HRD Protests Patriot Act Rules


July 26, 2005

HRD Protests Patriot Act Rules

HRD, the Diamond High Council in Antwerp, Belgium, will lobby Belgium and the United States to protest the interim final rules published in June by the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of Treasury, as part of the anti-money laundering regulations passed under the USA Patriot Act. HRD says the rules discriminate against non-U.S. diamond suppliers and fails to recognize thestrict anti-money-laundering rules implemented in Belgium, according to Antwerp Facets Online.

The interim final rules say companies dealing in precious metals, gemstones or jewels with an annual value in excess of $50,000 must develop and implement anti-money laundering programs. Retailers, though, can seek to be exempted from this obligation if they buy only from dealers who themselves have implemented such programs. This, HRD contends, puts non-U.S. diamond wholesalers who do not operate offices in the U.S. at a severe disadvantage. HRD saysit is likely American retailers may choose to limit their purchases to local suppliers to avoid the burden of implementing their own anti-money laundering programs.

In an editorial in the latest Antwerp Facets, Peter Meeus, HRD managing director, took FinCEN to task for failing to recognize the efforts being made outside the U.S. to tackle the scourge of money-laundering. "Supporters of the [FinCEN] rules say that security has to be an overriding concern. We find no fault with this statement, but question whether diamonds coming from Belgium, which itself has implemented a money laundering regime that is even stricter than that in the United States, really constitute a security threat," Meeus wrote.

"We certainly do not propose that the U.S. authorities enact policies that compromise national security. But, we do believe that a system of free and fair trade can be maintained if both sides recognize the 'functional equivalency' of each otheršs anti-money laundering legislation. Failure to do so would be an affront to like-minded colleagues and ultimately a blow to the U.S. consumer," said Meeus.

FinCEN invited comment about its "interim final" up until July 25. Comments will be posted on the organization's website at www.fincen.gov.



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