Jewelers making cash transactions above Rs2 million liable to comply with FATF conditions: FBR

Jewelers making cash transactions above Rs2 million liable to comply with FATF conditions: FBR

ISLAMABAD: The Federal Board of Revenue (FBR) has said that jewelers making cash transactions with their buyers and sellers above Rs2 million are liable to monitoring under Anti-Money Laundering (AML)/Countering Financing of Terrorism (CFT), sources said on Thursday.

In this regard the FBR issued guidelines for persons dealing in precious stones and metals.

The procedures have been issued under anti money laundering (AML) and combating financing of terrorism (CFT) and to meet conditionalities of Financial Action Task Force (FATF).

A jeweler is required to retain record of such transactions for at least five years following the completion of a transaction.

Bringing Designated Non-Financing Business and Professions (DNFBP) into AML/CFT laws is one of the major requirements of the FATF. The FBR on September 29, 2020 issued SRO 924(I)/2020 to notify regulations namely Anti-Money Laundering and Countering Financing of Terrorism Regulations for DNFBPs, 2020.

The DNFBPs have been defined as real estate agents, jewelers and accountants.

The latest procedure for compliance by jewelers has also been issued to make this segment into money laundering free business.

The sources said a person engaged in the business of precious stones is not subject to AML/CFT if he is selling or buying jewellery below Rs2 million in cash.

According to the procedures issued by the FBR, if a person is a retail merchant and selling or buying jewellery e.g. rings, bracelets, necklaces and other bodily ornaments may not be a Dealers in Precious Metals and Stones (DPMS) in one year or one month, but the person starts selling or buying such items over Rs2 million threshold, in subsequent years or months, the person would be subject to AML/CFT.

The FBR interprets the Rs2 million threshold as a cash transaction below threshold amount, if the cash transaction is below Rs2 million but is part of a series of transactions related to the purchase of the same item or items totaling Rs2 million or above.

The revenue body said that the business of precious stones and metals may be abused by criminals and terrorists because of a number of factors.

“They can be of very high value, but still very small and therefore very easy to carry, transport and conceal. Transferring ownership does not require any formal registration process unlike for real estate, motor vehicles or share ownership,” the FBR said, adding that the holder of the precious stone and metal is the owner and can be held anonymously without a need for records to be kept.

“In terms of gold, it can be considered as a universally accepted currency and therefore, investing in gold to launder illegal earnings would be easy as well as profitable,” the FBR added.

The FBR also issued similar procedures for real estate agents and accountants.

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