Patriot Act Final Regs Due Early in 2004


November 14, 2003

Patriot Act Final Regs Due Early in 2004

Jewelry industry businesses will soon be required to comply with anti-money laundering provisions included in the USA Patriot Act, according to a panel of experts who met on Nov. 12 in New York City to instruct companies on the presumed final rules. According to the U.S. Treasury Department, which is issuing the new regulations, the final document will probably be released in January 2004, followed by an anticipated three-month break-in period. After the three months, all companies will have to have their programs in place, says Cecilia Gardner, executive director and general counsel of the Jewelers Vigilance Committee, which partnered with the Jewelers Board of Trade and Manufacturing Jewelers & Suppliers of America to present the seminar.

The proposed regulations have remained basically the same since JVC first announced jewelry and other industries had been named by the government as vulnerable to being targeted by criminal money-launderers in early 2003. Most in the industry who buy and sell precious metals and gems 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 may often be the controller or financial officer in a company, but any person who has authority can be in charge, as long as he or she has the ability to acquire and disseminate the information to employees. The compliance officer must assess the risk of the business being used by money launderers, then create a written program, train employees and see that the program is tested by another employee or an outside firm that can check to see the program is functioning according to Treasury Dept. rules.

Among a few new points brought out at the seminar:

• JVC asked the Treasury Dept. to clarify whether trade-ins jewelers buy from the general public will count as part of the $50,000 they must buy before being subjected to the Patriot Act rules.
• Ten-karat gold is currently not included in the definition of "precious metals" and the Treasury Dept. is looking into whether it should be.
• The Treasury Dept. is working to give the industry more guidance on what its risks are from money launderers, according to Michael A. Dawson, deputy assistant secretary for the Treasury, who spoke at the meeting. "You need better guidance and feedback from us to understand your risk," says Dawson. "You need specific real examples of money launderers using your business." Dawson acknowledges it's difficult for the government to get good intelligence on what money launderers are up to, but it's 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 Dione Kenyon, president of JBT, who also spoke. JBT has 70,000 companies in its database, with key information that will be critical for companies to now know about all the companies they do business with.
• JVC will issue a Patriot Act Compliance Kit as soon as the regulations are made final in January. 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 will also offer its services as a tester of individual programs at industry firms. To order the kit now, contact JVC at (212) 997-2002 or go to jvclegal.org.

The seminar was sponsored by ABN Amro Bank, the Fashion Institute of Technology, Fleet Precious Metals, J.P. Morgan Chase Bank and Sovereign Bank.


by Peggy Jo Donahue



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