Law enforcement is putting industry on notice, says Jewelers Vigilance Committee
The Financial Crimes Enforcement Network (FinCEN) has fined a Los Angeles precious metals company $200,000 for not having the proper USA Patriot Act anti–money laundering programs in place.
The hefty fine is FinCEN’s first action against a dealer in precious metals, precious stones, or jewels, a statement said.
“In my opinion the reason this press release was issued is to put the industry on notice,” says Cecilia Gardner, president and CEO of the Jewelers Vigilance Committee (JVC), which follows Patriot Act–related issues. “Law enforcement takes seriously these requirements, and now they are going to now start issuing fines.”
According to the statement, the company in question, Bak Precious Metals, did not have the required anti–money laundering (AML) programs in place until 2011, five years after the business was established and only after the Internal Revenue Service examiners instructed it to implement one. When IRS examiners returned in 2013, its AML program was said to be found lacking, and sometimes ignored, according to FinCEN.
The statement further asserts that the company did not perform due diligence on high-risk customers. It charges that, beginning in 2011, Bak began dealing in large sums of gold with new customers but did not ask them for identification. Moreover, the purchase orders for these transactions—many of which were more than $100,000—contained only the business name with no identifying information on the underlying individuals, it says.
Bak did not return a call for comment.
“Gold and other precious metals are a highly concealable, transportable, and concentrated form of wealth that can be readily abused by criminals seeking to move and hide dirty money,” said FinCEN director Jennifer Shasky Calvery in a statement. “Dealers in these precious metals must do their part to ensure criminals are not able to use their products and services for such nefarious ends.”
The Patriot Act affects companies that buy or sell more than $50,000 of jewelry, precious metals, precious stones, and finished goods. Some exemptions apply.
More information on Patriot Act compliance can be seen on the JVC site.
An anonymous New York manufacturer talks about his Patriot Act audit here.