Terrorist financing, money laundering, and the Canadian jewellery industry (Part 5)

Posted on February 17, 2015

How’s your compliance regime?

Part 5 of 9

FINTRAC Guideline 6(l) “Record Keeping and Client Identifications for Dealers in Precious Metals and Stones” provides additional interpretation of the exceptions identified in Section 39(1). You will note the exception is extremely focused and few companies will actually meet the requirements to be exempt from the act and regulations.

If you conduct manufacturing, mining, cutting or polishing and all or substantially all of your purchases and sales are related to these activities, you are not subject to these obligations unless you conduct a transaction of $10,000 or more with a consumer.

In this context “all or substantially all” means 90 per cent or more of your purchases or sales are related to manufacturing, mining, cutting or polishing activities.

The term ‘consumer’ is not defined in the act or regulations and should be interpreted broadly. Consider anybody who purchases your goods to be a ‘consumer.’ As one FINTRAC investigator put it to me, unless all you do is repair watches, you will fall under the jurisdiction of this legislation. The consequences for non-compliance can be severe, even in the form of criminal charges, affecting your bottom line and reputation, since the names of companies found not to be in compliance are published on FINTRAC’s website. In this regard, compliance ought to be seen as a standard business practice, much like bookkeeping, advertising, and paying taxes.

More to come of this story in Part 6.

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