Dealers in precious metals and stones
Dealers in precious metals and stones (DPMS) must fulfill specific obligations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and associated Regulations to help combat money laundering and terrorist financing in Canada. For the purposes of the PCMLTFA, a dealer in precious metals and stones means an individual or an entity that buys or sells precious metals, precious stones or jewellery in the course of its business activities. You are subject to PCMLTFA obligations once you engage in the purchase or sale of precious metals, precious stones or jewellery in the amount of $10,000 or more in a single transaction. In other words, you are not subject to these requirements if you only engage in purchases or sales of less than $10,000 per transaction.
The purchases or sales referred to above exclude those carried out for, in connection with, or for the purpose of:
- manufacturing jewellery;
- extracting precious metals or precious stones from a mine; or
- cutting or polishing precious stones.
If all your purchases and sales are related to manufacturing, extracting, cutting or polishing activities, you are not subject to these requirements.
If you are an agent of the Crown (i.e. a government department or an agent of her Majesty in right of Canada or of a province), you are also considered to be a dealer in precious metals and stones subject to the requirements of the PCMLTFA and associated Regulations if you sell precious metals to the public in the amount of $10,000 or more in a single transaction.
Precious metals include gold, silver, palladium and platinum; they can be coins, bars, ingots, granules or in other similar forms. Precious stones include diamonds, sapphires, emeralds, tanzanites, rubies or alexandrites. Jewellery means objects made of precious metals, precious stones or pearls that are intended for personal adornment.
If you are the employee of a dealer in precious metals and stones, the requirements described further below are the responsibility of your employer, except with respect to reporting suspicious transactions and terrorist property, which is applicable to both you and your employer.
Dealers in precious metals and stones are responsible for providing FINTRAC with certain transaction reports, for implementing a compliance program and for keeping records that may be required for law enforcement investigations. Their obligations under the PCMLTFA and associated Regulations are described below.
A comprehensive and effective compliance program is the basis of meeting all of your obligations under the PCMLTFA and associated Regulations. During a FINTRAC examination, it is important to demonstrate that the required documentation is in place and that employees, agents, and all others authorized to act on your behalf are well trained and can effectively implement all the elements of your compliance program. A senior officer must approve the compliance program and the compliance officer must have the necessary authority to carry out the requirements of the program. You must:
- Appoint a compliance officer responsible for the implementation and oversight of the compliance program;
- Develop and apply written compliance policies and procedures that are kept up to date and approved by a senior officer;
- Apply and document a risk assessment, including mitigation measures and strategies;
- Develop and maintain a written training program for employees, agents, and others authorized to act on your behalf; and
- Review your compliance program (policies and procedures, risk assessment and training program) every two years for the purpose of testing its effectiveness.
See Guideline 4: Implementation of a compliance regime, the Risk-based approach guide and the Risk-based approach workbook for dealers in precious metals and stones for more information on these obligations.
Know your client
As a dealer in precious metals and stones, you must verify the identity of clients for certain activities and transactions according to the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations (PCMLTFR). Part of knowing your client includes following the methods to identify clients, as well as conducting certain additional activities as listed below:
- When to identify individuals and confirm the existence of entities – Dealers in precious metals and stones;
- Methods to identify individuals and confirm the existence of entities;
- Business relationship requirements;
- Ongoing monitoring requirements; and
- Third party determination requirements.
Dealers in precious metals and stones are required to complete reports about certain transactions and property and submit them to FINTRAC. Financial transaction reports are critical to FINTRAC’s ability to analyze transactions in order to develop financial intelligence that is disclosed to law enforcement and partner agencies. Therefore, the quality of your reporting will be reviewed by FINTRAC in examinations.
Suspicious transactions: Within 30 days of determining that there are reasonable grounds to suspect that a transaction or an attempted transaction is related to the commission or attempted commission of a money laundering or terrorist activity financing offence, you must submit a report. See Guideline 2: Suspicious transactions, Guideline 3A: Submitting Suspicious Transaction Reports to FINTRAC electronically and Guideline 3B: Submitting Suspicious Transaction Reports to FINTRAC by paper.
Terrorist property: When you know that property in your possession or under your control is owned, controlled by or on behalf of a terrorist or a terrorist group, you must submit a report. You must also submit a report to the Royal Canadian Mounted Police (RCMP) and the Canadian Security Intelligence Service (CSIS). See Guideline 5: Submitting Terrorist Property Reports.
Large cash transactions: When you receive $10,000 CAD or more in cash either in a single transaction or in multiple transactions within a 24-hour period, you must submit a report within 15 calendar days. See Guideline 7A: Submitting Large Cash Transaction Reports to FINTRAC electronically and Guideline 7B: Submitting Large Cash Transaction Reports to FINTRAC by paper.
If you have a computer and an internet connection, you must submit all reports to FINTRAC electronically, except Terrorist Property reports, which can only be submitted on paper.
You are responsible for keeping certain transaction and client identification records. These records are to be kept in such a way that they can be provided to FINTRAC within 30 days if required to do so. See Record keeping for dealers in precious metals and stones for details.
Penalties for non-compliance
Non-compliance with Part 1 of the PCMLTFA may result in criminal or administrative penalties.
FINTRAC has created a Guidance glossary that defines certain terms used throughout its guidance documents.
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