In its first action against a dealer in precious metals, precious stones, or jewels, the Financial Crimes Enforcement Network assessed a $200,000 civil money penalty against a Los Angeles precious metals business, its owner, and its compliance officer, who admitted to willfully violating the Bank Secrecy Act’s (BSA) anti-money laundering (AML) provisions. Under the assessment of civil money penalty, the parties also agreed to retain an external auditor, provide annual reports to FinCEN regarding their improved AML program, and provide annual copies of, and certify attendance and testing results of, their AML training program.
Director’s statement. “Gold and other precious metals are a highly concealable, transportable, and concentrated form of wealth that can be readily abused by criminals seeking to move and hide dirty money,” said FinCEN Director Jennifer Shasky Calvery. “Dealers in these precious metals must do their part to ensure criminals are not able to use their products and services for such nefarious ends.”
B.A.K.’s business. B.A.K. began business in 2006, but had no AML program until 2011, when IRS examiners instructed it to implement one. In 2013, the examiners returned to find the program materially lacking and often ignored.
B.A.K. failed to adequately assess its risks and did not conduct due diligence on its highest risk customers, FinCEN found. In 2011, the company began dealing in large sums of gold with new customers, with transactions ranging between $14 and $23 million. This helped B.A.K. nearly double its total yearly volume, which reached $120 million by the end of 2012. Despite this significant change in volume and customer base, B.A.K. required no documentation or identification prior to conducting business with many of the new, high-volume customers.
Moreover, FinCEN stated, the purchase orders documenting these transactions, many of which were over $100,000, contained only the business name and included no identifying information on the underlying individuals. These failures presented great risks for criminal abuse, the agency added.
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