IRS Stepping Up AML Audits of Jewelry Companies

The next knock on your door this holiday might not be UPS. The IRS is increasingly coming calling, too.

The Internal Revenue Service seems to have stepped up its anti-money-laundering [AML] audits of small- and mid-sized jewelry firms in recent weeks, according to Tiffany Stevens, president and CEO of the Jewelers Vigilance Committee.

“In the last month, the JVC has gotten more than five calls of IRS audits,” she says. “Obviously not everyone calls us; they have other resources. But that is a significant uptick in the number of calls.”

These audits seem to be concentrated in the Midwest and West, she says.

To Stevens, this stepped-up activity, as well as the recent OFAC fine against Richemont, indicates greater government enforcement of anti-money-laundering rules, fueled by the changing of the guard in Washington.

“This is generally an anti-regulatory administration but we are finding this obsession with borders and terrorism, and AML seem to fit into that category,” Stevens says. “So it seems we are under greater scrutiny.”

If you get an IRS notice in your Christmas stocking, don’t panic, Stevens says.

“You can get an extension,” she says. “And you have support. If you are not in great shape, you can call us or you can call other independent testers.”

Still, Stevens feels this issue needs to go back on jewelers’ radar.

“We understand everyone is busy during the holiday,” Stevens says. “But if you are making your New Year’s resolution, make sure you have an anti-money-laundering program. And if you have one, make sure you do your required yearly testing.”

More resources are available on a special section of the Jewelers Vigilance Committee website found here. And if you’re wondering what to expect when the IRS rings your doorbell, read our feature, What It’s Like to Receive an IRS Patriot Act Examination.

JCK News Director