Terrorist financing, money laundering, and the Canadian jewellery industry (Part 6)

Posted on February 19, 2015

How’s your compliance regime?

Part 6 of 9

The act and regulations are very specific about what activities a dealer in precious metals and stones (DPMS) reporting entity is required to complete and how, the records that need to be kept and how, and how compliance is to be documented. To be compliant, all DPMS reporting entities are required to do the following:

  1. Register their business as a DPMS reporting entity with FINTRAC.
  2. Have in place a five-part compliance regime that includes the following elements:
    • The appointment of a compliance officer;
    • The assessment and documentation of the risks of money laundering and terrorist financing to the DPMS and measures to mitigate that risk (i.e. risk-based assessment);
    • The development and application of written compliance policies and procedures;
    • The implementation and documentation of an ongoing training program; and
    • A documented review of the effectiveness of the risk assessment, policies and procedures, and ongoing training program. This review is to be conducted every two years.
  3. Submit three types of reports to FINTRAC:
    • Suspicious transaction reports;
    • Large cash reports; and
    • Terrorist property reports.
  4. Recognize when the DPMS has entered into a business relationship. In this context, business relationship should be interpreted as a ‘high-risk relationship’ and obliges the DPMS to conduct enhanced due diligence and record keeping. For more, see the article on page 70.
  5. Make a determination whether a third party is involved in the transaction and respond pursuant to the act and regulations.
  6. Keep four types of records on file for a period of at least five years:
    • Records of suspicious transactions;
    • Records of large cash transactions;
    • Records of business relationships (i.e. high-risk customers); and
    • Records of third parties involved in transactions.
  7. Ascertain identity.
  8. Obtain and use personal information lawfully.

As you can see, there is a great deal that you, as a DPMS reporting entity, must do to be compliant.

More to come of this story in Part 7.

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