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#2255121 - 06/10/21 03:05 PM AML Programs for Jewlery Shops???
Jinny Jewlery
Unregistered

The current FFIEC BSA AML exam manual says dealers in precious metals, stones, or jewels are classified as NBFIs, and must be risk-assessed, etc. Nowhere in that manual can I find a definition of such a dealer.

The only thing I can find is a definition from a 2005 "interim final" rule. Was this rule ever replaced by a final rule?

If I'm reading the below wall of text correctly,

FinCEN's 2005 Interim Final Rule - Anti-Money Laundering Programs for Dealers in Precious Metals, Stones, or Jewels is located at (https://www.fincen.gov/resources/statutes-regulations/guidance/frequently-asked-questions-0). This rule allows us to document the difference between a jewelry store retailer and a "dealer" in precious jewels. For example the average small jewelry shop retailer would not be a "dealer" under this rule, if this is the rule that is still in effect.


"3. Who is covered by this regulation? The interim final rule applies to “dealers” in “covered goods.” “Covered goods” include jewels, precious metals, and precious stones, and finished goods (including but not limited to, jewelry, numismatic items, and antiques) that derive 50 percent or more of their value from jewels, precious metals, or precious stones contained in or attached to such finished goods. FinCEN has defined the term “dealer” as it is commonly understood: A person who both purchases and sells covered goods. Additionally, FinCEN has included dollar thresholds in the definition of dealer: A person must have purchased at least $50,000, and sold at least $50,000, worth of covered goods during the preceding year.The dollar threshold is intended to ensure that the rule only applies to persons engaged in the business of buying and selling a significant amount of these items, rather than to small businesses, occasional “dealers,” and persons dealing in such items for hobby purposes. Significantly, the interim final rule distinguishes between a dealer and “retailer” of covered goods. FinCEN has defined the term retailer as a person engaged within the U.S. in sales of covered goods, primarily to the public. FinCEN believes that retailers, as defined, do not pose the same level of risk for money laundering as do dealers. Thus, most retailers will not be required to establish anti-money laundering programs. So long as retailers generally purchase their covered goods from U.S.-based dealers and other retailers, the retailers will not be required to establish anti-money laundering programs. Thus, retailers that, for example, purchase excess inventory from other retailers from time to time would still be covered by the retailer exemption. Under the interim final rule, a retailer that purchases up to $50,000 of covered goods from persons other than U.S.-based dealers or retailers is covered by the retailer exemption. However, if during the prior tax or calendar year a retailer both purchased more than $50,000 of covered goods from persons other than U.S. dealers or retailers (such as non-U.S. dealers and members of the general public), and sold more than $50,000 of covered goods, then the retailer would be deemed to be a “dealer” and would have to develop and implement an anti-money laundering program. Under such circumstances, the anti-money laundering program would only be required to address purchases from non-U.S. dealers (including members of the general public) for the following year; the program would not be required to address sales. Finally, businesses licensed or registered as pawnbrokers under state or municipal law are specifically exempted from the definition of “dealer” for purposes of the interim final rule. Therefore, pawnbrokers are not required to establish anti-money laundering programs under this rule as long as they are properly licensed or registered with the appropriate state or local government and engaged in pawn transactions."

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#2255137 - 06/10/21 04:35 PM Re: AML Programs for Jewlery Shops??? Anonymous
ColoradoAML Offline
100 Club
Joined: Mar 2018
Posts: 240
It's my understanding that his interim rule should be considered to be a final rule, with the exception that dealers who deal only in silver are not required to implement an AML program.

There is some clarification of the definition of precious metal dealers here: https://www.fincen.gov/resources/st...money-laundering-programs-dealers-silver and https://www.fincen.gov/resources/st...ition-precious-metals-interim-final-rule

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