Like MSBs, those covered by this regulation fit the definition of "financial institution" under BSA. Like MSBs, they can be used to launder money. So, it has long been expected that banks would monitor their activity and impose enhanced due diligence requirements.
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.
A "dealer" is a person who has purchased at least $50,000, and sold at least $50,000, worth of covered goods during the preceding year. (Pawnbrokers are specifically excluded.) In effect, as financial institutions, these businesses must establish AML programs that incorporate the naming of an individual responsible for compliance, training, independent testing, and internal controls.
Obviously, banks will need to identify these customers. However, since these businesses have traditionally been described as "high risk," banks should already know which customers are involved in transactions with covered goods. Now it's a matter of determining which ones meet the definition of a "dealer." Unlike MSBs, banks will probably not be able to surmise which of their customers are covered by the regulation solely from a review of bank records.
I don't find anything that provides guidance to banks on how to deal with these customers. However, I have not read it thoroughly because the document is nearly illegible, both in print and on the screen.
FinCEN has since linked to a different document; it's legible now.
Last edited by Ken_Pegasus; 06/19/05 04:44 PM.
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