Los Angeles precious metals dealer hit with BSA/AML penalty
The Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) has announced its assessment of a $200,000 civil money penalty against a Los Angeles precious metals business, as well as its owner and compliance officer. B.A.K. Precious Metals, Inc. (B.A.K.), its sole owner, Bogos Karaoglanyan, and its designated compliance officer, Arman Karaoglanyan, have admitted to willfully violating federal anti-money laundering (AML) laws, commonly known as the Bank Secrecy Act (BSA). It was FinCEN’s first action against a dealer in precious metals, precious stones, or jewels.
B.A.K. was the subject of a BSA compliance examination conducted by the I.R.S. in 2011 and again in 2013. B.A.K. did not have any AML program in place until 2011, five years after the business was established and only after the IRS examiners instructed it to implement one. And when the examiners returned in 2013, B.A.K.’s AML program was lacking in several material respects, and B.A.K., its owner, and its compliance officer often ignored the AML program. FinCEN reported that "B.A.K. failed to adequately assess its risks and did not conduct due diligence on its highest risk customers. In 2011, B.A.K. began dealing in large sums of gold with new customers, with transactions ranging between $14 and $23 million. This helped B.A.K. nearly double its total yearly volume, which reached $120 million by the end of 2012. Despite this significant change in volume and customer base, B.A.K. chose not to require any documentation or identification prior to conducting business with many of these new, high-volume customers. Moreover, the purchase orders documenting these transactions, many of which were over $100,000, contained only the business name and included no identifying information on the underlying individuals. These failures presented great risks for criminal abuse."