Customs Alert - USA Patriot Act Interim Regulation Covers Jewelry Importers
On June 3, 2005, the United States Department of the Treasury and the Financial Crimes Enforcement Network (â€œFinCENâ€) announced a USA PATRIOT Act interim regulation that requires certain dealers in precious metals, precious stones or jewels to establish anti-money laundering (â€œAMLâ€) programs to detect and prevent money laundering and the financing of terrorism. The interim regulation will take effect on July 11, 2005, and persons will have until January 1, 2006 to be in compliance.
I. Interim Regulation
The interim regulation concerns an amendment to Section 352 of the USA PATRIOT Act, which requires all â€œfinancial institutionsâ€ to establish AML programs. The regulation expands the scope of â€œfinancial institutionsâ€ to include dealers â€œin precious metals, stones or jewels.â€ The interim regulation defines a â€œdealerâ€ as any person within the United States who has both purchased and sold at least $50,000 of â€œcovered goodsâ€ during the preceding year. â€œCovered goodsâ€ includes jewels, precious metals, precious stones, and finished goods including jewelry. The regulation covers such entities as manufacturers, refiners, wholesalers, retailers, and any other entity (i.e. importers) engaged in the business of purchasing and selling jewels, precious metals, precious stones, or jewelry.
There are limited exceptions to the definition of â€œdealer,â€ which exclude certain retailers who purchase their goods from U.S. dealers already covered by the rule or those that do not meet the $50,000 minimum threshold. Registered pawnbrokers are also exempted from the definition of â€œdealer.â€
III. Anti-Money Laundering Program
Covered persons are required to establish an AML program by January 1, 2006. The AML program, at a minimum, should include:
i. written policies and procedures;
ii. internal controls;
iii. appointment of a corporate compliance officer;
iv. employee training;
v. risk assessment; and
vi. periodic independent testing to insure proper functioning of
If you would like additional information on the interim regulation or details on establishing an approved anti-money laundering program, please contact: C.J. Erickson, (212) 790-9274 or Carl R. Soller, (212) 790-9231.