Anti-Money Laundering For Dealers in Precious Metals and Stones (DPMS)
Anti-Money Laundering For Dealers in Precious Metals and Stones (DPMS)
Money laundering is a serious crime, and its scope is not merely restricted to financial institutions, small or medium-scale businesses. However, it has expanded its wings for Anti-Money Laundering For Dealers
in Precious Metals and Stones (DPMS). Compliance related to Anti-Money Laundering for Dealers in Precious Metals and Stones (DPMS) requires thorough knowledge of AML regulations in the UAE.
The smuggling, stealing, and trading of precious metals, stones, or gems are pretty frequent and regular. The proceedings from such unlawful activities are later on used for Anti-Money Laundering For Dealers in Precious Metals and Stones.
Dealers of precious metals, stones, or gems can undoubtedly be drawn into money laundering schemes. For instance, criminals or money launderers use dirty money in order to buy gold, diamond, and other precious metals or stones. The money launderers or criminals then resell the precious metals or stones to bring the money into the financial markets again and tag it as legitimate or authentic.
It must be challenging to identify and understand Anti-Money Laundering For Dealers in Precious Metals and Stones and what are the ways in which you can avoid it. Here are a few indicators that might alarm you that the transaction (buying or selling of precious stones, metals, gems) might be a money laundering attempt.
Money Laundering for Dealers in Precious Metals and Stones - Key Indicators:
- Payments are made in cash. Usually, in a transaction of precious stones or metals, massive amounts are involved. But if the payments are bifurcated in cash, multiple money orders, cashier’s cheque, or traveler’s cheque, or are being paid through a third-party account. Then you might suspect the probability of money laundering.
- The customer is not willing to provide complete or accurate financial references, contact information, or any type of business affiliations
- The supplier or customer attempts to maintain a high degree of secrecy about a transaction, like normal business records should not be maintained
- Sales or purchases don’t conform to industry standards.
- Sales or purchases are unusual for a particular supplier, customer, or a type of supplier or a customer
Dealers in precious metals and stones are expected to have a well-designed compliance program tailored as per their jewellery business. Anti-Money Laundering For Dealers in Precious Metals and Stones starts with the assessment of the overall risks involved, and as it progresses, it should include four-pillar requirements, which are as follows.
- Written policies, procedures, and internal controls
- Appointment of an anti-money laundering compliance officer
- Provision of ongoing anti-money laundering training for appropriate personnel.
- Independent testing at regular intervals.
Compliance. Trust. Transparancy
Customized and cost-effective AML compliance services to support your business always
What Are The Various Problems Associated With Anti-Money Laundering For Dealers in Precious Metals and Stones?
Compliance for Anti-Money Laundering for Dealers in Precious Metals and Stones (DPMS) is quite challenging:
- It is often challenging to understand and monitor Anti-Money Laundering For Dealers in Precious Metals and Stones. It is vital to have a completed risk assessment to keep up with anti-money laundering regulations and company or customer activities changes. A risk- based approach should always be built upon sound foundations. Developing a risk-based approach will facilitate the foundation for designing the compliance program.
- Dealers of precious metals, stones, and jewels often face some kind of challenges in order to keep up with the regulatory changes. Designating an efficient anti-money laundering compliance officer who is familiar with all the regulatory requirements will leave no stone unturned in protecting you from regulatory risks.
- The anti-money laundering programs fail to offer adequate training. An effective AML compliance program should have well-defined procedures, policies, internal controls, designation of an AML officer, training, and independent testing. Training is the key in order to find any kind of unusual activity.
- Dealers in precious metals, gems, and jewellery might be confused as to whether they are subject to regulations.
Key Trends: Anti-Money Laundering For Dealers in Precious Metals and Stones (DPMS)
Here we discuss key trends related to Anti-Money Laundering for Dealers in Precious Metals and Stones (DPMS):
- Technological advancements and innovations have increased the size and sophistication of criminal enterprises. If you are conducting business using advanced payment systems, you have to make sure that these processes are reflected in your risk assessment.
- AML Compliance manual, which incorporates policies, procedures, and internal controls, designation of the compliance officer is the essential requirement.
- Anti-money laundering training program materials and proof of training for the respective individuals must be kept for a period of 5 years.
- Reports prepared from conducting independent audits and performed testing shall be maintained for a period of 5 years.
- Reporting requirements as to DPMSR and STR should be fully taken care of.
- Customer Due Diligence (CDD) and Enhanced Customer Due Diligence (EDD) should be carried out in the case of all customers.
- Record keeping and any other type of documentation as required.
- Transactions happening between the dealers are considered low-risk ones. It is simply because each dealer in precious metals and stones is required to have a reasonably designed anti-money laundering compliance program.
Compliance. Trust. Transparancy
Customized and cost-effective AML compliance services to support your business always
AML Risks for Jewellers
Risks
- Reputational and financial risks to the institution
- Civil and criminal penalties for the individuals as well as institutions
Opportunities
- Protecting and maintaining the integrity of the financial system.
- Protecting your clients from falling prey to any kind of criminal activities or assaults.
- Aiding to protect your company from financial losses and reputational exposure.
- Harnessing efficiencies combining resources and IT systems to monitor for any kind of anti-money laundering and anti-fraud activities.
Skills
- Regulatory experience
- Valid certification from an authorized anti-money laundering association
- Experience working in the compliance department of any financial institution.
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FAQs - AML For Dealers in Precious Metals and Stones
Here are a few frequently asked questions about the Anti-Money Laundering For Dealers in Precious Metals and Stones (DPMS).
A legal or natural person involved in buying and selling precious metals, gems, jewellery, precious stones, etc., as a business is a dealer in precious metals.
Yes, gold is used in money laundering because it is challenging to trace gold. Also, its value is universal in nature and can be readily determined. Also, most of the transactions happen in cash, which can be brought from any source, leading to chances of financial crime.
- Under the AML/CFT decisions and AML/CFT laws, DPMS is obliged to apply the required AML measures when they qualify as DNFBPs.
- This occurs whenever they carry out either a single transaction or a series of multiple transactions that are related to each other and the total value of these transactions is equals to or exceeds more than AED 55,000,
- Define processes, policies, and internal controls
- Carry out know your customer (KYC)
- Screening
- Risk profiling
- Carry out enhanced due diligence (EDD), if required
- Submit STR
- Independent Audit
- Record Maintenance for a period of 5 years
- Repeat the process
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About the Author
Pathik Shah
FCA, CAMS, CISA, CS, DISA (ICAI), FAFP (ICAI)
Pathik is a Chartered Accountant with more than 25 years of experience in compliance management, Anti-Money Laundering, tax consultancy, risk management, accounting, system audits, IT consultancy, and digital marketing.
He has extensive knowledge of local and international Anti-Money Laundering rules and regulations. He helps companies with end-to-end AML compliance services, from understanding the AML business-specific risk to implementing the robust AML Compliance framework.