Financial Crime World

Jewelry Sector Faced with Significant AML/CFT Risks

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The jewelry sector has been identified as a high-risk area for Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT). The risk level varies depending on several factors, including the origin of the product, location of sellers and buyers, and methods of payment.

Established Controls and Procedures Mitigate Risk

To mitigate these risks, dealers in precious stones and metals must establish robust controls and procedures to assess country/geographical risks. This includes considering factors such as:

  • Participation in international initiatives like the Kimberley Process
  • Known mining or trading activities in the transaction source country
  • Government oversight of business and labor practices
  • Extent of cash use in the country
  • Regulation of activity
  • Presence of informal banking systems
  • Designated terrorist organizations operating in the country

Dealers must also consider customer and counterparty risks, including:

  • Retail customers: purchases made using cash, payment to third parties, or structuring transactions
  • Business counterparties: lack of knowledge of industry practices, unfamiliarity with financial terms and conditions, or proposing excessive or nonsensical transactions

Guidance from FATF and Other Organizations

To ensure compliance with AML/CFT regulations, dealers can consult guidance from:

  • Financial Action Task Force (FATF)
  • Egmont Group of FIUs
  • International Monetary Fund (IMF)
  • National government bodies
  • Nongovernmental organizations

Mauritius Participates in Kimberley Process

Mauritius has joined the Kimberley Process, an international initiative aimed at preventing the trade of conflict diamonds. This participation highlights the country’s commitment to transparency and ethical practices in the diamond industry.

Conclusion

By implementing robust controls and procedures, dealers in the jewelry sector can effectively mitigate AML/CFT risks and ensure compliance with regulatory requirements.