Precious Stones and Precious Metals (Prevention of Money Laundering and Financing of Terrorism) Regulations, 2019
Precious Stones and Precious Metals (Prevention of Money Laundering and Financing of Terrorism) Regulations, 2019
The Ministry of Law made the Precious Stones and Precious Metals (Prevention of Money Laundering and Financing of Terrorism) Regulations, 2019 to provide insights into the AML/CFT compliance obligations imposed upon dealers in precious stones and precious metals to combat money laundering and terrorism financing crimes. The said regulations came into effect on 10th April 2019.
- Sell of precious stones, precious metals or redemption of asset-based tokens against the payment received in cash or a cash equivalent exceeding S$20,000 (by way of a single transaction or series of connected transactions),
- Purchase of precious stones or precious metals from a customer (who is not a regulated dealer) against payment in cash or cash equivalent exceeding S$20,000,
Before entering into any designated transaction, the regulated dealers must apply customer due diligence measures, such as –
- identifying the client,
- obtaining client identification documents and verifying the same,
- inquiring about the ownership of the cash or cash equivalent, in case of the cash transaction and verifying the same,
- inquiring about the ownership of the precious stones, precious metals or asset-backed tokens when the customer is selling these to the regulated dealer and verifying the same,
- identifying the beneficial owners and controlling parties, including directors and senior managerial persons of the entity,
- identifying whether the customer is a Politically Exposed Person (PEP) or associated with any PEP,
- understanding the nature of customer’s business activities,
- applying enhanced measures in case the regulated dealer has reason to believe that the customer poses a high risk to its business or where the customer is associated with a FATF-defined list of high-risk countries or is a PEP.
The Precious Stones and Precious Metals (Prevention of Money Laundering and Financing of Terrorism) Regulations, 2019 mandate the application of the following measures when performing Enhanced Due Diligence:
- Establishing the income level of the customer, the source of funds and source of wealth of the customer and its beneficial owners,
- obtaining senior management approval before onboarding any customer or executing a transaction with such a customer, and
subjecting such high-risk customers and transactions to enhanced monitoring.
The regulated dealers can apply Simplified Due Diligence measures when the ML/FT risk assessed for the customer is low. The regulated dealer has obtained written approval from the Registrar to apply such simplified measures.
The regulations require that the regulated dealers undertake ongoing monitoring of customers’ profiles and transactions to detect any unusual pattern of transactions inconsistent with the customer’s risk profile, source of funds and income level.
For every designated transaction, the regulated dealers must file a Cash Transaction Report electronically on SONAR in Form NP 784 within 15 business days from the execution of the designated transaction.
The regulated dealers must conduct AML business risk assessments and define the internal policies, procedures and controls aligned with this ML/FT risk assessment.
The regulations also mandate the regulated dealers to implement an independent AML audit function to test the AML program implemented by the dealers. Further, regulated dealers are also required to ensure ongoing training of their employees around the AML program implemented by them.
Compliance with Targeted Financial Sanctions is also mandatory for regulated dealers, as there is a restriction on dealing with a person listed on the UN Consolidated List or the local list of terrorists issued under the Terrorism (Suppression of Financing) Act.
The regulated dealers must maintain all the documents and records about AML/CFT compliance for at least 5 years.