New Rules For Precious Stones and Metals Dealers
Singapore has awakened to the risk in precious stones and metals transaction in terms of money laundering and financing terrorism. Recently, the Ministry of Law of Singapore has added one new strategy in its anti-money laundering and counter the financing of terrorism (“AML/CFT”) regime – the new rule mandates precious stones and metals dealers (“PSMDs”) in Singapore to perform risk assessment and have internal controls in place to combat money laundering activities.
Did you know that precious stones and metals are one of the money launderers’ best pals? Precious stones and metals are highly portable, harder to be traced (if compared with banknotes), high in liquidity, and valuable. Many times, we can hardly tell the point of origin by examination and inspection. The trading of precious stones and metals has always been connected to illicit financial activities (as a tool in money laundering, a mean of bribery, an alternative currency, or being used in trade-based money laundering (TBML) schemes). What is more alarming is that precious stone and metals are not really regulated in terms of AML/CFT and that is one of the red flags that alert the watchdog in the country.
That said, regulations and compliance requirements are no stranger to PSMDs. Prior to the enforcement of the new rule, PSMDs have to comply with the requirements, i.e. the cash transaction reporting (CTR) regime that includes performing customer due diligence for cash transactions worth S $20,000 or more.
What Is The New Rule About?
The recent announcement has drawn the line between PSMDs and money laundering activities – it imposes tighter rules to PSMDs and strengthens the nation’s effort in combating money laundering activities and terrorism financing.
Under the new rule, the Ministry of Law will be the regulatory agency and PSMDs must register with the Ministry of Law. The most important part of the new rule is that it mandates PSMDs to adopt the risk-based approach to identify risk in AML/CFT as posed by transactions and customers. Under the new regime, PSMDs have to perform risk assessment (to identify and assess risk posed by customers) as well as to come out with internal controls to mitigate AML/CFT’s risk.
Though now is the initial stage of the law enforcement, the new rule is an important step for the Singaporean government to prevent and combat the misuse of precious minerals by money launderers while increasing revenue.