Jewelers Compliance Requirements

Veratad Technologies helps you meet your compliance needs:

USA PATRIOT Act Support

What is OFAC?

Red Flags Rule Support

USA PATRIOT Act Support

FinCen (Financial Crimes Enforcement Network), a U.S. government agency has issued the final rules requiring “dealers” in precious metals, precious jewels and stones to institute anti-money laundering (AML) programs. YOU MUST COMPLY BY JANUARY 1, 2006.

According to the final rules, you must institute an AML program if:

1. You are a dealer, meaning, you purchased “covered goods” (precious metal, jewels and stones and finished goods) in an amount in excess of $50,000 during the prior calendar or tax year AND received more than $50,000 in gross proceeds from the sale of precious metal, jewels or stones during the same period.

2. The calculation of the value threshold for purchase and sale is limited to the value of the precious metal, precious jewels and stones ONLY!

IMPORTANT EXCEPTIONS FOR RETAILERS

According to the final rules, retailers (those selling primarily to the public) may not need to implement an AML program if you qualify for one of the following exceptions:

1. If you are a retailer, and purchase only from other dealers (as defined above) who implement an U.S. AML program, you do not need to comply.

2. If you do purchase from non-dealers, such as members of the public and foreign sources of supply (to whom the US rules do not apply), and the value of the covered goods is less than $50,000, you do not need to comply. If the value of the covered goods is more than $50,000 in any one calendar or tax year, you must comply.

3. If you are a licensed pawn broker (rules for pawn brokers will be published by Treasury at a later date).

Retailers: For the purpose of determining your exception status you need not include in your calculation purchases in the form of trade ins, as long as they did not include providing funds of any kind to the customer in exchange for trade ins of such covered goods.

IF YOU HAVE ANY QUESTIONS WHETHER THESE RULES APPLY TO YOUR BUSINESS, PLEASE EMAIL JVCQuestions@aol.com.

NOTE: All transactions (sale or purchase) involving $10,000 or more in cash or cash equivalents still require all industry members to file an IRS 8300 form.

What is OFAC

OFAC is the Office of Foreign Asset Control, part of the U.S. Department of Treasury. OFAC is responsible for administering and enforcing economic and trade sanctions against certain nations, entities and individuals. OFAC maintains a listing of these restricted counter parties in a document called the “Specially Designated Nationals List” (SDN).

“Specially designated nationals” are organizations and individuals who are restricted from doing business with the United States or American companies, or Americans.. This includes terrorist organizations, individual terrorists, and state sponsors of terrorism (such as Iran, and North Korea). The list of “specially designated nationals” is maintained by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC).

Red Flags Rule

This FTC rule applies to jewelry retailers that offer credit through in-house financing, branded credit card programs, layaway facilities or any other credit arrangements  (Jewelry store operations that accept credit cards as a form of payment only–and don’t offer any of the above–are exempt.)

The rule requires businesses to establish a written program designed to detect “red flags” that might indicate a criminal’s attempt to steal identity information and to also put in place a program to prevent such thefts. Examples of “red flags” include alerts from a credit reporting company about suspicious identification documents, or activity on the Internet that indicates an attempt to access identification information by an unauthorized third party.

The program must be integrated into daily business operations and can be tailored to fit the risks that a business’ own credit program presents.
The FTC has four times granted a delay of enforcement of the ‘Red Flags’ Rule. December 31, 2010 is the new deadline.

It is important to note the following: The FTC has urged Congress to act quickly to pass legislation that will resolve any questions as to which entities are covered by the Rule and obviate the need for further enforcement delays. If Congress passes legislation limiting the scope of the Red Flags Rule with an effective date earlier than December 31, 2010, the FTC will begin enforcement as of that effective date.
IF YOU HAVE ANY QUESTIONS WHETHER THESE RULES APPLY TO YOUR BUSINESS, PLEASE EMAIL JVCQuestions@aol.com.