SINGAPORE - Dealers of precious stones and metals could soon have to register with the authorities, under a regulatory regime proposed by the Ministry of Law on Tuesday (July 17).

New rules, designed to manage money laundering and terrorism financing risks in the industry, would also require dealers to have measures in place to mitigate any such risks posed by customers and transactions.

Dealers already have to abide by a cash transaction reporting regime that mandates customer due diligence for cash deals of S$20,000 or more, under existing rules to crack down on corruption, drug trafficking and other serious crimes.

But the Law Ministry noted in a statement that the precious stones and metals dealership industry is not governed now by the same range of anti-money laundering and countering the financing of terrorism obligations as the financial sector or designated non-financial sectors such as pawnbroking. The new regulatory regime "will close this gap", it added.

"Precious stones and metals are portable, valuable and easily convertible to cash," the ministry said. "This exposes the (precious stones and metals dealers) sector to inherent money laundering and terrorism financing risks."

The Ministry of Law, which would become the regulatory agency for the sector, said that it will develop the proposed new rules in consultation with industry stakeholders such as associations, manufacturers, wholesalers and retailers. It will assess the risks that the sector now faces and adopt "a targeted, risk-based approach to address the risks while keeping regulatory costs reasonable", it said.

The ministry added that it will hold a public consultation in the coming months.

It had earlier commissioned a consumer and market research firm to survey precious stones and metals dealers on the matter, with polling carried out from April to June 2018.