New rules for dealers of precious stones and metals

File photo showing small rough diamonds being sorted. Dealers of precious stones and metal will soon be required to guard against money-laundering and terrorism-financing risks in the industry.
File photo showing small rough diamonds being sorted. Dealers of precious stones and metal will soon be required to guard against money-laundering and terrorism-financing risks in the industry.PHOTO: LIN ZHAOWEI FOR THE STRAITS TIMES

Dealers of precious stones and metals may soon have to register with the authorities, in a move to reduce money-laundering and terrorism-financing risks in the industry.

The new rules proposed by the Ministry of Law yesterday could also require dealers to have measures in place to guard against similar 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 $20,000 or more under existing rules.

But the ministry noted in a statement that the precious stones and metals dealership industry is not governed by the same range of anti-money laundering and terrorism-financing regulations as the financial sector or designated non-financial operators such as pawnbrokers.

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."

INHERENT RISKS

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

MINISTRY OF LAW, on the need for new rules for precious stones and metals dealers.

The Ministry of Law, which will become the regulatory agency for the sector, said 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".

A public consultation will be held in the coming months.

The ministry commissioned a survey of precious stones and metals dealers on the matter from April to last month.

A version of this article appeared in the print edition of The Straits Times on July 18, 2018, with the headline 'New rules for dealers of precious stones and metals'. Print Edition | Subscribe