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Are You Compliant With Anti-Money Laundering Laws?

What you need to know to protect yourself and your business

By Jewelers Mutual® Group

There are many obvious ways to keep your business safe. Things like having a working alarm system, keeping an eye out for suspicious activity, and alerting the authorities to potential threats are crucial to protecting your staff and store.

One critical safety measure often forgotten is anti-money laundering (AML) compliance. Complying with these laws can be tricky for jewelers, but if you don’t, you could face serious penalties. Anti-money laundering certification for jewelers is required, and you need to renew it on an annual basis.

Here are some basics to help you get started.

What does anti-money laundering mean?

The Financial Crimes Enforcement Network (FinCen) defines money laundering as the process of making illegally gained proceeds appear legal.

To prevent dirty money from infiltrating the industry, anti-money laundering laws were put in place in the United States, beginning with the Bank Secrecy Act in 1970.

While these laws have not changed, their scope has expanded significantly. Because of the enormous value of gems, jewelry, and precious metals, the USA PATRIOT Act of 2001 introduced amendments that made jewelers part of the financial system.

Who is affected by these laws?

FinCen defines jewelry dealers and retailers differently, and compliance with anti-money laundering laws is based on how jewelers conduct their business. Does all of that seem a bit confusing? Don’t worry; we’re here to help.

Dealers are defined as those who purchased covered goods exceeding $50,000 during the prior calendar or tax year and received more than $50,000 in gross proceeds from the sale of precious metals, jewelry, and gemstones during the same time frame.

  • Covered goods are defined as precious metals, jewelry, gemstones, and finished goods
  • The amount for gross proceeds from sales does not include finished goods
A retailer is one who does most of their selling to the general public. They may be exempt if one of the following situations is applicable:
  1. They are a licensed pawnbroker
  2. They purchase only from other retailers or U.S.-based dealers (who should already have a certified AML program)
  3. They purchased less than $50,000 in covered goods from non-dealers in the prior calendar or tax year
All transactions involving $10,000 or more (sale or purchase) in cash or cash equivalents still require all industry members to file an IRS 8300 form.

What happens if jewelers and their businesses do not comply?

1) A civil penalty may result in a fine of up to $250,000 or up to two times the amount of the transaction, not to exceed $1,000,000

2) A criminal penalty may result in a fine of up to $500,000 and a maximum of 10 years in prison, or both

Without an AML program, you run the risk of having assets frozen or being targeted for even tougher action taken against your business, even if you’re unaware of the laundering occurring at your business.

Plus, with today’s political events and new sanctions, the need for an AML program—and a diligent search of vendor names through the Office of Foreign Sanctions and Control (OFAC) sanctions database—is stronger than ever before.

How to make sure you’re AML compliant

Unless your business is currently exempt from AML-related laws, you are required to do the following:

  • Appoint a compliance officer to manage your AML program
  • Assess the risks your business faces
  • Create a written, customized program
  • Conduct ongoing employee training
  • Check customers and suppliers for risk factors
  • Appoint an independent tester to verify that your program is current, appropriate, and effective
  • Have your program tested annually
  • File appropriate federal forms when needed

We know this is a lot to take in, remember, and implement; there are so many things to consider when it comes to AML compliance. Thankfully, the Jewelers Mutual team is here to help take away the guesswork.

In addition to offering intelligent shipping solutions and insurance options for jewelers, JM Shipping Solution has an affordable AML program creator to help guide you through every step of this complex process.

For more information on keeping your business safe and secure, visit the Jewelers Mutual Clarity Blog.