The topics discussed in this monthly newsletter for insurance are as follows: ComplianceOne Insurance Newsletter – October 2025 The topics discussed in this monthly newsletter are as follows: REGULATORY UPDATES PIBA Urges Compliance with IA's Referral Fee Guidelines for Participating Policies and Warns Against High-Risk Practices MARKET NEWS IA Introduces Framework for Domestic Systemically Important Insurers (D-SIIs) JD.com (京東集團) Obtains Insurance Brokerage License in Hong Kong ENFORCEMENT NEWS ICAC Charges Six Individuals, Including Police Officers, in HK$3 Million Insurance Fraud Scheme IA imposed 30-year ban on WONG Ka Keung for conspiring to defraud HK$27 million Regulatory News 1. PIBA Urges Compliance with IA's Referral Fee Guidelines for Participating Policies and Warns Against High-Risk Practices On 13 October 2025, the Professional Insurance Brokers Association (“ PIBA ”) issued the Memo, regarding to the IA circular dated 1 September 2025 , which sets out regulatory expectations for referral fees paid by licensed insurance broker companies on participating policies (those involving profit-sharing). For more detail, please refer to the Memo: PIBA Circulars - IA's regulatory expectation on referral fees Summary of the IA circular Effective from 1 October 2025, all licensed brokers and insurers must fully comply with these rules, which include a 50% benchmark limit on fees to unlicensed referrers to prevent excessive payments and promote fair practices. For more detail, please refer to ComplianceOne Insurance Newsletter – August 2025 (Topic 1) Summary of the PIBA Memo PIBA, having engaged closely with the IA during the guideline development, stressed the need for immediate action: reviewing and revising existing referral contracts to ensure alignment, confirming all arrangements (new or ongoing) meet the expectations, and establishing strong internal controls to avoid non-compliance. The IA has already contacted several broker companies and their Responsible Officers (“ RO ”) in September 2025 to emphasize adherence, indicating potential for stricter enforcement if violations occur. To enhance oversight, the IA plans to issue questionnaires on referral details, conduct on-site and off-site inspections for high-risk cases, scrutinize referral arrangements during license renewals, and apply similar reviews to insurers' due diligence processes. Focus areas include unusual financial statement items like Business Expenses; Large Marketing or Administrative Costs; Rapid Growth in Broker Volumes Reported by Insurers; and Market Intelligence from Complaints. High-Risk Practices The memo also includes an annex outlining high-risk practices to evade the rules, which PIBA strongly advises against due to their legal and regulatory risks. These include: Rumoured Fee Arrangement Potential Risk and Consequences (i) Pass-through payments via technical representatives Detectable through abnormal volumes and triggering AML scrutiny (ii) Misclassifying fees as fictitious services Exposed in audits (iii) Splitting fees across multiple referrers per policy Assessed on total fees (iv) Using offshore companies Ineffective against due diligence requirements (v) Supplementing fees with private profit distributions Inefficient post-tax (vi) Applying for multiple agency licenses to shift business Violating Insurance Ordinance sections 64j and 64k, a criminal offense SIGNIFICANCE: This comprehensive guidance from PIBA reinforces the IA's push for ethical referral frameworks, reducing risks of misconduct and supporting sustainable industry growth. By consolidating reminders on compliance, upcoming regulatory actions, and avoidance of evasion tactics, it equips brokers to prioritize professional standards, enhance transparency, and protect policyholders, ultimately bolstering trust in Hong Kong's insurance sector amid evolving market dynamics. Market News 2. IA Introduces Framework for Domestic Systemically Important Insurers (D-SIIs) On 17 October 2025, the IA announced the implementation of a new framework for classifying Domestic Systemically Important Insurers (“ D-SIIs ”). This macroprudential approach identifies insurers whose potential failure could significantly disrupt Hong Kong's local financial system, necessitating enhanced supervisory measures. The IA will recommend to the Financial Secretary that all D-SIIs be included under the Financial Institutions (Resolution) Ordinance (“ Cap. 628 ”) to enable comprehensive resolvability assessments and resolution planning. The list of Insurers classified as D-SIIs Under this framework, AIA Group Limited (“ AIA ”) and Prudential Corporation Asia Limited (“ Prudential ”) have been designated as D-SIIs. Both entities are recognized as Internationally Active Insurance Groups (“ IAIGs ”), complying with stringent standards within the IA's group-wide supervision framework. Annual assessments will be conducted to review and update classifications, aligning with international best practices. The following table summarizes the classified D-SIIs ( Last update 17 Oct 2025 ): Insurer Remarks AIA Group Limited Internationally Active Insurance Group; subject to group-wide supervision. Prudential Corporation Asia Limited Internationally Active Insurance Group; subject to group-wide supervision. The list shall be updated by the IA when needed, for the latest version, please visit: Domestic Systemically Important Insurers What is a D-SII? D-SIIs are insurers whose failure could cause significant disruption to Hong Kong's financial system due to their size, market importance, and interconnectedness. The IA's D-SII framework uses a two-step assessment process: Quantitative (evaluating size, substitutability, interconnectedness, and liquidity); and Qualitative (considering additional risks and mitigating factors). Designated D-SIIs face enhanced supervision, including resolution planning under the Cap. 628 and integration with frameworks like the IAIS Holistic Framework for systemic risk management. SIGNIFICANCE: This framework enhances financial stability by proactively addressing systemic risks in the insurance sector, ensuring that critical insurers are resilient and resolvable without widespread economic fallout. By designating AIA and Prudential as D-SIIs, the IA reinforces Hong Kong's alignment with global regulatory standards, such as those from the International Association of Insurance Supervisors. Insurers and stakeholders should prepare for heightened oversight, which promotes long-term market integrity and policyholder protection. 3. JD.com (京東集團) Obtains Insurance Brokerage License in Hong Kong On 23 October 2025, JD.com (京東集團) Hong Kong subsidiary - Jingdong Insurance Consultants (Hong Kong) Limited, was granted an insurance brokerage license by the IA in Hong Kong. Spotlight on the Climate Modelling Project Name (EN) Jingdong Insurance Consultants (Hong Kong) Limited Name (CN) 京東保險顧問（香港）有限公司 Licence No. GB1101 Line(s) of Business General & Long Term Business (including Linked Long Term Business) Licence Period Start Date: 14 Oct 2025End Date: 13 Oct 2028 Business Address Suite 603, 6/F., Laws Commercial Plaza, 788 Cheung Sha Wan Road, Kowloon, Hong Kong Responsible Officer(s) LAM Che Chuen (林志全) License No.: IA5762 For more details, please refer to Register of Licensed Insurance Intermediaries The license, which remains valid until October 2028, positions JD.com to expand into the local insurance market by offering brokerage services. The responsible officer for the licensed entity is LAM Che Chuen, a seasoned professional in the sector. This development follows reports of JD.com actively recruiting insurance personnel with relevant licenses and experience in Hong Kong's insurance industry, signalling a strategic push to build a local team. SIGNIFICANCE: JD.com , a major Chinese e-commerce giant with a market value of approximately US$52 billion, is leveraging this license to tap into Hong Kong's robust insurance landscape, which has seen significant growth from Mainland Chinese visitors contributing HK$62.8 billion in new business premiums in 2024. The move aligns with broader efforts by tech firms to integrate financial services, including insurance, into their platforms. JD.com 's entry into Hong Kong's insurance brokerage market enhances competition and innovation, potentially offering digital-first solutions to consumers amid rising demand from cross-border clients. This could drive product diversification and efficiency but also underscores the need for rigorous regulatory oversight to ensure compliance and protect policyholders. Licensed intermediaries and insurers should monitor such expansions for partnership opportunities while reinforcing internal controls against emerging risks in tech-integrated financial services. Enforcement News 4. ICAC Charges Six Individuals, Including Police Officers, in HK$3 Million Insurance Fraud Scheme On 8 October 2025, the Independent Commission Against Corruption (“ ICAC ”) charged LAM Hin Ho (林顯豪) (“ LAM ”), a 36-year-old police sergeant, along with five others, in connection with a fraud scheme that allegedly defrauded two insurance companies: Sun Life Hong Kong (香港永明金融) (“ Sun Life ”); and China Taiping Life Insurance (Hong Kong) (中國太平人壽保險(香港) (“ China Taiping ”)) The fraud scheme with approximately HK$3 million in commissions, bonuses, and allowances. The scheme involved recruiting dummy insurance agents and policyholders to submit 20 fraudulent policy applications between December 2016 and June 2024. The following table outlines the key timeline of events based on official ICAC disclosures: Timeline Event/Action Source/Link Dec 2016 - Jun 2024 Allegedly recruited dummy agents (family, friends, colleagues) and submitted 20 false policy applications; arranged falsified credentials for one participant. ICAC Press Release (8 Oct 2025) 8 Oct 2025 Charged by ICAC along with five co-defendants; bail granted. ICAC Press Release (8 Oct 2025) 9 Oct 2025 Court appearance at Eastern Magistrates' Court; case transferred to District Court. Case Number: ESCC 2632/25 ICAC Press Release (8 Oct 2025) 6 Nov 2025 ICAC update on ongoing case; confirmation of two fugitives implicated with arrest warrants issued. ICAC Press Release (6 Nov 2025) LAM faces 21 charges: 20 counts of fraud under Section 16A of the Theft Ordinance and one count of conspiracy to make false instruments. He allegedly conspired with an insurance company mid-level manager (who remains at large) to recruit family members, friends, and police colleagues as dummy insurance agents. False representations were made to induce the insurers to underwrite the policies and release payments totalling around HK$1 million from Sun Life and HK$2 million from China Taiping. Additionally, LAM is accused of arranging falsified academic credentials for one co-defendant to join China Taiping to facilitate the scheme. A recent ICAC update on 6 November 2025 confirmed the ongoing proceedings against the six charged individuals, with two additional suspects—a former mid-level manager at the involved insurers and another individual—implicated but currently at large. Arrest warrants have been issued for these fugitives. The defendants were granted bail and appeared in Eastern Magistrates' Court on 9 October 2025, with the case transferred to the District Court for further handling. SIGNIFICANCE: This case highlights the persistent risks of insurance fraud through manipulated agency structures and falsified documents, which undermine industry integrity and policyholder trust. It underscores the need for insurers to enhance due diligence in agent recruitment, policy verification, and commission disbursement processes. Regulatory bodies like the ICAC and Insurance Authority continue to prioritize enforcement to deter such schemes, reinforcing Hong Kong's reputation as a transparent financial hub. Insurers are advised to review internal controls and collaborate with authorities to mitigate similar vulnerabilities. 5. IA imposed 30-year ban on WONG Ka Keung for conspiring to defraud HK$27 million On 3 November 2025, the IA imposed a 30-year ban on Mr. WONG Ka Keung (王家強) (“ WONG ”) (Licence number: IE9049), prohibiting him from acting as an insurance intermediary. This disciplinary action stems from his involvement in a large-scale fraud scheme where he conspired with at least nine other individuals to defraud his appointed authorized insurer of approximately HK$27 million over a three-year period. Reasons for the Ban Imposed WONG arranged for patients suffering from critical illnesses to impersonate policyholders and submit false claims, personally profiting around HK$13.5 million. He also forged three sick leave certificates for one patient to support the deception, including forged medical records for a pair of sisters to fraudulently obtain insurance payouts and extend sick leave. Details of the Case - HCCC 182/23 : WONG was charged by the Independent Commission Against Corruption (“ ICAC ”). High Court Judge described WONG as the mastermind, noting that his critical role as an insurance agent constituted a severe breach of fiduciary duty. The judge highlighted that the fraud could have continued indefinitely if undetected, causing ongoing harm to AIA Group Limited (友邦保險香港). As a result, he was sentenced to six years and four months in prison. The IA highlighted that such misconduct constitutes a criminal offense, disrupts market operations, and undermines the legitimate interests of policyholders. The lengthy ban underscores the gravity of the violations. SIGNIFICANCE: This case exemplifies the IA's zero-tolerance approach to fraudulent activities within the insurance sector, reinforcing regulatory enforcement to maintain market integrity and protect policyholders. By imposing one of the longest bans on record, the IA sends a clear deterrent message to intermediaries, emphasizing the severe consequences of criminal involvement in false claims. This action supports broader efforts to enhance trust in Hong Kong's insurance industry, particularly amid rising concerns over misconduct, and aligns with ongoing initiatives to strengthen compliance and ethical standards. [End of ComplianceOne Insurance Newsletter – October 2025] For more details, please click on the title of the topic above. ================================= ~ Make It Right Today, Better Tomorrow ~ ================================= The Newsletter is for general information purpose only and is not intended to constitute legal or other professional advice. For enquiries, please email to support@complianceone.hk or WhatsApp us at (852) 95164607 . Unit 1605, 16/F, West Tower, Shun Tak Centre,168-200 Connaught Road Central, Sheung Wan, Hong Kong Tel: (852) 39550277 www.complianceone.hk

The topics discussed in this monthly newsletter are as follows: ComplianceOne Newsletter - March 2024 The topics discussed in this monthly newsletter are as follows: 1. Reminder to submit audited accounts and BRMQ 2023. 2. Hong Kong sees surge in investment fund net inflows: SFC Quarterly Report 3. Circular to licensed corporations and management companies of SFC-authorized funds-Shortening of the US securities transaction settlement cycle to T+1 4. Insurance Authority signs Memorandum of Understanding with the Hong Kong Police Force to strengthen collaboration MARKET NEWS 1.Reminder to submit audited accounts and BRMQ 2023 We would like to remind you, our valued clients, that pursuant to section 156(1) of the Securities and Futures Ordinance (Cap. 571, laws of Hong Kong), licensed corporations and associated entities of intermediaries (the “Companies”) are required to submit their audited accounts and the BRMQ within 4 months after the end of each financial year to Securities and Futures Commission. The submission deadline for those Companies with financial year end on 31 December 2023 is 30 April 2024. Please prepare sufficient time to fill in the new version of BRMQ2023 which necessitates more preliminary readiness for completion. SIGNIFICANCE: Having noted that the SFC had published a circular dated 23 Dec 2022 as a reminder to the licensed corporations and their associated entities that a revised BRMQ would be adopted. The reminder explicitly stated " LCs and AEs are urged to review and familiarise themselves with the revised questionnaires, which are included in Annex 1 and Annex 2 to this circular, start gathering the newly required data and information and make system enhancements where necessary. " Therefore, the LCs should take a pragmatic and serious attitude to this revised BRMQ, and spare more time than before in order to prepare and consolidate the relevant documentations in fulfilling the stated requirements. 2. Hong Kong sees surge in investment fund net inflows: SFC Quarterly Report On 8 March 2024, the SFC published its latest Quarterly Report to provide operational and financial highlights for the quarter ending 31 December 2023. Key summaries of the Report are as follows: (1) For the asset management regime: there recorded a 92.9% increase year-on-year (YOY) in 2023 with inflows of funds up to HKD87.1 billion into Hong Kong. As at 31 December, the assets under management of the 914 Hong Kong-domiciled funds increased 4.9% YoY as well. (2) For Mainland-Hong Kong Stock Connect: the average daily northbound trading rose 8% YoY in 2023 whilst average daily southbound trading remained steady. Shares traded in both Mainland and Hong Kong stock markets showed increases in 2023 with both northbound and southbound trading recorded with net buys last year, amounting to RMB43.7 billion and RMB292.9 billion. (3) For listing market: the SFC approved rules amendments for GEM listing reforms by introducing a new route for GEM listing and a streamlined mechanism for Main Borad transfer. A total number of 270 listing applications were processed for 2023, with average processing time reduced by 11% YoY to 108 business days. (4) For the SFC license regime: licence applications received rose 16% YoY for the whole year. Of the 56 licensed corporation applications approved by the SFC in the last quarter 2023, Type 9 (asset management) and Type 4 (advising on securities) regulated activities accounted for 88% and 66% (because a licensed corporation may have multiple SFC licenses). And six VATPs applications were received during the quarter. (5) For combating fraudulent activities, the SFC has also established a joint working group with the Hong Kong Police SIGNIFICANCE: Despite the deemed atmosphere from successive news of closures of licensed corporations, findings of the quarter reports though suggest the pessimism pervading through the year is a bit exaggerated. As mentioned in the previous Newsletters, it is not hard to notice that the HKSAR government, the regulatory bodies and the financial institutions all collaborated to preserve the status of Hong Kong as an international financial centre, particularly in its devotion to stay ahead in the development of virtual assets regimes while other competitors are still hesitant. 3. Shortening of the US securities transaction settlement cycle to T+1 A circular was published on 27 March 2024 that effective from 28 May 2024, the standard settlement cycle for transactions in US securities will be shortened from two business days after the trade date (T+2) to one business day after trading (T+1) (the Transition). Since the timeline for completing post-trade settlement process will be compressed, the SFC is of the view that the impact of the Transition may be particular significant for market participants in Hong Kong due to time zone differences. The SFC has notes of reminder to the following entities: Licensed corporations (LCs): (1) Be aware of the cross-currency transaction: since the standard settlement cycle for foreign-exchange transactions remains at T+2, the LCs should be aware of the potential liquidity mismatches and settlement failure from such difference in settlement cycles; (2) To ensure the availability of staff to complete the post-trade settlement processes within the shortened timeframe; (3) To proactively communicating with the clients who are potentially affected by the Transition in order to raise their awareness and facilitate their preparation for a smooth transition. Management companies of the SFC-authorised funds (Funds): (1) The Funds should pay attention to such transition if they have considerable exposures to US securities; (2) Carefully assess the impact of the Transition including any potential mismatches in settlement cycles relating to the arrangement of subscription money from non-US markets to purchase US securities; (3) Making appropriate arrangement such as expanding pre-funding facilities and allocating additional staff to handle the compressed settlement timeline; (4) Give early alerts to investors about any intended changes arising from the Transition which may have material influence on the Funds and investors, and to take remedial actions accordingly. SIGNIFICANCE: The amendment was proposed in February 2023 in the Securities and Exchange Commission (SEC) in US under “ Amendment to Rule 15c6-1 " where it stated that standard settlement cycle for most broker-dealer transactions be shortened from T+2 to T+1, and would be effective on 28 May 2024; obviously it takes more than two years for the brokers to equip themselves in business operation and settlement process in order to ensure a seamless transition. Given the scale of the US stocks markets, brokers in Hong Kong should take this Transition seriously to assure themselves of a seamless and secured transition as well particularly in the eyes of other competitors in the vicinity in SEA. 4.Insurance Authority signs Memorandum of Understanding with the Hong Kong Police Force to strengthen collaboration The Insurance Authority (IA) and the Hong Kong Police Force (HKPF) entered into a Memorandum of Understanding (MoU) on 27 March 2024, setting out the framework between the IA and the HKPF to cooperate and provide guidance on matters such as case referrals, joint investigations, mutual investigative assistance and the exchange of information. During the ceremony, the signing of the MoU between the IA and HKPF have affirmed the joint commitment from both organizations to ensuring the insurance market is underpinned with integrity and trust so that it can continue to make contribution to maintaining Hong Kong’s position as a vital international financial centre. The Assistant Commissioner of Police (Crime), Ms Chung Wing-man, expressed in the ceremony the enthusiasm about the milestone collaboration, stating that the power of the alliance extended far beyond the immediate benefits to the two organisations. It will strengthen the resilience of the regulatory framework and hence, the protection of members of the public. SIGNIFICANCE: It is worth noted that the HKPF and the SFC had already entered into a MoU on 25 August 2017 to formalise and further strengthen co-operation in combating financial crime; and another MoU on 16 September 2022 between HKPF and the Financial Reporting Council (FRC) with the aim of enabling full collaboration and co-operation in combating commercial crimes ad illicit activities in relation to financial reporting and audit quality in Hong Kong. The HKPF has demonstrated to the public of its strong determination to ensure collaboration with other regulatory organizations to establish a full-fledged coverage network to combating financial crimes in order to safeguard the status of Hong Kong as a safe international financial centre. 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

海關在2023年破獲了一間涉嫌洗黑錢的本地找換店，拘捕了包括集團主腦及找換店合規主任在內的4人。 再揭洗黑錢集團陰謀：找換店合規主任及銀行職員涉案 海關在2023年破獲了一間涉嫌洗黑錢的本地找換店，拘捕了包括集團主腦及找換店合規主任在內的4人。該合規主任涉嫌開設空殼公司及銀行帳戶，處理6億港元的犯罪得益。 近日，香港洗黑錢集團的非法活動再次被揭露，在去年10月涉嫌洗黑錢的合規主任並未停止其非法行為，而是繼續在幕後操控，指使另外兩人開設空殼公司及銀行帳戶，三年間洗錢金額高達16億港元。同時，一名銀行職員亦被發現與犯罪集團串通，協助空殼公司開戶並教唆如何規避銀行審查。 「火花II」行動：海關再度出擊 在2024年10月15日至16日，海關展開了為期兩日的「火花II」行動，財富調查科突擊搜查了5個單位和一個商業單位，拘捕了5人，包括再度落網的找換店合規主任及懷疑集團主腦，以及兩名開戶的男子和一名銀行客戶關係經理。 根據海關調查，2020年8月至2023年10月期間，兩名被捕人受人指使，開設兩間空殼公司，分別在6間本地銀行，開設總共23個戶口。開戶時，兩間公司報稱從事手機程式設計及從事資訊科技，惟兩間公司至成立起都沒有業務地址，根據稅務紀錄亦無任何收入申報。案發期間，兩名被捕人作為公司董事，其兩間公司開立的戶口，在3年內交易金額達到16億港元，涉及超過4,000宗可疑交易，交易對手超過400名。惟被捕兩人分別申報任職找換店職員及兼職保安員，他們的工作背景明顯與公司財務背景不相關。 海關亦發現涉案戶口有不尋常及可疑的交易模式，當資金到戶後，通常於數日或同日內轉出，最高單日交易次數達到32次，單日最大入帳金額有4,800萬港元，單日出帳最高金額更達5,200萬港元。調查揭示，有關銀行交易並不是由公司持有人進行，反而由找換店合規主任在背後操作。 銀行職員的協助角色 調查進一步揭示，一名銀行客戶關係經理與找換店合規主任串通，協助空殼公司開戶，並教唆如何偽造公司紀錄，以通過銀行的開戶審查。此外，該客戶經理還提示如何應對銀行對可疑金額的審查。這顯示出洗黑錢集團的專業化及內部人員的參與，讓整個洗黑錢活動更加隱蔽且難以察覺。 這名銀行職員的涉案，暴露了金融機構內部合規管理的漏洞，也提醒了銀行必須加強內部監控和審查機制，防止內部人員利用職務之便進行非法活動。 金錢服務經營者如何避免 金錢服務經營者 (“MSO”) 應對所有合作的商業夥伴進行背景調查 - 了解你的客戶 (“KYC”) 程序，亦應加強內部控制和監控，包括嚴格審查員工背景，確保所有員工，尤其是合規人員，通過全面的背景調查。持續進行打擊洗錢和合規相關培訓，使員工保持警惕並熟悉最新的法規和監管要求。 MSO應引入先進的監控技術，使用人工智能和大數據分析技術，對所有交易進行實時監控，及時發現和報告可疑活動。採用自動化的KYC和AML（反洗錢）系統，以確保審查程序的徹底和一致性，對涉及高額資金的交易和空殼公司進行更嚴格的審查，拒絕與無法提供充分業務證明的公司合作。「東查查反洗錢/客戶管理系統」運用先進技術，能全面自動化您的反洗錢審查流程，即時篩查客戶、評估風險，大幅提高效率。系統同時提供完整的客戶檔案管理功能，確保合規記錄完備。立即試用「東查查」系統，助您輕鬆應對日益複雜的反洗錢合規挑戰。 免費試用 加強客戶審查也是關鍵，建立完善的風險評估系統，針對高風險客戶採取更嚴格的審查和監控措施，對所有客戶定期進行盡職調查，確保其信息和行為符合規定。金錢服務機構還應加強合作與信息共享，與其他MSO、金融機構和執法機構建立合作機制，共享洗錢風險信息，提升整體防範能力。 此外，積極參與行業相關培訓及課程，了解最新的合規趨勢和最佳實踐。通過這些措施，金錢服務機構可以顯著降低洗黑錢風險，維護金融市場的穩定和健康。 天匯合規網上培訓課程: https://complianceone.thinkific.com/collections/msozh 結論 洗黑錢是一項嚴重罪行，根據香港法律，若有人知道或有合理理由相信某財產全部或部分、直接或間接代表從可公訴罪行得益而仍處理該財產，即屬犯罪，最高刑罰為罰款港幣500萬元及監禁14年，犯罪得益亦會被充公。市民利用銀行帳戶處理來歷不明款項，無論有否涉及金錢報酬，均有可能觸犯洗黑錢罪。 此次海關的「火花II」行動，再次揭示了洗黑錢活動的複雜性及嚴重性。隨著執法部門的不懈努力，洗黑錢集團的非法活動逐漸曝光，未來需要加強監管和打擊力度，確保金融市場的健康和穩定。

The topics discussed in this monthly newsletter are as follows: ComplianceOne Newsletter – Nov 2024 The topics discussed in this monthly newsletter are as follows: 1. SFC concludes consultation on market sounding guidelines 2. The first batch of 14 brokers joining Wealth Management Connect Pilot Scheme 3. SFC hosts AML/CFT Regtech Forum in November 4. Stay aware of the inherent risks in use of Generative AI Language Models 5. SFC bans former RO of Tarascon Capital for false trading of shares 6. SFC commences MMT proceedings against Ding Yi Feng for market manipulation 7. SFC sanctions Zuo Ping for breaches of the Takeovers Code 8. SFC suspends Yuanta’s former employee Wang Shian-tang for violation of employee dealing policy 9. China Forestry’s former chairman and CEO sanctioned for insider trading Market News 1. SFC concludes consultation on market sounding guidelines On 31 October 2024, the SFC published the conclusions of its consultation on the proposed guidelines for market soundings. The guidelines gazetted on 1 November 2024 and will become effective on 2 May 2025. Intermediaries will have a six-month transitional period to comply with the new guidelines, ensuring a smooth implementation process. The guidelines are designed to uphold market integrity by setting protocols for protecting confidential information during market soundings. Respondents generally supported the objectives, providing constructive feedback that led to refinements in the guidelines. To address their comments, the SFC has refined the scope of the guidelines, clarified some requirements, and incorporated respondents’ feedback in the guidelines as appropriate. The SFC has provided practice guidance and examples through frequently asked questions to aid intermediaries. As Ms Julia Leung, the SFC ‘s Chief Executive Officer has said, “ the guidelines tackle the misuse of confidential information during market soundings, and lead to an unfair market, these guidelines will enhance investor confidence in Hong Kong’s capital markets by clarifying regulatory expectations and deterring substandard conduct. “ SIGNIFICANCE: The new “ Guidelines for Market Soundings ” are well complied to provide Four Core Principles, namely, (i) handling of information, (ii) governance, (iii) policies and procedures, (iv) review and monitoring controls; with specific requirements for Disclosing Persons (a sell-side broker) and Recipient Persons (a buy-side firm). 2. The first batch of 14 brokers joining Wealth Management Connect Pilot Scheme On 1 November 2024, the SFC announced the 14 licensed corporations (“LC”s) eligible to participate in the Cross-boundary Wealth Management Connect Pilot Scheme (“WMC”) in the Guangdong-Hong Kong-Macao Greater Bay Area (“GBA”). This initiative aims to enhance connectivity between financial markets in the GBA and foster Hong Kong's wealth management business. The guidelines will be effective immediately . The 14 LCs include: China Galaxy International Securities (Hong Kong) Co., Limited, China Industrial Securities International Brokerage Limited, China International Capital Corporation Hong Kong Securities Limited, China Merchants Securities (HK) Co., Limited, China PA Securities (Hong Kong) Company Limited, China Securities (International) Brokerage Company Limited, CITIC Securities Brokerage (HK) Limited, GF Securities (Hong Kong) Brokerage Limited, Guosen Securities (HK) Brokerage Company, Limited, Guotai Junan Securities (Hong Kong) Limited, Huatai Financial Holdings (Hong Kong) Limited, SDICS International Securities (Hong Kong) Limited, Shenwan Hongyuan Securities (H.K.) Limited, and Zhongtai International Securities Limited. The above-mentioned LCs will work in partnership with their Mainland partner brokers, the list is to be confirmed by the relevant Mainland regulatory authority, namely, the China Securities Regulatory Commission. SIGNIFICANCE: As commented by Ms Julia Leung, the Chief Executive Officer of the SFC, that “T oday’ s announcement marks another significant milestone for the brokerage industry and the WMC scheme in terms of enhancing the connectivity of financial markets in the GBA and fostering Hong Kong’ s wealth management business. “ With respect to the WMC Scheme, a set of guidance (the three Annex ) for LCs have already been posted in January early this year which covered essentially the following items: eligible criteria for participating LCs; eligible criteria for investors; scope of eligible investment products; account opening arrangements; investor quota management; cross-boundary closed-loop fund flow arrangements; and promotion and sales arrangements. 3. SFC hosts AML/CFT Regtech Forum in November On 4 November 2024, Ms Julia Leung, the Chief Executive Officer of the SFC , made a speech in the “SFC Regtech Forum”, main points of the speech are as below. Regtech progress and compliance pain points as its driver (1) A “Report on the Adoption of Regtech for Anti-Money Laundering and Counter-Financing of Terrorism” has been published to highlight use cases as helpful guidelines. (2) Many firms have already adopted the Regtech solutions in their AML processes like name screening, customer due diligence and transactions monitoring. (3) Conventional AML approaches are losing efficacy as bad actors are using novel techniques to launder crime proceeds, the situation is aggravated with increasing number of customers and transaction data faced by the firms. (4) Firms are struggling with backlog of pending reviews due to high volume of false positive alerts from name screening and transaction monitoring. (5) False alerts from traditional rule-based solutions fail to cater for multiple dynamic parameters, providing misleading solutions and causing futile investigations and operational inefficiencies, especially when real red flags are missed. Regtech use cases burgeoning With the advent of Regtech and the application of automation, data analytics and AI, a huge mass of data can be processed swiftly to spot out for suspicious activities. Regtech can now be adopted in many stages throughout the AML process with the use cases conducted by the SFC ranked by the usage rates. (i) Client onboarding: mostly used to authenticate client’s identity and collect digitised customer data for subsequent AML processes. (ii) Name screening: with a usage rate of 92% of the firms with robot process automation (“RPA”) to extract relevant customer information and compare it against the system alerts. (iii) Transaction monitoring: with usage rate of 69% as another important process to detect unusual or suspicious transactions and activities. (iv) Third-party deposit identification and due diligence: with a lower usage rate of 34%, attributed to its late introduction of the relevant guidelines & requirements published in May 2019 and uniqueness of the securities sector. Responsible adoption is key Alike other AML controls, the responsibility are still rested on the licensed firms to regularly review all Regtech solutions including AI models, and protect the customers and transaction data with robust data protection and cybersecurity measures. SIGNIFICANCE: The adoption of technology helps alleviate the repetitive and onerous data processing and analyses routines, and streamline the AML and KYC processes which are particularly crucial amid the sophisticated use of novel technologies by bad actors to circumvent the traditional monitoring tools. 4. Stay aware of the inherent risks in use of Generative AI Language Models On 12 November 2024, the SFC published a circular concerning the use of generative Artificial Intelligence language models (“AI LMs”). There the SFC notes that firms are using the AI LMs in all facets of their services provided including response to client enquiries via public chatbots, generating research reports, identifying investment signals etc. The SFC also pointed out that the use of AI LMs may amplify existing risks and pose additional risks on top of those from traditional AI. The key takeaways are: Risk in relation to AI LMs AI LMs’ output can be inaccurate, biased, unreliable and inconsistent. For instance: (i) AI LMs are prone to hallucinations risk, (ii) bias may exist in data used to train the AI LMs, (iii) there may be heightened risk of cyberattacks and leakage of confidential information, (iv) over-reliance on certain limited number of external service providers. In the light of the increased risks, LCs are advised to make reference to the Appendix which provided a list of non-exhaustive risk factors to be aware of in the process of adopting any AI LMs. Scope of this circular This circular is applicable regardless of whether the AI LM is developed or provided by the LC itself, its group company, an external service provider (Third Party Provider) or comes from an open source. Risk-Based approach An LC may implement the requirements in this circular, including the Core Principles, in a risk-based manner commensurate with the level of risk incurred by the application of the AI LM . It should be noted that an AI LM used by LCs for providing investment recommendations, advice or research to investors or clients are considered as high-risk use cases by the SFC. The FOUR Core Principles are: (1) Senior Management Responsibilities (2) AI Model Risk Management (3) Cybersecurity and Data Risk Management (4) Third Party Provider Risk Management Notification Requirements For LCs which intend to adopt AI LMs in high-risk use cases, they are reminded to comply with the notification requirements under the Securities and Futures (Licensing and Registration) (Information) Rules (Information Rules). SIGNIFICANCE: This circular, together with the Appendix, provide the LCs with a set of fully comprehensive guidance in relation to the use of AI LMs in the provision of their services. LC are strongly advised to seek reference and get acquainted with the requirements before adopting the AI LMs which may be a double-edged instrument if no used properly. Enforcement News 5. SFC bans former RO of Tarascon Capital for false trading of shares On 6 November 2024, the SFC announced that Mr Jonathan Dominic lu Wai Ching (“Iu”) has been prohibited from re-entering the industry for 15 years. Key Findings: Iu, a former responsible officer of Tarascon Capital Management (Hong Kong) Limited, engaged in false trading of shares. lu used the brokerage accounts of a hedge fund and his mother, gaining $5.6 million for his mother’s account. SFC determined that Iu is not fit and proper to be licensed due to his serious and dishonest conduct over two months, violating client trust. This action serves as a deterrent to prevent similar future misconduct. SIGNIFICANCE: This ban highlights the SFC's dedication to maintaining market integrity and enforcing ethical standards. By imposing severe consequences on Iu, SFC aims to deter other practitioners from engaging in dishonest behaviour and emphasizes the importance of trust and compliance in the financial industry. 6. SFC commences MMT proceedings against Ding Yi Feng for market manipulation SFC commenced proceedings in the Market Misconduct Tribunal (“MMT”) against Mr Sui Guangyi (“SUI”), former chairman and non-executive director of Ding Yi Feng Holdings Group International Limited (“Ding Yi Feng”), two corporate entities and 28 other suspects for alleged manipulation of the shares of Smartac International Holdings Limited ( 00395.HK ). The SFC alleged that between 31 October 2018 and 11March 2019, SUI and other suspects manipulated the trading of Smartac shares to push up the price and turnover, creating a false and misleading appearance of active trading. The increase in share price contributed to an investment gain by Ding Yi Feng, which held a 21.68% of the share in its gross assets as of 31 December 2018. The SFC had issued restriction notices to freeze securities accounts linked to the suspected market manipulation of Smartac shares which still remain in force. SIGNIFICANCE: This action by the SFC emphasizes its commitment to combating market misconduct and maintaining market integrity. The proceedings against Mr. Sui and others are a clear signal that the SFC will take stringent measures against manipulative trading practices. Cooperation between the SFC and the China Securities Regulatory Commission underscores the importance of regulatory collaboration in addressing cross-border market manipulation. 7. SFC sanctions Zuo Ping for breaches of the Takeovers Code On 15 November 2024, the SFC publicly censured and imposed a six-year cold shoulder order against Ms ZUO Ping (“ZUO”) for breaching the mandatory general offer obligation under the Takeovers Code. ZUO made a number of acquisitions and disposals of shares in CBK Holdings Limited ( 08428.HK ) on the market between 2 November 2023 and 20 November 2023, and her interest in CBK increased from 0% to 30.22% of CBK’s issued capital on 20 November 2023, triggering a mandatory general offer obligation under Rule 26.1 of the Takeovers Code. Yet ZUO did not make any general offer then. Zuo acknowledged her breach of the Takeovers Code, and agreed to the disciplinary action. SIGNIFICANCE: The SFC emphasizes the importance of adhering to the Codes on Takeovers and Mergers, advising parties to seek professional advice when in doubt. The order denies Zuo access to the Hong Kong securities market from 15 November 2024 to 14 November 2030. 8. SFC suspends Yuanta’s former employee Wang Shian-tang for violation of employee dealing policy The SFC suspended the licence of Mr Wang Shian-tang (“WANG”), a former licensed representative of Yuanta Securities (Hong Kong) Limited (“Yuanta”) for 26 months from 20 November 2024 to 19 January 2027. In the investigation, it was found that WANG entered into a private profit-sharing agreement with a client on discretionary trading services without Yuanta’s knowledge or consent; and WANG would be entitled to 10% of any annual profits made for the client. It was also found that WANG maintained another account with an outside broker for conducting 10 warrant trades with a total transaction value of HKD350,000; yet these were not disclosed to Yuanta which violated the employee dealing policy of the company, depriving the company to monitor his personal dealings. SIGNIFICANCE: With the false and disingenuous representations to the SFC regarding his personal account and trades, the SFC considered WANG had displayed dishonest behaviour that undermined the interests of his then employer and its clients, as well as the integrity of the market. 9. China Forestry’s former chairman and CEO sanctioned for insider trading The Market Misconduct Tribunal (MMT) ordered Mr Li Han Chun (“LI”), the former chief executive officer (CEO) of China Forestry Holdings Company Limited ( 00930.HK ), and his investment vehicle, Top Wisdom Overseas Holdings Limited (Top Wisdom), to disgorge $353,430,000 which represents the loss they avoided by insider dealing of China Forestry’s shares. The MMT also imposed the following orders against LI and Mr Li Kwok Cheong (“LIKC”), the former chairman of China Forestry, for disclosing false or misleading information in China Forestry’s IPO prospectus, annual results announcement, and annual report for the year ended 31 December 2009, inducing transactions in the company’s shares: Disqualification orders for five years Cold shoulder order for five years Cease and desist orders Please see the SFC’s press releases dated 7 August 2024 and 28 June 2018 . And LI, LIKC and Top Wisdom had to pay the costs and expenses incurred by the Government and the SFC as well. SIGNIFICANCE: This case underscores the importance of transparency and integrity in the financial markets, with severe penalties for insider dealing and disseminating false information to maintain market trust and investor confidence. For more details, please click on the title of the topic above. ================================= ~ Make It Right Today, Better Tomorrow ~ ================================= The Newsletter is for general information purpose only and is not intended to constitute legal or other professional advice. For enquiries, please email to support@complianceone.hk or WhatsApp us at (852) 95164607 . Unit 1104, 11/F, 299QRC, 287-299 Queen's Road Central, Sheung Wan, Hong Kong Tel: (852) 39550277 www.complianceone.hk

在此次分享中，我們分享了金融科技在合規與風險管理中的重要性。 天匯合規獲邀參與“第三屆澳琴現代金融發展趨勢與金融科技座談會” 我們很榮幸受邀參加由澳門生產力暨科技轉移中心與澳門經濟民生聯盟合辦的“ 第三屆澳琴現代金融發展趨勢與金融科技座談會 ”。 “ 金融+科技 ”是推動現代金融產業實現高質量發展的關鍵。大灣區金融科技的創新必將引領現代金融產業未來發展的方向，為大灣區贏得獨特優勢和發展機遇，促進經濟多元化發展。 億東金融科技有限公司的聯合創始人王陶浚先生在會上就“ 引領金融合規與風險管理新紀元 ”主題，與大家分享了金融科技在合規與風險管理中的重要性。我們對所有與會者的積極參與和寶貴提問表示衷心感謝，並期待在不久的將來再次與大家相聚，交流有關金融科技與合規的最新見解！ We are honored to be invited to participate in the 3 rd Macau-Hengqin Modern Finance Development Trend and Financial Technology Seminar , co-organized by the Macao Productivity and Technology Transfer Center and the Macau Economic and Livelihood Alliance. ' Finance + Technology ' is key to promoting the high-quality development of the modern financial industry. The innovation of fintech in the Greater Bay Area will undoubtedly lead the future development direction of the modern financial industry, bringing unique advantages and development opportunities to the region and promoting diversified economic development. Mr. Tao Wong, Co-Founder of Edon Fintech Limited, shared insights on the importance of fintech in compliance and risk management, focusing on the theme ' Leading a New Era of Financial Compliance and Risk Management '. We would like to express our sincere gratitude to all attendees for their active participation and valuable questions and look forward to meeting you again in the near future to share the latest insights on fintech and compliance!

The topics discussed in this analysis update are as follows: The 10 Most Significant Regulatory News for Licensed Corporations in 2025 The topics discussed in this analysis update are as follows: A. Development Roadmap and Regulatory Update VA Development Roadmap - ASPIRe Roadmap in ACTION Kick-off Game of the Hong Kong Stablecoin Regime New Guidance in IPO subscription & segregation of client money Roadmap for the Global Fixed Income and Currency hub B. Market Developments and Updates NASDAQ is pioneering in launching tokenization of stocks TECH launched to facilitate listing application Collaborated efforts across the border to curb unauthorized accounts opening residents from mainland CHINA The Fall of an Empire: Prince Group's Dramatic Downfall in 2025 C. Enforcement News The first solicitor convicted of breaching secrecy provision by the SFC An unprecedented collaboration between SFC and HKEX A. Development Roadmap and Regulatory Update 1. VA Development Roadmap - ASPIRe Roadmap in ACTION ASPIRe refers to Pillar A (Access), Pillar S (Safeguard), Pillar P (Product), Pillar I (Infrastructure), Pillar Re (Relationships). The ASPIRe roadmap advocated by the SFC set out a plan of 12‑initiatives in a five separate pillars, to position Hong Kong as a leading, resilient virtual asset hub by: (i) streamlining market access via clear licensing regimes for OTC trading and custody services, and attracting global liquidity, (ii) optimizing compliance burdens while strengthening safeguards through enhanced custody, insurance, and investors onboarding/ product categorization standards, (iii) expanding virtual asset offerings and services, safeguarding retail investors while exploring PI‑only token listings, feasibilities of VA margin financing, and staking, borrowing/ lending services under robust control guidelines, (iv) modernizing regulatory infrastructure with enhanced reporting, surveillance, and cross‑agency, cross‑border cooperation, and (v) empowering investors and industry through education, regulation of finfluencers, and sustained engagement to advocate fit‑for‑purpose policy making. Adaptability and flexibility to cope with the ever-changing VA ecosystem are the indispensable attributes HK as an international financial hub should endeavor to maintain and strengthen on and on . VA Regulatory Update relating to ASPIRe roadmap - Alleviating the grip on staking services Stepping in Q2, further relaxations were seen in lifting the ban on staking services offered by licensed corporations. The SFC issued two circulars providing regulatory guidance on staking services for licensed VATPs and SFC‑authorized VA Funds. The VATPs are allowed to expand the product services offered which align with the Pillar P (“ Product ”) in the ASPIRe roadmap. VATPs interested in providing staking services have to acquire SFC’s prior written approval, and be subject to specific conditions under the Terms and conditions for providing staking services”. In another circular, the SFC-authorized VA funds are allowed to stake their virtual asset holdings only through SFC-licensed VATPs or authorized institutions subject to a cap; notwithstanding this, prior consultation and approval from the SFC are also required. VA Regulatory Update relating to ASPIRe roadmap Pillar A (“ Access ”) - Further step forward with the launch of global liquidity and diversified offerings The SFC’s new circulars mark a major move toward enabling SFC-licensed Virtual Asset Trading Platform (“ licensed VATP ”) operators to access global liquidity through a shared order book arrangement. It allows licensed VATPs to combine orders with affiliated overseas VATPs (“ OVATP s”) into a single liquidity pool, facilitating cross‑platform order matching and execution. To achieve this, OVATP must be licensed in its own jurisdictions, and comply with strict trading, settlement, and market surveillance requirements. On the trading side, the licensed VATPs are permitted to offer trading in VAs without a 12-month track record for professional investors as previously required. The SFC also proposed to amend the standard set of licensing conditions to facilitate the distribution of digital asset-related product and tokenized securities, playing a role to navigating the market participants to accomplish the ASPIRe roadmap as it advocated and envisaged. 2. Kick-off Game of the Hong Kong Stablecoin Regime The HKMA's stablecoin licensing regime under the Stablecoin Ordinance came in to effect on 1 August 2025, with a bundle of AML/CFT guidelines, explanatory notes for licensing and transitional provisions for pre-existing issuers (“ PEI ”s). PEIs conducting regulated stablecoin activities before this date must submit license applications, declarations, and undertakings by the deadline on 31 October 2025 in order to be granted the "Application Submitted and Acknowledged" status to continue operations until 31 January 2026. PEIs who missed the deadline, or whose application is rejected, refused, or withdrawn, should enter a closing down period. 3. New Guidance in IPO subscription & segregation of client money In a circular in March, the SFC outlined regulatory expectations following a review of licensed corporations’ (“ LC ”s) credit risk management practices in IPO financing and subscription activities. Findings of the review indicated deficiencies such as weak credit assessments, excessive leverage, inadequate liquidity planning, and improper segregation of client monies. To address risks from these lenient credit control measures, the SFC requires LCs to adopt stricter financial capability assessments, collect a minimum of 10% upfront deposits for IPO subscriptions, and perform thorough liquidity and financing capacity reviews before extending any IPO loans. LCs are expected to ensure strict compliance of proper segregation of client deposits not placed with designated banks, and satisfy the Financial Resources Rules (“ FRR ”) requirements in computing liquid capital. Viability to sustain a business and compliance to remain competent is like a pendulum which needs to swing to sustain the momentum rather than staying at either side. 4. Roadmap for the Global Fixed Income and Currency hub In September, the SFC and HKMA’s jointly announced Roadmap for the Development of Hong Kong’s Fixed Income and Currency (“ FIC ”) Markets sets a structured plan with four procedural pillars and ten initiatives to strengthen Hong Kong’s role as a global FIC hub. The roadmap first reinforces market foundations by Boosting Primary Market Issuance through greater government bond supply, targeted promotion to global issuers and investors, and expanding the investor base to funds, family offices, and corporates. It then Enhances Liquidity in the Secondary Market by completing the OTC derivatives regulatory regime and developing a repo central counterparty. Under “Breaking New Ground,” the roadmap seeks to Expand Offshore RMB Business by broadening RMB usage and improving Connect schemes to deepen liquidity and product diversity. Lastly, it comes to building Next-generation Infrastructure , including modernizing core market systems, supporting enhanced electronic trading platforms, and facilitating tokenization and innovation in FIC products. A Roadmap is commonly adopted as a tool to navigate evolution of a new regime. B. Market Developments and Updates 5. NASDAQ is pioneering in launching tokenization of stocks The tokenized securities market exhibited an explosively growth in less than two years with on‑chain stocks jumping from under US$5 million in 2024 to about US$420 million, driven by competition between crypto‑native firms and major traditional financial institutions to secure the first‑mover advantage. This competition also gave fuel to a potential revolution against the traditional exchange models, and Nasdaq, being the world’s second-largest exchange, took the initiative to incorporate tokenized stocks to push itself to be the pioneer in the Wall Street. Actually, tokenized stocks are merely new “packaging” for the traditional equity connected on blockchains with enhanced settlement efficiency and transaction time & accessibility. To put in simple words, NASDAQ is not trying to do away with the old order, but rather to upgrade the underlying structure of the market with minimal impact and to ensure that the core principles of investor protection and market transparency remain intact . 6. TECH launched to facilitate listing application The SFC and HKEX have launched the technology enterprises channel (“ TECH ”) to support prospective Specialist Technology Companies (“ STC ”) and Biotech Companies (“ BTC ”) with facilitating measures for application which includes: a designated experienced team to help in filing the Main Board Chapters 18A and 18C applications, engagement for better understanding, providing guidance on eligibility & suitability for listing etc. The TECH channel is strategically vital for Hong Kong's financial hub status. By providing pre-application guidance and confidential submissions tailored specifically for high-potential, high-risk specialist tech and biotech firms, TECH directly addresses a critical market gap. This significantly enhances Hong Kong's attractiveness and competitiveness against global rivals. 7. Collaborated efforts across the border to curb unauthorized accounts opening residents from mainland CHINA There was news circulated in media reports in China showing intensified regulatory enforcement to curb with unauthorized use of Hong Kong securities accounts for cross-border trading by clients with origins of residence from mainland Chinese. Under guidance from mainland regulators, Hong Kong-based brokers—including Futu Securities, Tiger Brokers, Long Bridge HK, and Valuable Capital—have strengthened account-opening standards for mainland-origin clients. Since June last year , many firms have relinquished the prior “ Proofs of Existing Accounts ” (“ PEA ”) method, which allowed account openings based on ownership of overseas securities accounts, and replaced with the principle of “ Proofs of Life & Work ” of cross-border residence or employment (e.g., utility bills or leases). This regulatory shift effectively closed loopholes enabling mainland investors (residents) without actual presence to open accounts in Hong Kong, signaling collaboration & supervision between mainland and Hong Kong authorities to curb unapproved cross-border investment activities . 8. The Fall of an Empire: Prince Group's Dramatic Downfall in 2025 In the shadowy world of international finance and cybercrime, 2025 delivered a blockbuster scandal straight out of a thriller novel. At the center stood the infamous Prince Group (太子集團), the sprawling Cambodian conglomerate founded by the enigmatic Chen Zhi (陳志). Once hailed as a powerhouse in real estate, banking, and more, the group crumbled under the weight of explosive allegations: operating vast "telecom fraud parks" in Cambodia, where scammers allegedly preyed on victims worldwide through pig-butchering schemes and other digital cons. The drama escalated when US authorities slapped Chen Zhi with sanctions and prosecution, freezing a staggering HK$120 billion in Bitcoin assets—equivalent to a fortune that could rival some nations' GDPs. This wasn't just a slap on the wrist; it exposed a web of deceit that spanned continents, drawing in Hong Kong's regulators like a magnet. Enter the SFC's iron fist : In a swift crackdown, licenses for two Prince Group-linked entities were suspended, effectively halting their operations in Hong Kong's financial arena. Mighty Divine Securities Limited, licensed since 3 March 2021 and Mighty Divine Investment Management Limited (CE: BCQ145) were slapped with "Licence suspended" and "Ceased business of regulated activities" notations by 3 November 2025. Spillover effects continued with market watchers glued their eyes to Hong Kong-listed stocks tied to Chen Zhi: Geotech Holdings Lt d. ( 01707.HK ) and Khoon G roup Ltd. (00924.HK) saw wild fluctuations amid the fraud buzz. Then came the bombshell resignation: LI Thet (李添), Prince Group's CFO and chairman of FSM Holdings (01721.HK), stepped down on 21 October 2025, after facing his own US sanctions for alleged money laundering and large-scale cash smuggling. This revelation unmasked a third listed company in the tangled net, proving the scandal's reach was deeper than anyone imagined. C. Enforcement News 9. The first solicitor convicted of breaching secrecy provision by the SFC On the day of conviction at the Eastern Magistrates’ Courts, the solicitor (TSE Yin Fung) was fined HKD25,000 and ordered to cover the SFC's investigation costs. As the legal representative for an individual, the solicitor had received confidential information related to a restriction notice issued by the SFC, which was protected under the SFO's secrecy rules. Despite this, he disclosed the sensitive details to two other individuals on 9 February 2021, leading to the charges. This 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 . 10. An unprecedented collaboration between SFC and HKEX HKEX took its first-ever disciplinary action against two former directors of the Listco (6928.HK) for failing to cooperate with investigations conducted by both the SFC and the HKEX . On 12 August 2025, the HKEX publicly censured executive director (Ma Xiaoqiu) and non-executive director (Jin Lailin) deeming them unsuitable for future directorial or senior management roles at the Listco or its subsidiaries. This stemmed from their non-responsiveness to inquiries by the SFC and probes into Listing Rules compliance by the HKEX's Listing Division, even after their tenure had ended. The case arose amid broader investigations into potential SFO violations involving Listco and related parties, with the SFC issuing section 183 notices for information and documents. The HKEX's Listing Committee determined that their lack of cooperation constituted a severe breach of ongoing obligations under the Listing Rules. [End of ComplianceOne's Summary – The 10 Most Significant Regulatory News for Licensed Corporations in 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 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 . Unit 1104, 11/F, 299QRC, 287-299 Queen's Road Central, Sheung Wan, Hong Kong Tel: (852) 39550277 www.complianceone.hk To unsubscribe, please simply reply with “ I don’t like to know more about Compliance ”.

The topics discussed in this monthly newsletter for insurance 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 – Feb 2025 The topics discussed in this monthly newsletter are as follows: REGULATORY UPDATES 1. SFC convenes inaugural VA Consultative Panel meeting 2. SFC sets out ASPIRe roadmap as blueprint to navigate Hong Kong as a global virtual asset hub 3. Hong Kong's market watchdog reviews 8 brokerages amid IPO oversubscription frenzy 4. SFC Supports Listing of Alternative Funds to Boost Investor Options 5. SFC Leads Regional Consensus on Sustainability, Tech, and Investor Protection 6. SFC proposes to relax position limits for key exchange-traded derivatives 7. SFC flags cybersecurity incidents in a thematic review report MARKET NEWS 8. SFC supports government budget measures 9. HashKey Capital is granted approval for VA discretionary accounts management services ENFORCEMENT NEWS 10. SFC Imposes Restriction Notices on Money Concepts Entities 11. SFC Launches Insider Dealing Case Against Wong Pak Ming Regulatory Updates 1. SFC convenes inaugural VA Consultative Panel meeting Earliest on 14 FEB, the SFC had convened an inaugural meeting of the Virtual Asset Consultative Panel (“ VACP ”) for the licensed virtual asset trading platforms (“ VATP ”s). Chaired by the SFC’s Executive Director of the Intermediaries Dr Eric Yip, the VACP comprises all the licensed VATPs represented by members of their senior management, and is expected to provide invaluable contribution to the SCF’s formulation of regulatory policy to further facilitate the development of a sustainable and resilient virtual asset ecosystem. Members of the VACP will collaborate towards the aim of identifying policy priorities, paving way for market and regulatory developments. As added by Dr Eric Yip, “The SFC looks forward to close collaboration with the members to encourage and develop innovation while ensuring adherence to regulatory standards in this rapidly changing landscape”. SIGNIFICANCE: The VACP is a good example of SFC’ s proactive engagement with the licensed VATPs in addition to its previous engagement in launching the swift licensing process for new VATP applicants with a streamlined approach. 2. SFC sets out ASPIRe roadmap as blueprint to navigate Hong Kong as a global virtual asset hub The SFC outlined 12 major initiatives to enhance the security, innovation and growth of Hong Kong’ s virtual asset (“ VA ”) market under a five- pillar “ ASPIRe ” roadmap, which stands for Access, Safeguards, Products, Infrastructure and Relationships. A snapshot of the pillars and initiatives: FIVE-pillars (incorporating the TWELVE initiatives) “ A-S-P-I-Re ” Roadmap for a Resilient Virtual Asset Ecosystem (1) Pillar A (Access) – Streamline market entry through regulatory clarity Key objectives: (i) Expand market accessibility (ii) Encourage responsibility participation (iii) Enhance investor opportunities Initiative 1 : Establish licensing regimes for OTC trading and custody services Initiative 2 : Attract global platforms, order flows and liquidity providers (2) Pillar S (Safeguards) – Optimising compliance burdens without compromising security Key objectives: (i) Align compliance requirements (ii) Adopt risk-proportionate oversight (iii) Promote regulatory clarity Initiative 3 : Explore adopting a dynamic approach to custody technologies and storage ratios Initiative 4 : Enhance insurance and compensation frameworks Initiative 5 : Clarify investor onboarding and product categorization (3) Pillar P (Products) – Expand product offerings and services based on investor categorisation Key objectives: (i) Enable risk-appropriate investment tools (ii) Safeguard retail investors (iii) Mitigate potential risks Initiative 6 : Explore regulatory framework for professional investor-exclusive new token listings and virtual asset derivative trading Initiative 7 : Explore virtual asset margin financing requirements aligned with securities market risk management safeguards Initiative 8 : Consider allowing staking and borrowing/lending services under clear custody and operational guidelines (4) Pillar I (Infrastructure) – Modernise reporting, surveillance and cross-agency collaboration Key objectives: (i) Strengthen market-wide oversight capabilities (ii) Early detection of illicit activities and misconduct (iii) Safeguard investor assets Initiative 9 : Consider solutions for efficient regulatory reporting and deploy advanced surveillance tools to detect illicit activities Initiative 10 : Strengthen local cross agency collaboration and promote cross border cooperation with global regulators (5) Pillar Re (Relationships) – Empower investors and industry through education, engagement and transparency Key objectives: (i) Enhance investor understanding (ii) Foster industry participation (iii) Promote fit-for-purpose policy making Initiative 11 : Consider regulatory framework for financial influencers (Finfluencers) to address new investor engagement channels Initiative 12 : Cultivate sustainable communication and talent network SIGNIFICANCE: Encountered with the ever-changing VA ecosystem, market participants are facing challenges from all edges: institutional-retail bifurcation, fragmented liquidity, and regulatory arbitrage risk due to discrepancies in development of VA regulatory regimes across regions; the SFC is pioneering itself with a pragmatic ASPIRe roadmap to secure and gradually materialize the mission of positioning Hong Kong as an international VA hub. 3. Hong Kong's market watchdog reviews 8 brokerages amid IPO oversubscription frenzy On 14 February 2025, a press release showing the SFC’s explicit concern with the oversubscription frenzy in IPO offering observed recently from eight brokers. Some key points are worth noted: the SFC will examine the brokers IPO financing policies, and advise that brokers should take into consideration the clients’ repayment ability, and set appropriate loan limit to avoid overfinancing; in November 2023 a couple of years ago, a circular form the SFC had been posted to remind brokers of the need to adopt a prudent risk management policy in providing IPO subscription services to its clients, in particular after the launch of FINI on 22 November then; since under the new FINI settlement, brokers are only required to pay for the maximum number of shares allotted in the IPO instead of the “full amount” of the subscriptions, thus allowing opportunities to further scale up the leverage offered to the clients. It is observed that some brokers tend to accept large subscription orders without collecting sufficient initial subscription deposits from clients as minimum upfront payments; brokers tend to take advantage of “the exemption to pay the full amount” to grant more IPO loans to the clients with larger multiples which further add fuel to boost up the oversubscription frenzy. SIGNIFICANCE: The FINI mechanism shortens the settlement period from “t+5” to “t+2” while at the same time alleviating the financial costs burden of having to pay the full amounts of subscription in previous arrangements. Though initial intention of the FINI is to streamline the IPO settlement process, it unexpectedly allows the possibility for more speculative IPO overfinancing activities. Market participants also expect the SFC to provide more clear guidelines on the margin-financing policies, not only as reference for prudent risk management, but also as a note of reminder to brokers of the potential risk of breaching the financial resources requirements amid the vehement buoyancy of IPO offerings. 4. SFC Supports Listing of Alternative Funds to Boost Investor Options The SFC of Hong Kong has issued new regulatory circular to encourage the listing of closed-ended alternative funds on the Stock Exchange of Hong Kong Limited (“ SEHK ”). Announced on 17 February 2025, this move aligns with the HKSAR Government’s 2024 Policy Address to expand private equity fund distribution and solidify Hong Kong’s position as a global asset management hub. Key takeaways: Funds already listed on recognized international exchanges may also qualify, subject to comparable regulations. Size & Scale: Funds must be sizeable (HK$780 million market cap), with management companies managing at least HK$780 million in alternative assets. Diversification: Funds should invest in well-balanced portfolios, with borrowing capped at 30% of net asset value (NAV). Transparency: NAV must be published quarterly, and offering documents must detail investment strategies, risks, and valuation methods. Investor Education: Management companies are urged to educate investors before launching these funds in Hong Kong. SIGNIFICANCE: “We’ve always welcomed closed-ended alternative funds,” said Ms. Christina Choi, SFC’s Executive Director of Investment Products. “This clarity will help investors tap into opportunities managed by top-tier asset managers.” This initiative broadens Hong Kong’s investment landscape, offering sophisticated investors access to alternative assets while maintaining robust safeguards. The SFC aims to balance innovation with investor protection, reinforcing the city’s financial competitiveness. 5. SFC Leads Regional Consensus on Sustainability, Tech, and Investor Protection The SFC has taken a pivotal role in shaping the future of capital market regulation across the Asia-Pacific, forging a united front with regional counterparts at the International Organization of Securities Commissions (“ IOSCO ”) Asia-Pacific Regional Committee (“ APRC ”) meetings held from 19 Feb 2025 to 21 Feb 2025, in Da Nang, Vietnam. Key takeaways: Collaborative Roadmap: Chaired by SFC CEO Ms. Julia Leung, the APRC brought together over 70 regulators from 19 jurisdictions to align on tackling scams, online harm, and investment fraud, while leveraging technology for regulatory innovation. Supervisory Cooperation: Vietnam’s State Securities Commission (“ SSC ”) joined as the 14th signatory to the APRC Multilateral Memorandum of Understanding (“ SMMoU ”), a milestone witnessed by Vietnam’s Finance Minister Mr. Nguyen Van Thang and celebrated during a signing ceremony. Global Dialogue: Ms. Leung co-chaired the EU-Asia-Pacific Forum on Financial Regulation, driving discussions on digitalization, fintech, and sustainable finance with European and regional financial leaders. Unified Approach to Emerging Challenges Regulators agreed on strategies to combat scams and harness generative AI and other technologies to enhance oversight. SFC senior executives also contributed to Enforcement and Supervisory Directors’ Meetings, sharing insights on enforcement trends, virtual asset safekeeping, and tech-driven supervision. Ms. Leung, in her keynote at the SSC Vietnam Symposium, underscored the APRC’s role: “This platform fosters collaboration essential for trust in our growing markets. Together, we can navigate emerging trends and risks effectively.” SIGNIFICANCE: As capital markets evolve with technology and sustainability at the forefront, the SFC’s leadership in the APRC reinforces Hong Kong’s role as a regulatory hub. This consensus sets the stage for stronger investor protection and innovation-friendly frameworks across the region. On the sidelines, Ms. Leung met with SSC Chairwoman Ms. Vu Thi Chan Phuong to deepen supervisory ties, focusing on crypto regulation and shared capital market priorities. Vietnam’s SMMoU entry marks a step forward in regional cooperation, enhancing information-sharing among Asia-Pacific regulators. For Ms. Leung’s full speech and more details, visit the SFC website . 6. SFC proposes to relax position limits for key exchange-traded derivatives On 27 February 2025, the SFC launched a Consultation proposing to increase the position limits for exchange-traded derivatives based on the three major stock indices in Hong Kong to keep pace with market development. To facilitate hedging activities of market participants, the proposals will lift the current position limits for the futures and options contracts as the table shown below: Underlying Index Existing position limit (net long/short position delta) Proposed position limit (net long/short position delta) Hang Seng Index (HSI) 10,000 15,000 (↑50%) Hang Seng China Enterprises Index (HSCEI) 12,000 25,000 (↑108%) Hang Seng TECH Index (HSTECH) 21,000 30,000 (↑43%) SIGNIFICANCE: These will enable Hong Kong’ s derivatives markets to keep pace with the growth in the market capitalisations of major stock indices and trading volumes of their constituents over the past years, without introducing additional risks to the markets. As Ms Julia Leung said, “ The relaxation of position limits will not only allow market participants to enjoy greater flexibility in managing positions, but also promote the liquidity and efficiency of both the derivatives and broader markets. ” 7. SFC flags cybersecurity incidents in a thematic review report Material cybersecurity incidents in recent years involving cyberattacks against licensed corporations (“ LC ”s) aroused attention of the SFC as LCs were vulnerable to significant business disruptions or hacking of client accounts. A Report on the 2023/24 Thematic Cybersecurity Review of Licensed Corporations (“ Report ”) was issued by the SFC on 6 February 2025 where eight incidents of material cybersecurity breach were reported to SFC between 2021 and 2024, examples identified are: unauthorized access to trading in clients’ account through loopholes in the network security of the LCs; end-of-life (“ EOL ”) software and weak algorithm for encrypting client data. In the light of these insufficient management oversight and inadequate controls on cybersecurity measures, the SFC has set out in the Report some standard of conduct expected of the LCs in relation to phishing detection and prevention, EOL software management, remote access control, third-party IT service providers management and cloud security. SIGNIFICANCE: As emphasized by Dr Eric Yip, the SFC’ s Executive Director of Intermediaries, that the LCs should take all necessary measures to tackle the sophisticated and prevalent cyberattacks, and failure to address these threats would cause detrimental influence on the LCs, their clients as well as the entire financial system in such a highly interconnected and digitalised world. Senior management should recognize the critical importance of safeguarding from and mitigating the cybersecurity risks by making reference to the Report for details. Market News 8. SFC supports government budget measures The SFC has expressed strong support for the Hong Kong government’s 2025-2026 budget measures, unveiled by Financial Secretary Paul Chan on 26 February 2025. These initiatives aim to solidify Hong Kong’s status as a leading international financial hub. Key takeaways: Boosting Securities and Derivatives Markets: SFC Chairman Dr. Kelvin Wong praised the budget for advancing Hong Kong’s securities, derivatives, and asset management sectors, reinforcing its competitive edge. Tech-Focused Listing Channel: The SFC will collaborate with Hong Kong Exchanges and Clearing Limited (“ HKEX ”) to launch a "technology enterprises channel," streamlining listings for tech and biotech firms. Listing Regime Refinement: A comprehensive review of listing rules, vetting processes, and market structures is underway, including exploring post-delisting trading mechanisms and optimizing dual/secondary listing thresholds. Risk Management Enhancements: The SFC will soon consult on raising position limits for key index derivatives to better serve investors. RMB Bonds and Fixed Income Hub: Partnering with the Hong Kong Monetary Authority, the SFC is crafting a roadmap to develop primary and secondary bond markets, alongside hosting a flagship forum in late 2025 to highlight Hong Kong’s strengths. Virtual Assets and Fintech: Following a mid-February regulatory roadmap, the SFC will guide the sustainable growth of Hong Kong’s virtual asset market, aligning with the government’s upcoming policy statement on blending traditional finance with innovative tech. SIGNIFICANCE: SFC CEO Ms. Julia Leung emphasized ongoing collaboration with regulators and stakeholders to strengthen Hong Kong’s role as a fixed income and currency hub, advance virtual asset markets, and deepen ties with Mainland China and global markets. The SFC’s proactive stance signals a dynamic year ahead for Hong Kong’s financial ecosystem. 9. HashKey Capital is granted approval for VA discretionary accounts management services Following the approval from SFC, Hashkey Capital is now able to offer discretionary account management services for virtual assets to professional investors (“ PI ”s) subject to type 9 license. This approval enables HashKey Capital to deliver customised services to professional investors subject to a pre-approved list of exchanges across the entire investment lifecycle ranging from: (i) tailored investment mandates: from spot investments to OTC trading and derivatives; (ii) flexibility in trading platforms: to offer discretionary account management service across a multiple of exchanges available to the clients taking into consideration the issues of compliance, operational efficiency; (iii) seamless strategy execution: providing a full-fledged discretionary account management from buying, selling, asset allocation, monitoring, rebalancing and final reporting. SIGNIFICANCE: Hindered by the complex virtual assets landscape, investors are always averse to the unforeseeable risks beyond their investment perspectives; discretionary account management services offer a bespoke solution by shifting the burden of regulatory and technical complexities from investors to professional market practitioners who are more conversant in the newly evolving regime. Enforcement News 10. SFC Imposes Restriction Notices on Money Concepts Entities The SFC took decisive action on 18 February 2025, issuing restriction notices to Money Concepts (Asia) Holdings Limited (“ MCAH ”) and its subsidiary, Money Concepts Asset Management Limited (“ MCAM ”). The SFC cited potential risks to the investing public and the broader public interest as key drivers for the restrictions. Restriction in Place: Both firms are barred from engaging in any licensed regulated activities—directly or via agents—without prior SFC approval, until further notice. SIGNIFICANCE: The move stems from concerns over their honesty, reliability, integrity, and competence in conducting regulated activities, raising doubts about their fitness to remain licensed. 11. SFC Launches Insider Dealing Case Against Wong Pak Ming The SFC kicked off criminal proceedings against businessman Wong Pak Ming on 27 February 2025, at the Eastern Magistrates’ Court. Wong, former chairman and controlling shareholder of Transmit Entertainment Limited (formerly Pegasus Entertainment Holdings Limited), faces charges of insider dealing tied to the company’s shares. Case Details Allegations : Wong is accused of counselling or procuring someone to trade Pegasus shares between 25 August 2017 and 17 October 2017, while possessing inside information about the company. Background : Pegasus, listed on Hong Kong’s Growth Enterprise Market in 2012 and later moved to the Main Board in 2015, was renamed Transmit Entertainment in March 2018 after Wong sold his controlling stake. Legal Basis : Insider dealing violates section 291 of the Securities and Futures Ordinance (“ SFO ”) . SIGNIFICANCE: No plea has been entered yet. The case is adjourned to March 27, 2025. Wong was released on $200,000 cash bail with conditions to stay at his provided address, notify police of any residence change, and inform the SFC 24 hours before leaving Hong Kong.This prosecution highlights the SFC’s ongoing efforts to combat market misconduct. [End of ComplianceOne Newsletter –February 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 – September 2025 The topics discussed in this monthly newsletter are as follows: REGULATORY UPDATES Latest 'Conduct In Focus' Edition Highlights Key Regulatory Insights and Industry Trends MARKET NEWS Captive Insurance Highlighted as Risk Tool at Belt and Road Summit Hong Kong Green Week Spotlights Insurance's Vital Role in Climate Resilience ENFORCEMENT NEWS IA Imposes 50-Month Ban on Insurance Intermediary for Misconduct ENFORCEMENT NEWS New TV Drama 'IA Files' Spotlights IA's Regulatory and Enforcement Role Regulatory News 1. Latest 'Conduct In Focus' Edition Highlights Key Regulatory Insights and Industry Trends On 30 September 2025, the IA has released the newest edition of Conduct In Focus , a valuable resource for insurance practitioners and policyholders alike. This publication delivers the latest complaints statistics alongside in-depth regulatory insights and observations on conduct-related matters, aimed at fostering a more transparent and ethical insurance landscape. Key Highlights: Additional Topics Explored The publication also addresses several emerging issues: Run-Off Portfolios Management: Regulatory considerations for insurance agencies specializing in managing run-off portfolios, highlighting opportunities and compliance requirements in this growing niche. Broker Disclosures for Offshore Products: The essential role of brokers in transparently disclosing risks and limitations when sourcing offshore insurance solutions for clients, to safeguard informed decision-making. Impact of MPF Telemarketing Cessation: Implications for cold-calling practices within the insurance sector following the recent halt of Mandatory Provident Fund (MPF)-related telemarketing, urging a review of sales strategies. SIGNIFICANCE: This edition of Conduct In Focus serves as a timely guide for navigating regulatory expectations and adopting best practices. Insurance professionals are encouraged to review the full publication for actionable insights that can strengthen their operations and client relationships. Market News 2. Captive Insurance Highlighted as Risk Tool at Belt and Road Summit On 10 September 2025, the IA took center stage today at the prestigious Belt and Road Summit , hosting a dedicated breakout session on the pivotal role of captive insurance in bolstering risk management for enterprises engaging in Belt and Road Initiative (“ BRI ”) projects. This session underscored Hong Kong's emerging status as a premier captive domicile, equipped to support participants in tackling the multifaceted challenges of international expansion. Key Highlights from the Session The discussion, moderated by Mr. Clement Lau, Executive Director of Policy and Legislation at the IA, emphasized the need for innovative risk strategies amid the BRI's vast scope. "The extensive scale of the Belt and Road Initiative entails a wide range of complex and diverse risks, requiring participants to adopt innovative and comprehensive risk management strategies where captives can be a valuable option," Mr. Lau remarked. He further highlighted Hong Kong's commitment: "By fostering a vibrant captive ecosystem in Hong Kong, we stand ready to support Belt and Road participants in venturing abroad and exploring new markets." Panelists included CEOs from two Hong Kong-domiciled captive insurers, one established by a Mainland enterprise and another by a multinational conglomerate. They shared how these captives have empowered their parent companies to effectively manage intricate risk landscapes and emerging threats. Experienced professional service providers also contributed, detailing the comprehensive support they provide for establishing and operating captives, from regulatory navigation to ongoing management. SIGNIFICANCE: The session delved into Hong Kong's unique advantages as a captive insurance center, including its strategic location, robust regulatory framework, and facilitative measures introduced by the IA. Attendees gained insights into the future trajectory of the Hong Kong captive market, positioning it as a leading global hub for BRI participants seeking tailored risk solutions. This event aligns with the broader goals of the Belt and Road Summit, highlighted how captive insurance offers enterprises a customized approach to risk transfer, cost efficiency, and enhanced control over insurance programs, essential for the high-stakes, cross-border nature of BRI projects. 3. Hong Kong Green Week Spotlights Insurance's Vital Role in Climate Resilience On 12 September 2025, the IA and the Hong Kong Federation of Insurers (“ HKFI ”) joined forces today to co-host a landmark event as part of the Hong Kong Green Week . Themed "Bridging Finance and Future: The Insurance Industry as a Pillar of Climate Resilience," this featured seminar brought together over 180 insurance practitioners and stakeholders both in-person and online to explore how the insurance sector can drive climate adaptation and sustainability. The event featured expert speakers from the insurance industry, government, academia, and the commercial sector, fostering discussions on navigating climate risks and identifying opportunities for innovation. Spotlight on the Climate Modelling Project A key highlight was an overview of the Climate Modelling Project, a collaborative effort led by the IA in partnership with the HKFI's Task Force on Green Insurance and the Hong Kong University of Science and Technology (“ HKUST ”). Representatives including Mr. Clement Lau, Executive Director of Policy and Legislation at the IA; Mr. Eric Hui, Chairman of the HKFI Task Force on Green Insurance; and Professor Alexis Lau from HKUST shared how this initiative leverages insurers' claims data to enhance underwriting capabilities, spur product innovation, and improve climate risk assessments aligned with sustainability objectives. This regulator-industry-academia collaboration aims to translate advanced research into practical tools for the sector, empowering insurers to better support Hong Kong's green transition. SIGNIFICANCE: As part of the broader Hong Kong Green Week initiative, this event underscores the city's commitment to sustainable development. Mr. Stephen Yiu, Chairman of the IA, stressed the urgency of multi-stakeholder engagement in addressing climate challenges. "Given the scale and complexity of climate-related risks, it is incumbent upon regulators and policymakers to engage proactively with the insurance industry, to strengthen our city’s climate resilience through robust risk assessment, improved risk management frameworks underpinned by a deeper understanding of the social value of insurance," he said. Enforcement News 4. IA Imposes 50-Month Ban on Insurance Intermediary for Misconduct On 25 September 2025, the IA has taken decisive action by banning Ms. SO Yuen Wa (Licence number: IG3140) (“ Mr. SO ”) from acting as an insurance intermediary for a period of 50 months. This enforcement measure underscores the IA's commitment to upholding ethical standards and safeguarding policyholders' interests in the industry. Details of the Case Ms. SO engaged in deceptive practices by providing misleading advice to two clients, falsely claiming that her appointing insurer would acquire their existing policies. This inducement led the clients to surrender three critical illness and long-term savings policies in favor of purchasing eight new ones through her. Key violations included: Failing to disclose that the transactions constituted de facto policy replacements. Impersonating one client to inquire about her policies. Pocketing the surrender value instead of applying it to the new policies. Although Ms. SO later repaid nearly all the funds involved, the harm to the clients was significant. They were left without the protection of their original policies and lost the chance to reinstate them, highlighting the irreversible consequences of such actions. SIGNIFICANCE: Policy replacement is a critical decision with profound effects on policyholders' financial security and coverage. The IA emphasizes that deceptive or unethical practices in this area will not be tolerated and will result in severe penalties. The public is strongly advised to exercise caution when considering surrendering existing policies. Insurance intermediaries are reminded to adhere strictly to ethical guidelines to avoid similar repercussions. Miscellaneous 5. New TV Drama 'IA Files' Spotlights IA's Regulatory and Enforcement Role On 23 September 2025 , the IA and Radio Television Hong Kong (“ RTHK ”) are set to launch "IA Files" (“保監有道” in Chinese), a compelling four-episode TV drama series premiering on RTHK TV31 on 27 September 2025. Drawing from real-life cases, the series aims to illuminate the IA's regulatory, investigative, and enforcement activities while delivering essential educational messages on insurance practices. Alan Wu, Acting Head of Conduct Supervision at the IA, elaborated on the content: "The stories in the drama series are based on real-life complaints and investigation cases, covering issues such as failure to explain key policy features to customers, inducement of policy replacements, unlicensed selling, and misappropriation of premiums. The IA places strong emphasis on the industry’s adherence to the principle of ‘treating customers fairly’, and it is vital for intermediaries to act in the best interests of their clients in their dealings." Broadcast Details IA Files will air on Saturdays at 7pm for four weeks starting from 27 September on RTHK TV31. The episodes will also be streamed simultaneously on the RTHK website and “RTHK TV” mobile app. The programme will later be available for viewing on the IA’s YouTube channel. Please see the series synopsis in the annex (Chinese only). [End of ComplianceOne Insurance Newsletter – September 2025] For more details, please click on the title of the topic above. ================================= ~ Make It Right Today, Better Tomorrow ~ ================================= The Newsletter is for general information purpose only and is not intended to constitute legal or other professional advice. For enquiries, please email to support@complianceone.hk or WhatsApp us at (852) 95164607 . Unit 1605, 16/F, West Tower, Shun Tak Centre,168-200 Connaught Road Central, Sheung Wan, Hong Kong Tel: (852) 39550277 www.complianceone.hk

在此次分享中，我們講解了香港金融監管機構的結構及其監管下的香港金融牌照，以及持續合規的重要要點。 感謝全球惠商邀請天匯合規分享“金融出海新方略”。在此次分享中，我們講解了香港金融監管機構的結構及其監管下的香港金融牌照，以及持續合規的重要要點。 天匯合規期待繼續為大家帶來更多有關香港金融牌照和合規的資訊。 Thank you to QuanQiu HuiShang for inviting ComplianceOne to share insights on "New Strategies for Financial Expansion." During this presentation, we discussed the structure of Hong Kong's financial regulatory institutions and the financial licenses under their supervision, as well as key points on maintaining ongoing compliance. ComplianceOne looks forward to continuing to provide more information regarding Hong Kong financial licenses and compliance.

分享金錢服務經營者牌照的合規性與跨境支付安全的合規指南概述 天匯合規再次獲邀參與國際會計師公會香港分會主辦之可持續發展講座 天匯合規榮幸再次受到國際會計師公會香港分會（AIA）的邀請，共同主辦有關合規反洗錢新動向加行業指引分享的研討會。 藉此機會，我們很高興能分享金錢服務經營者牌照的合規性與跨境支付安全的合規指南概述。我們旨在傳達客戶盡職調查（CDD）程序和實施安全風險管理的重要性，特別是作為金錢服務經營者（MSOs）的角色。 我們非常感謝這次的合作，並對觀眾的熱烈參與感到高興。 我們期待未來能夠舉辦更多研討會與大家分享更多合規的資訊！ ComplianceOne are honoured to be invited one year again from the Association of International Accountants (AIA) to co-host the seminar regarding to the updates on anti-money laundering guidelines. We were delighted to share about the security and compliance guidance of the cross-border payment by this opportunity. We aimed to convey the significance of Customer Due Diligence (CDD) procedure and risk management strategy as being Money Service Operators (MSOs). We greatly appreciated our collaboration and were thrilled by the enthusiastic participation from the audience, with many attendees joining the conference. We anticipate organizing more seminars in the future to share further insights on compliance topics with everyone!