Reference no: EM133434349

Question: JOY KENSINGTON CASE STUDY Joy Kensington It has been over three years since Joy Kensington's husband passed away suddenly. Her husband's estate has been settled and Joy, a 50-year-old, former Sydney nurse, has moved to Port Douglas, in North Queensland in January 2022, with her Jack Russel, Skippy, to begin as her children say a new stage of her life. She posts that she is leaving Sydney for a 'sea change' on her Facebook profile. She has never travelled outside of New South Wales. Her children and extended family like it, her former work friends comment and typically wish her well. Her profiles on social media are very open. SCB Bank Joy Kensington has been a customer at SCB Bank for the last thirty years. She holds a regular transaction account, a savings account and has both a debit card and a credit card. She seldom withdraws cash and appears to utilise her debit card for most of her day to day living costs, and only occasionally uses her credit card for purchases at vendors such as The Good Guys and Harvey Norman. Her quarterly utilities bills are paid through EFTs, and she has several direct payments set up for other periodic bills such as telephone and insurances. Enter Danial Adam In Port Douglas, Joy works part-time at a local clinic and is an active social media userposting photos and comments and keeping in contact with interstate family. She is surprised to see a 'friend request' from 'Danial Adam' who liked one of her pictures. She has a look at his profile page and sees that he is formerly from East London in the UK, and his photos reveal his affection for dogs. He likes her posts for about a month and then they start to chat online, through Facebook Messenger. Danial is in his late 50s and is currently living in Barbados. For the last two years he has been investing in hospitality and tourism ventures in and around the island. One particularly venture is a holistic mind-and-body wellness centre for international guests. On her birthday in March, Danial sends Joy flowers, which she thinks is sweet. She has not mentioned him to her children. About a week later, Danial sends a message to say that he has been in a car accident. To add insult to injury, when he was getting the other driver's details, he was robbed and had his phone, wallet and iPad stolen! He now has to use a local internet café until he makes a police report and maybe an insurance claim, as without his wallet and ID he can't buy a new phone. Without hesitation, Joy uses her debit card to send AUD$200 in cash via Eastern Union, a money transferring service to get a new phone. Danial thanks her and tells her that the police are now going to charge him for the motor accident, unless he pays the local police. However, he has no access to his funds as the bank has halted his credit. Joy offers to send him some money, for which he is grateful and says it would be paid back. Danial says that he does not really trust the police and would rather not be walking around with too much cash in his pocket. He asks that the money be paid into the account of a local friend 'Ferdie Shapiro' instead. Joy arranges a bank transfer for AUD$3,000.00 to be sent to Ferdie. 3 Soon, Danial asks for another 'loan'. Over the next two months she sends four further bank transfers of AUD$2,000.00 each, to Ferdie's account. He says that the local police sergeant wants the cash because the car accident involved a local politician's son, Danial does not want to go to jail. A few weeks later, unexpectedly, flowers arrive from Danial thanking her and stating that he 'has fallen in love, with a person with such a kind heart'. He has sorted out the police issue and has been able to access his bank accounts again. Next time they chat, Danial says he wants to repay her the money he borrowed. He will send the funds in two payments of AUD$5,500.00. Danial sends an Eastern Union transfer to Joy in July, which is deposited directly into her bank account. She is surprised to see that the amount is actually AUD$6,500.00. Danial says the remitter must have got confused with the exchange rates. Danial suggests that she could deposit the extra cash into a business associate's account, to fund another one of his investments. Joy goes to her local SCB Bank and makes the deposit to the account of "Col Frith", ManiBank, Sydney. Two days later Danial sends her more funds, the amount is again AUD$6,500.00, again Joy deposits the $1,000 into 'Col Frith's" account. The teller at SCB Bank asked her about the deposit, and they become quite chatty, and Joy relates Danial's misadventures to her. The teller, Sally, is a little concerned and makes a note on the system, outlining her concern about the two transactions. Three weeks pass and the couple are exchanging dozens of messages per day. Danial calls her to ask if she wants to become a business partner in the wellness resort. It will cost AUD$50 to register her name on the documents. Danial sends her photos of a resort and his plans to expand the resort. Joy is very happy and agrees and sends him the $50 again via Eastern Union, as they have the most favourable exchange rate. Another month passes and Danial calls her in a panic. The politician's son who was in the car accident, is after him! Danial says he needs to protect their investment and he wants to send her some cash. He explains that his cousin, Jordan Adam has agreed to draw the cash from his local Sydney bank in return for Danial transferring money to a West Indian bank account of Jordan's. He says this way, the police won't realise that he is safeguarding the money. Danial asks her to meet Jordan and collect the money, which she does. She is rather taken aback to be in possession of AUD$85,000 in cash and is very nervous having so much cash on hand. When Danial urges her to deposit AUD9,000 into one account and the balance equally into eight more separate bank accounts, she is so relieved. Joy asks why so many accounts, and Danial explains that he does not want the Australian government to take his savings. He reassures her that the accounts belong to himself and some other businesses that he has a controlling interest in. He just doesn't want them to risk "losing everything". He adds that he is planning a trip to Port Douglas next month and was going to surprise her. He thinks it would be good to start looking at business opportunities in Australia, because Barbados is just getting too difficult. "I mean the beaches are great, but, oh man, there are just some seriously dodgy people here and I am sick of all the crime!" Joy agrees and makes the deposits. Two of the accounts are held at SCB Bank and Joy goes into her local branch to make the cash deposits. Sally, the Teller, strikes up a conversation with Joy again, and jokingly asks if she won the lotto! Joy laughs and says that she is now a business partner with her 'boyfriend' but doesn't elaborate. She does let slip that her boyfriend's name is Danial Adam, from the UK and he is moving to Port Douglas soon.

4 Questions

1) Risk Profiling: perform a risk profiling of Joy Kensington as a customer of SCB Bank based on the information provided to determine her risk rating as of 1 January 2022 (i.e. before moving to Northern Queensland).

Discuss your justifications for all judgments made.

b) Reevaluate the risk profile of Joy Kensington at the end of the case and provide explanation for your assessment. (Hint: check whether any of the parties are on a sanctions list, and use open sources and/or AUSTRAC/FATF to determine whether the jurisdictions involved are high risk).

2. Customer Due Diligence: Discuss the customer due diligence process for Joy Kensington, from her initial onboarding as a customer thirty years ago until the end of the case. Limit your discussion to the facts of the case and your risk profiling presented in Question 1. Assume that there has been no significant change in her banking transactions over the period of her being a customer until the beginning of 2022.

3) SMR Reporting: Assume that you are suspicious about Joy's more recent bank activities and believe that it is necessary to submit a Suspicious matter report (SMR). a) At which point would you consider raising an alert? Explain your reasoning. b) AUSTRAC requires that an SMR report includes a 'Grounds for Suspicion' wherein you should provide details of the nature and circumstances surrounding the matter. describe your Grounds for Suspicion in this case.

4) Flow of Funds: Based on all the information provided in the case above, show a diagram showing the flow of funds.