Retailers Buying Mostly from Industry Sources Exempt from Patriot Act Compliance

March 12, 2003

Retailers Buying Mostly from Industry Sources Exempt from Patriot Act Compliance

Compliance with the proposed money-laundering provisions of the USA Patriot Act of 2001 won't be required for retail jewelers who buy most of their jewelry from wholesale sources, according to supplementary information published by the U.S. Department of the Treasury.

Only jewelers who buy more than $50,000 worth of jewelry or gems per year from the general public (or any sources other than bonafide dealers) must follow the proposed rules, expected to go into effect later this year.

The exemption for retailers means all jewelers should keep accurate records of jewelry or gems purchased from the general public or other non-industry sources over the course of each year to see if they exceed the $50,000 limit, advises Cecilia Gardner, executive director and general counsel for the Jewelers Vigilance Committee, New York City.

Jewelers who buy from the general public should also develop policies for how they assess such sellers, says Gardner, to screen for possible attempts to launder money. The proposed regulations, for example, suggest that buyers should be wary of sellers who:

• are unwilling to provide complete or accurate contact information.
• request that normal business records of the transaction not be kept.
• wish to sell jewelry that would be unusual for such a customer to have.

JVC – along with Jewelers of America, Manufacturing Jewelers & Suppliers of America, Diamond Manufacturers and Importers of America, American Gem Trade Association, International Precious Metals Institute, World Gold Council and American Gem Society – will submit detailed comments to the Treasury Department about the proposed money-laundering rules. The government has asked for comments during a period that ends on April 22.

To comply with the new proposed rules, companies who buy or sell precious metals or precious stones in excess of $50,000 for calendar year (with a few exceptions such as the one for retailers) must develop and implement anti-money-laundering programs reasonably designed to prevent purchases from being exploited for criminal purposes. "In 2003, firms will be required to develop written internal policies and procedures, designate compliance officers, train employees and institute independent audit functions to test the programs," Gardner says.

The proposed rules can be found in the Feb. 21, 2003, volume of the Federal Register or on JVC's Web site.

by Peggy Jo Donahue

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