Small Business Reading Room

Tuesday, June 07, 2005

FINCen spreads its net

The U.S. Department of the Treasury, Financial Crimes Enforcement Network is once again expanding the circle of businesses that can be forced to be agents of the government.

Jewelers are now subject to the regulation of the government entity that is charged with enforcing the Bank Secrecy Act and the "Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism" (USA PATRIOT) Act of 2001.

Quoting the Final Rule:
The new rules apply to "dealers" that have purchased and sold at least $50,000.00 worth of "covered goods" during the preceeding year....

"Covered Goods" include jewels, precious metals and precious stones, and finished goods that derive 50 percent or more of their value from jewels, precious metals or precious stones contained in or attached to such finished goods.

The rule summarizes actions of two dealers who were complicit with the criminals and extrapolates to conclude that all dealers are vulnerable to abuse by money launderers and terrorists.

The rule demands that Jewelry Dealers create compliance programs that include:

  • Policies, procedures and internal controls, based on the dealer’s assessment of the money laundering and terrorist financing risk associated with its business;

  • A compliance officer who is responsible for ensuring that the program is implemented effectively;

  • Ongoing training of appropriate persons concerning their responsibilities under the program; and

  • Independent testing to monitor and maintain an adequate program.

While I firmly believe it is every citizens' obligation to report criminal activity, I also think this will impose a burden on small businesses. I think there is probably a better way to get the information the government seeks without, in effect, deputising every jewelry dealer in America. I wonder if the burden is being considered along with the benefit when FINCen makes these new rules.


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