JVC: Most Small Jewelers Exempt From Patriot Act

The U.S. Treasury Department issued its PATRIOT Act anti-money-laundering rules for the jewelry industry—and most smaller retail jewelers will be exempt from its obligations, the Jewelers Vigilance Committee has announced. The final rules still require dealers and covered retailers to set up compliance programs within six months. But many retailers will not be required to implement the program—with the exception of those that purchase more than $50,000 of covered goods from non-U.S. dealers or members of the public, and sell more than $50,000 of those goods. However, an exemption to this $50,000 threshold—which was not included in the first draft of the rules—is trade-ins. “Retailers do not have to include any trade-in that did not result in a money transaction to the customer,” notes Jewelers Vigilance Committee executive director Cecilia Gardner. “Therefore, if you took in goods and exchanged them for more goods, it doesn’t count. If you paid in cash, it does. That is why most small retailers will not have to comply. We are very gratified about this change, because it’s one we highlighted to Treasury for comments.”

Pawnbrokers are also exempted from the rule. On the other hand, large retailers will likely have to comply with the rules if they transact a good deal of business with overseas companies. According to the rules, dealers in covered goods (meaning jewels, precious metals, precious stones, and finished goods) and non-exempt retailers will have until Jan. 1, 2006, to implement an anti-money-laundering program. The program has to include:

  • An assessment of the risks of being exploited for money-laundering purposes;

  • A program based on the risk assessment;

  • A compliance officer to implement the program;

  • Employee training;

  • Independent tests that ensure that the program functions as designed.

To help companies design anti-money-laundering programs, the Jewelers Vigilance Committee has developed the USA PATRIOT Act Compliance Kit. The kit is available at www.jvclegal.org.