Alpha Alternative Asset Management $($AAAM$)$ is an actively managed alternative investment fund which invests

in all forms of securities and derivatives. The parent company is based in the US but the AIF fund is domiciled

in Ireland. As fund promoters and managers AAAM has been very successful over the years and both the parent

and the investors are generally happy with their efforts.

Recently, there have been a number of issues in the funds sector and regulators have been getting very active

in sanctioning firms which have not put adequate systems and processes in place to fight against Money

Laundering and Terrorist Financing. The Irish regulator has issued a notice to the funds domcilied in Ireland that

a thematic exercise around Due Diligence, AML and CFT is about to take place and that all involved should be

prepared.

A recently marketed fund at AAAM is their new Euro Alternative Private Equity $($EAPE$)$ Fund and they are

currently in the initial selling period for this fund. A new, American based, investor has decided to look into

adding this fund to their overall portfolio. Their investment is significant in the overall context of the new fund,

and the investor is a highly sought$-$after family office which has only had very limited exposure to investing

outside of the US and are not fully comfortable with fund activities in Europe. They have previously met with

the Irish based management company and also with the promoters. They have now requested to meet with

the custodian and in particular the team that will be acting as Transfer Agent for the fund.

In initial discussions the family office representatives have outlined that the main beneficial owners of their

private group is a Senator and her family. Her husband is a high ranking member of the U$.$S$.$ Air Force whilst

their two daughters are both working in investment banks in New York. The Senator sits on the high$-$profile U$.$S$.$

government House Committee on Ways and Means. They understand that a different level of due diligence may

be required to satisfy regulatory needs but they would like the Transfer Agent to explain this process clearly to

them.

The family office representative has made it clear that one of the attractions of investing in the AEPE Fund is

the ability to take advantage of Deferred Sales Charges when investing in these funds. They have some

experience in this space but would like the TA to outline fee structures generally, both up$-$front and deffered,

and to have the Advantages and Disadvantages outlined clearly to them.

One other area that the investors would like some further insight on is the developments in Data Protection and

any effect this could have on such a fund.

You lead the team that acts as TA for such funds and the Head of Alternative Clients has asked you to prepare a

briefing note for the investor. The request from the investor came with some specific areas they want covered.

In this context you must cover the following in a memo to the family office representative:

a$)$ Clearly outline your understanding of Money Laundering, the stages of this activity and the

European Directives in place to counter such activities. Refer to the work of the Financial Action

Task Force $($FATF$)$ in the global efforts to combat money laundering and in Countering the Financing

of Terrorism $($CFT$).$

b$)$ Outline the Due Diligence process that would need to be followed with respect to the family office

seeking to become an investor in the AAMM Euro Alternative Private Equity $($EAPE$)$ Fund. Explain

the regulatory changes in place in Europe with regards to data protection.

c$)$ To illustrate the fees structures available you must use the fictional set of sample data given in

Appendix $1.$ You must lead the investors through the calculations and give brief descriptions of

each descriptions of a Contingency Deferred Sales Charge $($CDSC$)$ and Redemption Proceeds.

Please explain why funds would use such a mechanism and what alternatives they may consider.

The attached appendix $1$ gives details of the sample test data used and is instrumental in preparing your briefing

note.

Please use these figures and do not make up your own set as an illustration as you will not gain the marks

available for this part of the assignment if you do not use the sample test data.

The Test Fund

Holding period $($shares have been held for$)$ CDSC

Less than one year $4\%$

More than one but less than two years $3\%$

More than two but less than three years $2\%$

More than three but less than four years $1\%$

Four years and above $0\%$

Transaction Data

An instruction to sell $9,500$ shares was received for value the $20$th May $2023$ when markets had dropped to an

almost three$-$year low where the applicable NAV was $15\mathrm{.}50.$

It is expected that you will deliver a clear and precise illustration of why the CDSC process is used, the calculated

cost involved and the Redemption Proceeds which would have