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Dealer in Precious Metals, Stones and Jewels

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Question: 
We are trying to determine whether or not a customer qualifies as a dealer of precious metal, precious stones or jewels and if so, what is required with regard to AML and OFAC. The customer sells jewelry on Etsy to the general public including rings, earrings and necklaces. Most of the rings come with a gemstone. The metal of the ring is made with sterling silver, 10K gold and 14k gold. Gemstones include aquamarine, cubic zirconia, alexandrite, lab (man-made) sapphire, lab created ruby, lab created emerald, amethyst, moonstone, blue topaz, garnet, quartz, period and morganite. The customer purchases approximately $150,000 from foreign vendors in Hong Kong. - Does this customer qualify as a dealer in precious metals, stones and jewels? - And if the customer does qualify, what documentation does the customer need to have in place with regard to an AML program, OFAC, risk assessment, etc.? - How are dealers in precious metals, gemstones and jewels advised that they are required to have this documentation? - Are they regulated, and if so by who? Any insight you could provide would be greatly appreciated.
Answer: 

FinCEN defines a dealer in precious metals stones and jewels as business that buys and sells more than $50,000 in covered goods. There is an exclusion for retail jewelers who only purchase their supply from other U.S. suppliers. $150,000 in international purchases would make this customer qualify as a dealer in precious metals, stones and jewels.

FinCEN advised dealers of their obligations under the Bank Secrecy Act by publishing an interim final rule in 2005 which describes all of the requirements for a BSA/AML program, OFAC compliance ,etc.

https://www.fincen.gov/news/news-re...r-jewels-required-establish-anti-m...
https://www.fincen.gov/sites/default/files/shared/antimoneylaundering060...

The IRS is responsible for regulating the industry.

First published on 09/06/2020

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