Money Laundenng Facts of the Case

Andreou is an accountant and an adnuntstra%on servtce provider regulated by 'CPAC. working in Cyprus Mt Andreou had employed one Compliance Officer (CO) who is a recently qualified accountant Mth no AML experience and limited work experience Smith from the UK owns a used car doalergtup in the UK. approached M' Andreou and bank administration and accounting servjces Mt Andreou sets up a CO(11pany With the assistance of a registered "censed lawyer that purchased used cars fronv Mr Smith s UK Company and resold them in the local mane: Andreou approved and processed the payments of the purchases and rnembers of tvs staff issued the sales Invoices and deposited the recetpts from the sale of the new cars and matntatned propel accounting records The business was very profitatAe anc cash rich. as the used ters were bought at a very low pnce ane resotd at a 9gntficantty higher once 'n cash

One employee of Mr Andreou expressed her concerns to the CO as she was warned that the mapnty of sales were made incash (below the 10.000 threshold 1 i and, tn addition to this. in many Instances the cats were registered to a different customer than one paytng for the safe The CO dismissed her worries and explained that this is tww business IS done n Cyprus. and that many people still have cash at home after the deposit haircut tn 2013

Not long after. Mr Smith was convicted and mprjsoned. snce it emerged that he is a drug dealer who has set up used car sale businesses in a number of countries to launder the proceeds from drug sales As a result. all used cars and cash were viewed by the Republic of Cyprus as criminal proceeds and were now the subject of confiscation proceedings.

Mr Andreou was arrested and put on trial alongside the Compliance Officer According to the prosecution. the set up and management of the company was intended to eliminate the trail that led back to Mr. Smith and his illegitimate funds and they should have been suspicious of the transactions as the cars sold were almost obsolete but generated high income in cash

CO t where a cxcv state ane root have to t tri settle their purchases 7he CC) convic:tod to 'eporl. contrary to of the

Prevention ane Surpresson of Money I-aundennq anc Terronst fArnendtngj Law Of 2018 [the and sentenced to 17 months' imprisonment

Answers the following case study questions(l to 3)

1 toent'fy and explarn 5 red flags In the case study? 15 marks

2 Wha' actions should have been taken to avoid money laundenng? 10 marks

3 What dc be done to mitigate the spread of money laundenng and terronst financng025 marks

General answers

4.why should we know our client? 15 marks

5.client due diligence what Should you do when verifying a client's identification document? 15 marks

6. What is the current legal framework OF AML? 1 Omarks

7.Why do I need to perform Anti-Money Laundering checks? 10 marks