ASIC has just issued Happy Investments Ltd (HappyI) a new Australian Financial Services License (AFSL). Cheery Jon Baileys (Jon) and Lucky Jim Beam (Jim) are the Managers responsible under the AFSL. Jon, and Smiley Hendricks, an employee of HappyI, will both provide personal financial product advice under this licence. Services will be provided to retail clients only. Jim will be in charge of the business operations. The AFSL has authorisations to provide financial product advice and deal in a financial product in relation to the following financial products: • Basic deposit • Securities • Managed investments • Superannuation Jon and Jim will charge clients an hourly rate of $330 (GST inclusive) for any advice provided, in addition to a 1% fee on any funds that they manage 'under advice'. Jim has also established a referral arrangement with a nearby accounting practice Matty-Matic Pty Ltd (Matic). The arrangement includes the payment to Matic of 15% of any revenue earned by HappyI from that client in the first year. Dom Perignon (Dom), a friend of Smiley Hendricks, has asked Smiley to provide him with advice in relation to some life insurance coverage, retirement planning, now that he is just a few years away from retiring. Dom also wants advice on selecting a suitable fund or funds for him to invest $15,000 for each of his grandchildren as a reward for completing their university studies. HappyI have been advised (by their lawyers) that under their AFSL, they have compliance obligations in relation to anti-money laundering legislation. Jon and Jim have a few queries about the new arrangements and what their obligations are, they have asked you to advise them on the following matters:

Answer ALL the following questions: a) What their specific legal obligations are and whether they have any ongoing requirements that they need to meet (4 marks). b) What is Smiley's role? What type of supervision and monitoring processes should HappyI consider to ensure their compliance with their legal obligations as holders of an AFSL? (4 marks). c) Jon knows that because they are providing advice to retail clients that he needs to provide them with a Financial Services Guide. Advise Jon on the content requirements and when the guide needs to be distributed. Ensure you note any specific information from the facts provided above that may impact on the content of HappyI's guide (5 marks) d) Jon and Dom want you to provide them with an overview of the advisory process including any duties that they must meet and how they can demonstrate that they have met these (provide practical examples). Ensure that your response takes into consideration the facts noted above (if you have covered information in an earlier question - you can refer to it) (12 marks).

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