dynamics: While premiums from Mainland visitors remain significant (27.6% of new individual life business), the IA’s focus on monitoring this segment signals stricter enforcement of unlicensed referral practices. Recent discussions indicate a zero-tolerance stance on: (i) Unlicensed cross-border referrals (e.g. unlicensed Mainland agents/brokers directing clients to Hong Kong insurers); and (ii) non-compliant commission-sharing arrangements with unregulated third parties. For more details of unlicensed referral, please refer to circular issued by IA on 22 May 2024. Regulatory Overhaul: Prepare for RBC Changes: The Risk-based Capital (“ RBC ”) regime, effective 1 July 2024, introduces new reporting standards. Insurers now report by financial year instead of calendar year, and offshore general insurance metrics are now included. Historical comparisons may be unreliable—verify data context with partners. For more details of RBC regime, please refer to here . Semi-Annual Reporting: Starting Q1 2025, the IA will publish Mainland visitor business statistics semi-annually due to seasonal fluctuations. Long-Term Business Growth: New policy premiums for long-term business (excluding retirement schemes) reached $169.6 billion, up 15.7%. General Business Performance: Gross and net premiums for general business in the first three quarters of 2024 were $75 billion and $51.7 billion. For additional summary of the provisional statistics, please refer to the Annex and Market & Industry Statistics published by IA. SIGNIFICANCE: As the insurance landscape evolves, licensees must stay agile and informed. Adapting to the shifting dynamics of Mainland visitor business is crucial, especially with the IA's stricter enforcement on unlicensed referral practices. Aligning product offerings with Mainland visitor preferences and ensuring compliance with the new RBC regime will help licensees effectively navigate these regulatory changes. Market News 4. Revision of the Mainland China Visitors Definition The IA proposed to revise the official definition of Mainland China Visitors (“ MCV ”) to exclude individuals under related talent schemes (e.g. Top Talent Pass Scheme) to prevent data inflation and improve data accuracy and address risks tied to visitors’ limited familiarity with local insurance regulations. MCV Definition proposal Current MCV Definition: Mainland residents entering Hong Kong with a Double Entry Permit or Chinese passport. Proposed MCV Definition: Specific talent schemes participants may no longer be classified as MCV. Additionally, the IA will explore the possibility of collecting data on new policies from different regions. Considering the seasonal travel patterns of Mainland visitors, the related business statistics will be published semi-annually instead of quarterly starting from Q1 2025. Participating Business Reforms The IA has proposed three major changes to enhance transparency and consumer protection: Cap on Commission Rates: An annual review of maximum illustration rates, divided into HKD and non-HKD policy categories. Commission Ratio Comparison Platform: A public platform to compare insurers' actual vs. projected dividend payouts. Referral Compensation Review: An overhaul of unlicensed referrer’s commission structures. The above-mentioned will be reviewed and announced by IA within the year, with the cap on commission rates expected to be implemented first. SIGNIFICANCE: Reviewing the definition of Mainland visitors aims to prevent data inflation and improve consumer protection and risk management. The reforms in participating business practices will enhance transparency and ensure fair treatment of consumers. Licensed insurance companies and brokers need to adjust the business strategies promptly to comply with the new regulations and maintain client trust. Enforcement News 5. SFC bans Chan Ka Him for life for insurance fraud The SFC has permanently banned Mr. Chan Ka Him, a former insurance specialist at Standard Chartered Bank (Hong Kong) Limited, from re-entering the industry following his criminal convictions for insurance fraud. Case Details: Between January and March 2019, Chan assisted two clients in taking out insurance policies. Between August and September 2019, Chan induced one client to transfer US$52,300 and another client to transfer over HK$420,000 to a bank account connected to him, under the pretense that these transfers were for premium payments. Chan attempted to cancel the clients’ insurance policies by falsely representing to the insurer that the clients wished to do so. SIGNIFICANCE: Chan was sentenced to 20 months’ imprisonment by the District Court on 2 February 2024 after being convicted of three counts of fraud and one count of attempted fraud. For more details, please refer to Judgment – DCCC 1157/2022 The SFC considers that Chan is not fit and proper to be a regulated person due to his criminal convictions. [End of ComplianceOne Insurance 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 Insurance Newsletter – Mar 2025 The topics discussed in this monthly newsletter are as follows: 1. IA and HKMA Clarify Regulatory Framework for Indexed Universal Life (IUL) Products 2. IA publishes its Annual Report 2023-24 3. Insurance Complaints Bureau Releases 2024 Claims Complaint Statistics and Case Review 4. Macau Prepares for a Modernized Insurance Framework 5. PAObank Secures Insurance Agency License and Forms Strategic Partnerships 6. First Case of Insurance Broker Fined for Late Submission of Financial Statements 7. Suspension of Chan Lok Wang’s Insurance License for falsification client signature IA News Updates 1. IA and HKMA Clarify Regulatory Framework for Indexed Universal Life (IUL) Products On 7 April 2025, the IA and Hong Kong Monetary Authority (“ HKMA ”) issued a circular to chief executives of authorized insurers, institutions, and licensed insurance intermediaries, addressing the growing interest in Indexed Universal Life (“ IUL ”) insurance products among high-net-worth clients. The circular clarifies the application of the insurance regulatory framework to IUL products, ensuring policyholder protection and fair treatment. Classify Scope: IUL products combine life insurance with a cash value component tied to financial indices (e.g. stock market indices), offering premium payment flexibility. Unlike traditional universal life insurance, the cash value is linked to index performance, classifying IUL as Class C (linked long term) business under the Insurance Ordinance (Cap. 41). Regulatory Application: As Class C business, IUL products fall under guidelines such as GL15 (Underwriting Class C Business) and GL26 (Sale of ILAS Products), alongside cross-referenced GL28 (Benefit Illustrations) and GL30 (Financial Needs Analysis). However, recognizing IUL’s hybrid nature with traditional universal life features, certain GL16 (Underwriting Long Term Insurance Business) provisions also apply. For IUL products sold exclusively to Professional Investors (“ PIs ”) as defined by the Securities and Futures Ordinance (Cap. 571), adjustments to GL15 and GL26 requirements are permitted to balance practicality and protection. Key Highlights: Some Class C provisions are less relevant to IUL or require tailored application. Traditional universal life elements necessitate select GL16 compliance. For PI-only sales, certain GL15 and GL26 rules can be offset without compromising safeguards. SIGNIFICANCE: This clarification responds to industry enquiries amid rising demand for IUL products, offering a practical framework that aligns innovation with regulatory oversight. It ensures robust protection for sophisticated investors while fostering market growth. The Annex to the circular details specific guideline provisions and their adjusted application for IUL products targeting PIs, which insurers and intermediaries must follow. 2. IA publishes its Annual Report 2023-24 The IA released its Annual Report 2023-24 on 19 March 2025, titled "Striding towards a Sustainable Future." This report showcases the IA’s pivotal role in guiding Hong Kong’s insurance industry through a challenging year, spotlighting key achievements such as: Risk-based Capital (RBC) Regime The IA successfully implemented the RBC regime, a framework that requires insurers to maintain capital aligned with the risks they underwrite. This ensures financial stability, protects policyholders, and positions Hong Kong as a leader in global insurance standards. Insurance-linked Securities (ILS) Market Progress in developing the ILS market has allowed insurers to transfer risks to capital markets, enhancing risk management and attracting international investors. This strengthens Hong Kong’s reputation as a premier financial hub. Conduct Supervision and Disciplinary Enforcement The IA intensified its efforts to oversee conduct and enforce disciplinary measures, ensuring that insurers and intermediaries uphold high ethical standards. These actions safeguard policyholder interests and bolster trust in the industry. SIGNIFICANCE: Through these initiatives, the IA is not only addressing today’s challenges but also laying a foundation for the long-term sustainability of Hong Kong’s insurance sector. The report reflects a commitment to resilience, innovation, and policyholder protection in an ever-evolving global landscape. The complete Annual Report 2023-24 , along with an engaging abridged animated version, is now available on the IA website. 3. Insurance Complaints Bureau Releases 2024 Claims Complaint Statistics and Case Review The Insurance Complaints Bureau (“ ICB ”) in Hong Kong released its 2024 claims complaint statistics on 27 March 2025, showing a rise in disputes, particularly in medical and travel insurance. Of the 646 cases received, 356 were resolved, with 111 complainants receiving over HK$10 million in total compensation, the highest being HK$120,000. The 356 resolved cases showed the following distribution: Policy term interpretations: 54% of cases, the most common issue. Exclusions: 16.5% of cases. Non-disclosure of facts: 15.5% of cases. Leading policy types causing disputes were: Hospitalization/medical insurance: 46% of cases. Travel insurance: 27% of cases. Key Case Examples: Medical Insurance Dispute: A policyholder insured in 2018 declared good health but later clarified on the policy issuance date that a 2017 hospital record (using her social security card) belonged to her father due to liver issues. In 2023, diagnosed with breast cancer, she claimed compensation, but the insurer initially denied it, citing non-disclosure of liver conditions diagnosed as primary biliary cirrhosis. The ICCP investigated, noting she provided a 2022 normal liver ultrasound report, indicating she was unlikely to have had liver disease in 2017. The ICB ruled in her favor, ordering the insurer to pay HK$120,000. Travel Insurance Dispute: A policyholder planned a trip but a blizzard halted train services for three days, delaying his scheduled trip. The insurer offered 50% of the trip delay limit, arguing no specific train ticket was booked. The ICCP found the delay due to "adverse weather" was covered, supported by evidence like hotel bookings, and recommended full compensation, which the insurer accepted. SIGNIFICANCE: The 2024 data reflect the ICB’s role in balancing consumer protection with industry practices, particularly as medical and travel insurance disputes rise. Those cases illustrate the ICCP’s emphasis on objective evidence and fair interpretation, suggesting policyholders need accurate disclosures and insurers clear term explanations. It serves as a reference for insurers and policyholders, highlighting communication and evidence’s role in reducing disputes, especially in an increasingly complex insurance environment for medical and travel policies. 4. Macau Prepares for a Modernized Insurance Framework The Monetary Authority of Macau (“ AMCM ”) is laying the groundwork for the new Insurance Intermediaries Law (Law No. 15/2024) , set to take effect on 1 August 2025. Key changes in the law include: Extending license validity to two years Introducing pre-approval and notification requirements for specific actions Expanding suitability assessments for intermediaries Enhancing the AMCM’s supervisory powers The AMCM has taken proactive steps to ensure a smooth transition. Recently, it joined an exchange session hosted by the Macau Financial Society, briefing representatives from banks, insurers, brokerages, and corporate agents on the law’s details. SIGNIFICANCE: These updates go beyond mere administration—they align Macau’s standards with global best practices, boosting the sector’s competitiveness and resilience. This landmark legislation replaces the outdated Decree-Law No. 38/89/M , in place for 36 years, and aims to bring the regulatory framework for insurance intermediaries into the modern era. With 7,798 licensed intermediaries as of 30 April 2024, this sector is a vital pillar of Macau’s financial ecosystem. Market News 5. PAObank Secures Insurance Agency License and Forms Strategic Partnerships On 5 March 2025, PAObank – a leading digital bank in Hong Kong, has been granted an insurance agency license by the IA. This milestone allows PAObank to act as an intermediary. PAObank will provide customers with a range of general and life insurance products, all accessible through a seamless, fully online purchasing experience. The IA-issued license empowers PAObank to broaden its financial services by offering insurance solutions. As an insurance agency, PAObank will distribute products from its appointing principals China Ping An and FWD to its growing customer base. Strategic Partnerships PAObank has partnered with two powerhouse insurance providers: China Ping An Insurance (Hong Kong) Company Limited and FWD Life Insurance Company (Bermuda) Limited. These collaborations unlock a broad spectrum of insurance offerings, ranging from general policies such as motor, travel, and home insurance, courtesy of Ping An, to life insurance solutions provided by FWD. Digital Innovation PAObank is redefining convenience by harnessing advanced fintech and API technology. By syncing its digital platform with those of Ping An and FWD, the bank offers a streamlined, entirely online process for purchasing insurance. Customers can now browse options, choose coverage, and finalize policies in just a few clicks without any paperwork or branch visits required. SIGNIFICANCE: PAObank 's entry into the insurance business is not only a major step forward for its business, but also demonstrates its determination to build a comprehensive financial services platform. Through its collaboration with Ping An Hong Kong and FWD, relies on the professional advantages of the United Insurance Group to provide customers with high-quality insurance products, while combining its banking digital technology advantages to meet the market's urgent demand for convenient financial services. This "bank + insurance" (bancassurance) model is not unfamiliar in Hong Kong, but PAObank has taken this traditional cooperation to a whole new level with its fully online service model. Customers can purchase reliable protection for themselves and their families in just a few simple steps. Enforcement News 6. First Case of Insurance Broker Fined for Late Submission of Financial Statements On 19 March 2025, a licensed broker company was convicted by the Eastern Magistrates’ Courts and fined $26,060 for failing to submit audited financial statements within the required six-month deadline, on two occasions. This is the first such conviction by the IA. Case Overview The licensed broker company, was found guilty of contravening section 73(1) of the Insurance Ordinance (Cap. 41). The company failed to submit its audited financial statements, auditor’s report, and auditor’s compliance report within the mandatory six-month period following the end of its financial year—on not one, but two separate occasions. As a result, the court imposed a fine of $26,060. SIGNIFICANCE: These documents are more than just paperwork—they are vital tools for assessing whether a broker meets the regulatory standards necessary to responsibly handle public insurance business. Regulators (including IA) relies on them to ensure transparency, accountability, and trust within the industry. Failing to submit them on time can signal potential issues with a broker’s operations and erode public confidence. This case highlights the need for strict adherence to regulatory requirements to uphold industry standards and public trust. 7. Suspension of Chan Lok Wang’s Insurance License for falsification client signature On 12 March 2025, the IA suspended Mr. Chan Lok Wang’s insurance license for four months. The suspension follows his falsification of a client’s signature on a policy surrender form. Case Overview In December 2022, Mr. Chan, having inherited a client from colleagues at his company, received a partially completed surrender form signed by the client to terminate one of their two long-term insurance policies. Mistakenly assuming the client intended to surrender both policies, Mr. Chan photocopied the original form, completed it with details for the second policy, and submitted it without verifying the client’s intentions. Consequently, both policies were cancelled. In determining the four-month suspension, the IA considered several factors: Mr. Chan’s admission of his misconduct, the internal disciplinary measures already imposed by his insurer, and his full cooperation throughout the IA’s disciplinary process. SIGNIFICANCE: The IA has made it clear that forging a client’s signature—irrespective of intent or method—is unacceptable for a licensed insurance intermediary. Such actions can expose policyholders to significant risks or financial harm. This case also highlights the critical need for due diligence when managing orphan policies to uphold public trust in the insurance industry. [End of ComplianceOne Insurance Newsletter – March 2025] For more details, please click on the title of the topic above. ================================= ~ Make It Right Today, Better Tomorrow ~ ================================= The Newsletter is for general information purpose only and is not intended to constitute legal or other professional advice. For enquiries, please email to support@complianceone.hk or WhatsApp us at (852) 95164607 . Unit 1104, 11/F, 299QRC, 287-299 Queen's Road Central, Sheung Wan, Hong Kong Tel: (852) 39550277 www.complianceone.hk

The topics discussed in this monthly newsletter 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 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. [End of ComplianceOne Newsletter – August2025] For more details, please click on the title of the topic above. ================================= ~ Make It Right Today, Better Tomorrow ~ ================================= The Newsletter is for general information purpose only and is not intended to constitute legal or other professional advice. For enquiries, please email to support@complianceone.hk or WhatsApp us at (852) 95164607 . Unit 1104, 11/F, 299QRC, 287-299 Queen's Road Central, Sheung Wan, Hong Kong Tel: (852) 39550277 www.complianceone.hk

The topics discussed in this monthly newsletter are as follows: ComplianceOne Newsletter – June 2022 ComplianceOne Newsletter – June 2022 The topics discussed in this monthly newsletter are as follows: 1. SFC reminded investors of risks associated with non-fungible tokens 2. SFC proposed amendments to the Securities and Futures Ordinance (“SFO”) to strengthen enforcement 3. SFC fined China Everbright Securities $3.8 million for breach of anti-money laundering (“AML”) regulatory requirements 4. SFC fined CES Capital International (HK) Co. Limited $3.2 million for failures in managing private funds MARKET NEWS 1. SFC reminded investors of risks associated with non-fungible tokens The SFC raised concern to investors of the risks associated with non-fungible tokens (NFTs) which become popular in recent years. As with the other virtual assets, NFT are exposed to heightened risks of illiquid secondary markets, volatility and opaque pricing. Despite the majority of the NFTs are intended to represent a unique copy of an underlying asset such as a digital image, artwork, music or video; some NFTs have trespassed to the boundary between a simple collectible and a financial asset, say securitized in the form of a collective investment scheme (CIS). The SFC has expressed that where an NFT constitutes an interest in a CIS, marketing or distributing it may constitute a “regulated activity” which necessitates a license unless an exemption applies. Significance: NFTs allow the purchase and ownership of one-time digital assets, with ownership records kept in blockchain. Make it explicitly, the fads of NFTs allow virtual assets to become as collectible and tradeable as real-world works. Such fancy collectables as NFTs seem to offer some sort of get-rich-quick stampede which evolve even faster than the cryptos counterparts. Investors opting to these fancy stuffs should bear in mind always the inherent risks and their underlying intrinsic values before putting their hard-earned money into the basket. 2. SFC proposed amendments to the SFO to strengthen enforcement The SFC launched a two-month consultation in June on proposed enforcement-related amendments to the SFO to enable it to take more effective enforcement action. The amendments would (i) broaden the scope of some SFO provisions to expand the basis for the SFC to apply for remedial and other orders against a regulated person under section 213; and (ii) also enable the SFC to address insider dealing perpetrated in and outside Hong Kong. Amendments particularly deserve attention include clarifying an exemption such that, unless authorized by the SFC , advertisements of investment products which are intended to be sold only to professional investors may only be issued to professional investors who have been identified in advance as such by an intermediary through its know-your-client and related procedures Significance: As exemplified in the speech made by Mr. Ashley, the CEO of the SFC, "effective enforcement is essential to safeguard the integrity of Hong Kong"; the advertisements of investment products which are restricted to professional investors should not be made accessible to investors in general public looks reasonable especially with the overwhelming emergence of derivatives products and cryptos of which the inherent volatilities are mostly beyond the tolerance levels even of any professional investors. ENFORCEMENT NEWS 3. SFC fined China Everbright Securities for breach of AML regulatory requirement The SFC has reprimanded and fined China Everbright Securities (HK) Limited (“ CESL ”) $3.8 million for failures in complying with AML/CFT regulatory requirements. The SFC found that CESL failed to implement adequate systems and controls to guard against and mitigate the risk of money laundering associated with third party deposits between January 2015 and February 2017. CESL also failed to detect suspicious fund deposits in some of the client accounts and make appropriate enquiries despite the presence of identifiable red flags. 4. SFC fined CES Capital Int’l (HK) Co. Ltd for failures in managing private funds The SFC reprimanded and fined CES Capital International (Hong Kong) Co. Ltd. (“ CESHK ”) HK$3.2 million over its failure to discharge its duties as an investment manager of two funds between February 2015 and July 2017. The SFC found that CESHK failed to (i) perform sufficient due diligence and monitoring of the funds' underlying investments and (ii) undertake satisfactory risk management measures to identify, quantify and manage the risks exposed to the funds. Also, CESHK failed to keep a proper audit trail of the due diligence and monitoring allegedly performed on the funds and their underlying investments. Significance: It seems the first time the SFC stepped into how an asset management company managed the funds, and scrutinized the deficiencies in the daily routines for failures to comply with what are supposed to be essential procedures expected from the regulatory bodies. Given the intention of the SFC to strengthen its enforcement efficiencies as mentioned in news topic #2 above, it is likely to have more cases coming up especially for those asset management companies where the rights of decisions of investments are not explicitly delineated and exercised in compliance with the investment mandates. Since 15th June, 2021, CESHK has been ceasing business of regulated activities, according to information from its company website. For more details, please click on the title of the topic above. ================================= ~ Make It Right Today, Better Tomorrow ~ ================================== The Newsletter is for general information purpose only and is not intended to constitute legal or other professional advice. For enquiries, please email to support@complianceone.hk or call us at (852) 39550277 . 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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。

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 are as follows: ComplianceOne Newsletter - December 2023 The topics discussed in this monthly newsletter are as follows: 1. SFC issued key regulatory work and market data in quarterly report 2. SFC would consider authorising spot virtual asset ETF funds for public offering 3. HKMA proposes to implement regulatory regime for stablecoin issuers to secure protection to the public 4. SFC fined Ruifeng Securities Limited $5.2 million and suspended its responsible officer for fund management and account opening failures 5. SFC banned Amy Chow Bik Sum for life for conviction of bribery offence 6. SFC fined Central Wealth Securities Investment Limited $1 million for breach of Financial Resources Rules 7. SFC suspended Hau Bing Leung for 15 months for unauthorized third-party operated securities account MARKET NEWS 1.SFC issued key regulatory work and market data in quarterly report On 7 Dec 2023, the SFC published its latest Quarterly Report to provide operational and financial highlights for the quarter from July to September 2023. Encouraging achievements are as follows. (1) On asset management, exchange-traded funds (“ETFs”) were a bright spot with robust net inflow of HKD16.2 billion, while their average daily turnover (“ADT”) recorded with a healthy growth of 12% to HKD14.8 billion. (2) Besides ETF figures, the number of open-ended fund companies (“OFCs”) was also recorded with an encouraging growth of 87% year-over-year to 187. Hong Kong-domiciled funds recorded net inflows ($11.7 billion) for another quarter. (3) For the listing market, the SFC processed 39 new listing applications in the quarter, including four from pre-profit biotech companies. (4) For licensed activities, the SFC witnessed growth in the number of licence applications received, up 13% from the quarter before and 6% from a year ago. It also granted 33 corporate licences during the quarter, mainly for asset management (Type 9) and advising on securities (Type 4). (5) On the VA front, the SFC stepped up information dissemination on virtual asset trading platforms (“VATPs”) by publishing several VATP lists online, including a list of applicants. SIGNIFICANCE: Though fraught with negative comments that the status of Hong Kong as an international financial centre was fading away, the figures and achievements stated above demonstrate to the world how resilient Hong Kong can be from the previous economic drawback due to COVID-19 epidemic! 2. SFC would consider authorising spot virtual asset ETF funds for public offering A circular dated 22 Dec 2023 set out the requirements under which the SFC would consider authorising investment funds with exposure to virtual assets (“VA”) of more than 10% of their net asset value (“NAV”) for public offerings in Hong Kong ( SFC-authorised VA Funds ) under sections 104 and 105 of the Securities and Futures Ordinance (“SFO”). In the light of rapid evolvement of the VA landscape and the increasing demand for investment products providing exposure to VA, and VA-related ETFs offered in major overseas markets, where accesses to both retail and professional investors are available; the SFC has introduced regimes that allow the offering of certain VA products to the Hong Kong public with appropriate investor protection safeguards. The SFC put forward requirements for SFC-authorized funds with regard to two categories: (i) funds investing directly in the same spot VA tokens tradable on the SFC-licensed VATPs (i.e., direct exposure ); and (ii) funds acquiring indirect investment exposure to such VA (i.e., indirect exposure ) through futures traded on conventional regulated futures exchanges. A snapshot of the requirements on SFC-authorized VA Funds Pre-requisites to start with are that the Funds should meet the applicable requirements in the Overarching Principles Section and the Code on Unit Trusts and Mutual Funds (“UT Code”) in the SFC Handbook for Unit Trusts and Mutual Funds, Investment-Linked Assurance Schemes and Unlisted Structured Investment Products. Additional requirements are applicable to the followings (please refer to original for details): (a) Management companies : good compliance record with competent staff knowledgeable in VA product. (b) Eligible underlying VA : accessible on SFC-licensed VATPs. (c) Investment Strategy : (i) funds with direct or indirect exposure in eligible VA tokens; (iii) only for those traded on conventional regulated futures exchanges; (iii) no leverage in exposure to VA at the fund level (d) Transactions and direct acquisitions of spot VA : (i) transactions and acquisitions of spot VA by SFC-authorised VA Funds should be conducted through SFC-licensed VATPs, or authorized financial institutions where subscriptions can be in form of “in-cash” or “in-kind” types; (ii) both in-kind and in-cash subscription and redemption are allowed for SFC-authorised spot VA ETFs. (e) Custody : (i) the custodian function of the VA Fund should only be delegated to SFC-licensed VATPs or any authorised financial institutions ("AIs”); (ii) VA holdings owned by clients should be segregated, and stored most in cold wallet for safety purpose; (iii) the private keys should be securely stored. (f) Valuation : an indexing approach based on VA trade volume across major VA trading platforms should be adopted. (g) Service Providers : it is necessary to ensure all service providers are competent. (h) Disclosure and Investor education : the offering documents, including the product key facts statements (“KFS”), of SFC-authorised VA Funds should disclose the investment limits and key risks related to the funds’ VA exposures. (i) Distribution : refer to the relevant requirements for intermediaries and distribution of SFC-authorised VA Funds as set out in the Joint Circular (dated 22 Dec 2023 SIGNIFICANCE: Hong Kong maybe the first pioneer in allowing the public offering of spot VA ETF , and it further consolidates the status of Hong Kong being the international financial centre for licensing regime of digital assets. The HKEX should also ensure the infrastructures should be adaptable and aligned to keep pace with the rapid and ever-evolving VA landscape in order to maintain the competitiveness and attractiveness of Hong Kong as an international financial centre as well. 3. HKMA proposes to implement regulatory regime for stablecoin issuers to secure protection to the public In an announcement on 27 Dec 2023, the Financial Services and the Treasury Bureau (“FSTB”) and the HKMA jointly issued a public Consultation Paper on the legislative proposal for implementing the regulatory regime for stablecoin issuers in Hong Kong. An executive summary for your glance as below. Virtual assets and stablecoins Virtual assets (“VA”), often referred to as crypto-assets, are digital representations of value that are cryptographically secured, typically through the use of distributed ledger technology (“DLT”), like blockchain. Given the intrinsic high price volatility which suffocate the growth of VA, the emergence of stablecoins seems to offer a solution to tackle the problem. Stablecoins can be visualized as a VAs which aim to maintain a stable value with reference to certain asset such as fiat currencies. It can be envisaged as exchanging fiat currency with a stablecoin issuer in return or stablecoins of equivalent value, or vice versa. These tokens with stable value on blockchain could help mitigate the abovementioned issues of high volatilities, which could in turn improve the overall efficiency of “on-chain” transactions. Potential use cases and risks of stablecoins With the use of DLT, payment and settlement via stablecoins could become more efficient and transparent, and when used in conjunction with smart contracts, stablecoins could also function as “programmable money” and be used to execute complex transactions. The VA market is still far from maturity and will likely continue to evolve, and stablecoins could become the interface between traditional finance and the VA markets. Yet, from the users’ perspective, they could suffer financial losses and disruption in their supposedly smooth daily payment routines if stablecoin issuers fail to maintain adequate reserve assets to uphold the stable value of the stablecoin, especially in redeeming back to fiat currencies. Formulation of a regulatory regime In the light of the potential risk of stablecoins, under our proposed regime, an issuer of stablecoins would be required to obtain a licence from the HKMA if it issues a stablecoin that references the value of one or more fiat currencies (“ fiat-referenced stablecoin ”) in Hong Kong. The licensee would be required to put in place an effective stabilisation mechanism, such as maintaining a pool of high-quality and highly-liquid reserve assets; and would also need to comply with relevant governance, risk management and AML/CFT measure. In particular, only stablecoins issued by licensed issuers could be offered to retail investors. In an ever-changing and evolving market, there is always a dilemma of safeguarding financial stability and embracing innovation. With this in mind, the HKMA plans to roll out a “sandbox” to facilitate the communication of our supervisory expectations with entities that are interested in issuing stablecoins in Hong Kong. SIGNIFICANCE: According to the Consultation Paper, we have the key takeaways: (1) The consultation period will expire on 29 February 2024. (2) There is a transitional period arrangement. It is proposed that the commencement date will be effective one-month upon gazettal of the proposed new ordinance. The pre-existing fiat-referenced stablecoin (“ FRS ”) issuers currently conducting FRS issuance activities may continue to operate under a non-contravention period of 6 months, on condition that they have submitted an application to the HKMA within 3 months of the commencement of the regime; or otherwise, the FRS issuers will have to close down its business by the end of the 4th month. (3) Making a reference from international practices, it is proposed that the minimum paid-up share capital will be either HKD25,000,000 or a fixed percentage at 2% of the par value of FRS in circulation, whichever is higher will be applied. ENFORCEMENT NEWS 4. SFC fined Ruifeng Securities Limited $5.2 million and suspended its responsible officer for fund management and account opening failures On 4 December 2023, the SFC reprimanded and fined Ruifeng Securities Limited (“RSL”) HK$5.2 million over failures relating to its fund management activities and account opening procedures. It was found that RSL invested about 90 per cent of the fund’s US$94.5 million net asset value into financial instruments which was identified as having various downside factors in their own analysis and such material information was not disclosed in the fund. It was also found that RSL had failed to adopt acceptable account opening procedures for verifying the identities of clients who opened their accounts on a non-face-to-face basis through RSL’s mobile application between 26 November 2018 and 31 July 2020. As a result of this investigation, the SFC also suspended the licence of Mr Fang Zhi for 10 months from 1 December 2023 to 30 September 2024 for failing to discharge his duties as a responsible officer of RSL in charge of its fund management activities. 5. SFC banned Amy Chow Bik Sum for life for conviction of bribery offence It was announced on 13 December 2023 that the SFC had banned Ms Amy Chow Bik Sum, a former assistant customer service manager of OCBC Wing Hang Bank Limited (“OCBC”), from re-entering the industry for life following her conviction of bribery offence. The Kwun Tong Magistrates’ Court found that on 15 July 2021, Chow, who handled residential mortgage applications at OCBC, offered an employee of OCBC Wing Hang Credit Limited (“OCBC Credit”) a rebate of referral fees from an external party as a reward for referring OCBC Credit’s clients to that party, who would in turn arrange mortgage refinancing from other banks or financial institutions. The SFC considers that Chow is not a fit and proper person to be licensed or registered to carry on regulated activities as a result of her criminal conviction . 6. SFC fined Central Wealth Securities Investment Limited $1 million for breach of Financial Resources Rules On 18 December 2023, the SFC reprimanded and fined Central Wealth Securities Investment Limited (“CWSIL”) $1 million for failures in complying with the Securities and Futures (Financial Resources) Rules (“FRR”). It was found that CWSIL made various accounting and calculation errors in the financial returns submitted to the SFC under the FRR which resulted in overstating its liquid capital between April 2019 and December 2020 (Relevant Period) which was otherwise records of deficits after eliminating the errors. CWSIL’s failure to ensure accuracy in the FRR was mainly attributable to its failure to appoint qualified and competent persons to prepare and review the FRRs, coupled with the fact that its responsible officers were not familiar with the FRR requirements as well. SIGNIFICANCE: The assurance of a qualified and competent staff to conduct the financial returns was a prerequisite to ensure compliance with the FRR under the SFC. With the rapid development and fast-changing regulatory regime in the financial industry, particularly in the recent and buoyant environment with the virtual assets and non-conventional businesses under the regime of regular regulated activities, a precise and accurate financial return prepared by competent staff is of high priority for senior staff with respect to risks management which is the pillar for sustainability of a licensed corporation. 7. SFC suspended Hau Bing Leung for 15 months for unauthorized third-party operated securities account On 27 December 2023, the SFC had suspended the license of Mr Hau Bing Leung (“HAU”), former account executive of Chee Tak Securities Limited (“CTSL”), for 15 months from 22 December 2023 to 21 March 2025. It was found in the investigation that between 1 July 2018 and 5 March 2020, Hau had allowed a third party to operate the securities account of a client at CTSL without obtaining the client’s written authorisation. Having been verbally authorized by the client, the third party and HAU also even carried out personal trades in the client’s securities account; even worse was that HAU prevented CTSL from monitoring the operation of that client’s account and his personal dealings. SIGNIFICANCE: The incidence revealed the deficiency in risk control and trades monitoring, and subsequently exposed the client to potential loss from unauthorized trading and CTSL to potential liability in case of disputes arising from trades in the account concerned. 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