ABC Company is an accounting firm offering bookkeeping and corporate services to a large Group of companies whose main activities are the holding of investments in entertainment and catering industries as well as the provision of consulting and management services. 

 The fees generated by ABC Company from this Group amount to 20% of the firm's annual turnover. The companies belong to a large Group are registered in jurisdictions including BVI and the Cayman Islands. Although different shareholding percentages apply to the various layers of the structure, the Group seems to belong to a number of trusts which are set up in BVI, Cayman Islands and Island of Man. 

ABC Company believes that there may be other companies belonging to the same Group which may be administered by service providers in BVI, but this information could not be so verified.  

Overall, there seems to be difficulties when ABC Company seeks to obtain information and documentation from the New York lawyers acting as the representatives of the Group. Furthermore, information on the ownership and control of the structure seemed uncertain, although, ABC Company thinks that the whole structure belongs to a Ukrainian billionaire and his family who has interests in a number of entertainment and catering industries and holds key positions in the Board of Directors of major Ukrainian companies and is also known to have close links with the Ukrainian government. 

ABC Company, given some efforts, managed to receive some documentation in order to carry out the bookkeeping of these companies and this documentation revealed the following:

• The investments in various companies, especially start-ups, are acquired and are disposed of within a few months often at a big profit. 
• The companies of the Group have numerous bank accounts both in BVI and the Cayman Islands and funds are being transferred between these bank accounts and sometimes remitted to third party accounts.  
• The invoices for consulting and management services are issued to Ukrainian companies. ABC Company accidentally found out that the Ukrainian billionaire is a member of their Board of Directors. 

1.        Discuss the red flags which might indicate illegal activities in this case 

2.    Discuss the risks and potential threats that ABC Company may be faced with

3.  What KYC/CDD work should ABC Company have carried out.

Answer rating: 100% (QA)

1 Warnings Demonstrating Criminal operations a Mind boggling Possession Construction The complicated proprietorship structure including various wards trusts and muddled shareholding rates collects dou... View the full answer