By Jennifer Heebner, Editor in Chief
Twenty-two years after the USA Patriot Act was signed into law, its directives are ever important: to better empower law enforcement to deter terrorists and to prevent money laundering that empowers their illegal activities. It’s the latter portion of this purpose that remains relevant to fine jewelers, who must have anti-money-laundering compliance policies in place to ensure no malfeasance occurs.
According to the Jewelers Vigilance Committee (JVC), AML programs are required for all U.S. dealers of precious metals, precious gemstones, and jewelry containing these products if they buy or sell $50,000 or more of those goods in a year. Fine-jewelry retailers, too—with some exceptions—must also have AML policies in place. Retailers are exempt from having AML programs if they buy only from U.S.–based suppliers with their own AML plans. But if retailers have foreign suppliers or buy precious inventory from the public (think cash for gold or coins), estate sales, or government auctions, AML programs are a must.
Foreign firms with U.S. offices must also have AML programs, though those that only have U.S. customers and do not have U.S. offices or exhibit at U.S. trade fairs need not have AML plans—though these companies should adhere to any AML laws in their own countries.
Additionally, any cash payments exceeding $10,000 must be reported to the IRS.
“All businesses—regardless of whether they have an AML program—must comply with the IRS cash reporting requirements, which require reporting from any business accepting cash as payment at $10,000 or more for a single transaction or a series of related transactions,” says JVC’s Sara Yood, Deputy General Counsel.
While no certification exists for AML programs, a good one should include a compliance officer (CO), risk assessment, strong AML policies, employee training, and periodic testing. JVC notes that the individual who tests the program should not be the CO or work for the CO. Also important to note: Having an AML program in place is not mandated by AGTA, but it is a U.S. government requirement. Click here to watch a short helpful video from Yood and Jeweler’s Mutual about AML compliance.
Failure to comply could lead to IRS audits and penalties. A worst-case scenario, says Yood, is that banks or the IRS can force businesses to prove compliance. “There are actually examples of banks closing accounts of jewelry clients who could not prove that their AML programs were fully implemented and robust,” she explains.
To be sure your business is compliant, consider these resources to help you establish an effective AML program.
The first is the JVC’s AML Kit, which is a do-it-yourself option that walks users through setup and instructs how to remain compliant. Once purchased, the JVC emails a link to Dropbox to get users started immediately. Click here to purchase it.
A second route to compliance is to hire the JVC to create an AML program for you. For more information on what that entails, reach out to JVC at [email protected] or 212-997-2002.
A final option is JewelPAC, from JVC and Jewelers Mutual. JewelPAC combines JVC’s expertise regarding legal issues impacting the jewelry industry with Jewelers Mutual Group’s trusted guidance and is a proprietary software program that outlines AML regulations and creates customized documentation, including an AML policy and certificate of training, for your business. To learn more or purchase, click here.