Professional Jeweler Archive: Front Line on Terrorism

April 2003

Managing/Legal Issues


Front Line on Terrorism

Jewelers must play their part in combating terrorism, says JVC


The U.S. government is enlisting jewelers’ help in the fight against terrorism, especially through the USA Patriot Act of 2001. This law requires businesses to help prevent terrorists from manipulating legitimate commerce, especially through laundering money.

“At this uncertain time in world politics, our government is concentrating its attention on businesses that carry on substantial international transactions,” says Cecilia Gardner, executive director and general counsel of the Jewelers Vigilance Committee, New York City. “This inevitably includes the jewelry industry, with its frequent international trades and international shipping of product and financial money transfers.”

The jewelry industry has been implicated additionally because of ongoing news stories that link diamonds, colored gems and gold to money laundering by terrorists. The most recent was a Dec. 29 Washington Post article reporting on a new European investigation that shows the strongest evidence to date that al Qaeda terrorists converted about $20 million into diamond stockpiles in the months before the Sept. 11, 2001, terrorist attacks. The whereabouts of the diamonds, how many have been sold and to whom are unknown (see www.professionaljeweler.com’s Jan. 6 Daily News for more details).

Industry Volunteers

At a JVC seminar held during the JA International Jewelry Show in New York City in January, Gardner explained the specific actions retailers should take to ensure their businesses don’t become unwittingly involved in terrorist money laundering, which she describes as money that has been acquired criminally and then converted into “legitimate” money to further fund illegal activities.

Industry leaders reacted proactively to the terrorist issue and the Patriot Act of 2001, she says. “We actually went to the U.S. government first, asked them what we could do and told them we are ready to regulate ourselves,” she says. The industry already had in progress a system of controls designed to regulate international trade in rough diamonds: the Kimberley Process (see “Fifty Nations Adopt Kimberley System,” Professional Jeweler, December 2002, p. 18). “The good news is that we got there early [due to the conflict diamond crisis],” says Gardner.

In addition, the industry, through a voluntary system, continues to track polished diamonds right down to the retail level, after the rough diamonds are vetted conflict free by Kimberley certificates (see Professional Jeweler, January 2003, p. 21). In addition to Kimberley requirements, retailers should comply with the Patriot Act of 2001, she says.

What Jewelers Should Do

The Patriot Act of 2001 expects businesses to:

  • Develop Policies
    These should be aimed at keeping your employees informed about what they should and should not do regarding ethical and proper business practices. “At stake is preventing business from accepting money for the purposes of laundering,” says Gardner. “An example would be if a contact came to you and offered a parcel of stones at an impossibly good price, but without export or import paperwork.”
  • Develop Procedures
    This involves being aware and vigilant. Owners and employees should make a habit of asking more questions – particularly of suppliers. “Get to know them well,” says Gardner. Procedures also involve making sure business paperwork is in order. “That means obtaining all the necessary business license numbers, addresses, telephone numbers or Social Security numbers. It also means the filing of proper IRS forms for sales or purchases over $10,000.
  • Get an Auditor to Review Your Policies and Procedures
    An auditor can find areas of weakness in a business plan or in policies and procedures and suggest meaningful changes.
  • Join Associations
    This helps you stay informed and vigilant about your obligations.

– by Robert Weldon, G.G.

Copyright © 2003 by Bond Communications