The Tribune

BY NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

A Cabinet minister yesterday branded ‘cash for gold’ enterprises as “higher risk”, calling for them to be subject to enhanced due diligence and transaction monitoring procedures.

Ryan Pinder, minister of financial services, said the proposed amendment to the Bahamas’ anti-money laundering laws would subject all dealers in metals and precious stones to Know Your Customer (KYC) requirements similar to the financial services industry.

Under the change to the Financial Transactions Reporting Act, dealers in precious metals and stones will be required to report suspicious transactions when they engage in any cash transaction equal to or above a $15,000 benchmark.

“These financial transactions are intended to include situations where the transaction is carried out in a single operation or in several operations that appear to be linked,” Mr Pinder said.

“It is also important to note and explain to the industry, because there may be a variety of businesses included in the prescribed definition and application of this Bill, that the determination on how one would comply will be on a risk-based approach.”

Speaking in the House of Assembly, Mr Pinder stressed that such an amendment was important to keep the Bahamas compliant with international best practices.

“The impetus for the amendment is to legislate and codify the requirements by the Financial Action Task Force. The intent is to ensure the cash for gold, and other types of consignment operations in precious metals and precious stones, are included in the due diligence requirements to ensure adequate anti-money laundering protections,” he said.

Speaking with Tribune Business outside Parliament, Mr Pinder said: “The Bahamas is not the only jurisdiction that takes the approach in these types of matters, called a ris- based approach. That’s actually encouraged by the FATF. We do it with respect to financial services.

“The Financial Intelligence Unit makes the determination on what is high risk or low risk. One can easily see why a ‘cash for gold’ operation would be at a higher risk than a commercial jewelry store selling to tourists. I just used it as an example on how risk-based approach may apply.

“There are other jewellers, there could be commodity traders, manufacturers, miners - all of these different aspects of dealers in precious metals and stones.”

Mr Pinder added: “By adopting a risk-based approach, measures to prevent or mitigate money laundering and terrorist financing can be taken that are commensurate with the risks identified. This will allow resources to be allocated in the most efficient ways.

“A risk-based AML/CFT regime should help ensure that honest customers and counterparties can access the services provided by dealers, but creates barriers to those who seek to misuse these services. A risk analysis must be performed to determine where the money laundering and terrorist financing risks are the greatest.

“Countries will need to identify the main vulnerabilities and address them accordingly. It is clear in the Bahamas the high risk sectors of the industry include cash for gold establishments, whereas established retail jewellry dealers for the tourist market are a low risk exposure,” he said.

“This is evident in the method in which the legislation is drafted, and will be evident in the regulations.”