My thoughts:

1. Tell him that he's only cheating himself. When he's shooting an approach in actual, there's nothing to be seen outside, no matter how hard he looks.

2. Talk to his dad. Surely an airline pilot can see how stupid the idea of sneaking a peek is.

3. If all else fails, drop him. With some students, you have to mark the line in the sand- either he's gonna stop cheating, or he can find another CFI. How comfortable would you be if you signed him off, and then years later walked onto an airplane and saw him up front?

PS. Def. think it's a good idea to give the examiner a heads up about this student.