FinCEN Clarifies AML Risk Assessment for Jewelers

The U.S. Financial Crimes Enforcement Network (FinCEN) has issued additional guidance for the jewelry industry, intending to clarify the risk assessment to be performed by dealers in the jewelry industry. The information does not impose any additional requirements on dealers but is meant to help identify certain jurisdictional characteristics that would impact their exposure to risk.

At an ongoing anti-money laundering (AML) seminar series being conducted by the Jewelers Vigilance Committee (JVC), FinCEN Junior Director James H. Fries explained that in certain circumstances the risks of money laundering associated with purchases from a foreign source may not be greater than those associated with a domestic supplier.

He urged retailers to review the following factors among a longer list of possible risk factors:

1. The nature and scope of the regulatory efforts of the supplier’s jurisdiction to prevent money laundering and terrorist financing in its precious metals, precious stones and jewels industry;

2. The nature and scope of the regulatory efforts of the supplier’s jurisdiction to prevent money launderers’ and terrorist financers’ entrance into, or exploitation of, the industry and

3. The dealer’s relationship with the supplier.

Fries also stressed the need for dealers to develop procedures to make reasonable inquiries to determine whether a transaction involved money laundering. Examples include whether the transaction involved the use of unusual payment methods, such as the use of a large amount of cash, multiple money orders, traveler’s checks or payments from third parties.

JVC President, CEO and General Counsel Cecilia Gardner added, “Retailers should insure that their foreign sources of supply are themselves complying with their AML obligations.”

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