Patriot Act Final Regs Due Early in 2004
Retailers who buy less than $50,000 a year from the general public are still exempt
JVC will issue a Patriot Act Compliance Kit as soon as the regulations are made final. The kit will provide templates of a typical program, employee training information, a testing methodology to use, form letters to send to business contacts and a copy of the final rules.
JVC also will offer its services as a tester of jewelers programs.
To order the kit, contact JVC at (212) 997-2002 or www.jvclegal.org.
Jewelry industry businesses will soon have to comply with antimoney-laundering provisions of the USA Patriot Act, according to a panel of experts who met on Nov. 12, 2003, in New York City to instruct companies on the presumed final rules. The final document probably will be released this month, estimates the Jewelers Vigilance Committee, which presented the seminar along with the Jewelers Board of Trade and Manufacturing Jewelers & Suppliers of America. After an anticipated three-month break-in, all companies will be required to have their programs in place, says Cecilia Gardner, executive director and general counsel.
The proposed regulations have remained basically the same since JVC announced in early 2003 that the U.S. Treasury Department regarded companies in the precious metals, gems and jewelry industries as financial institutions vulnerable to being targeted by criminal money-launderers (Professional Jeweler, May 2003, p. 76). Most companies in the industry will have to comply with the rules, except retailers who buy principally from bona fide industry dealers. (If jewelers buy over $50,000 a year from the general public, though, they must comply.)
As previously announced, companies will be required to appoint a compliance officer to create and administer the program. Gardner advises jewelers do so now so they can begin preparations and research the issue. Compliance officers might be the controller or financial officer of a company, however, anyone who has authority may be in charge. The compliance officer must assess the risk of money launderers using the business, then create a written program, train employees and have another employee or outside company test it to make sure it functions according to U.S. Treasury Department rules (JVC will offer a Patriot Act Compliance Kit to help companies compliance officers do their jobs correctly read Patriot Kit for details).
Among a few new points brought out at the seminar:
- JVC asked the Treasury Department to exclude from retailers $50,000 threshold any trade-ins of items previously bought at a store, then brought in for exchange with other merchandise at that same store. However, other kinds of trade-ins, exchanged for other merchandise, are considered financial transactions even if no money is paid. The cash value of those trade ins would be counted toward the $50,000 threshold.
- Ten-karat gold is not included in the definition of precious metals, and the Treasury Department is looking into whether it should be.
- The Treasury Department also is working to give the industry more guidance on what its risks are from money launderers, says Michael A. Dawson, the departments deputy assistant secretary, who spoke at the meeting. You need better guidance and feedback from us to understand your risk, he said. You need real examples of money launderers using your business. Dawson acknowledged its difficult for the government to get good intelligence on what money launderers are up to, but its continuing to try through international intelligence and national and local law enforcement.
- JBT can help companies learn more about the businesses with whom they buy and sell, says JBT President Dione Kenyon, who also spoke. JBT has key information on 70,000 companies in its database.
The seminar was sponsored by ABN Amro Bank, Fashion Institute of Technology, Fleet Precious Metals, J.P. Morgan Chase Bank and Sovereign Bank.
by Peggy Jo Donahue