The US Treasury’s Financial Crimes Enforcement Network (FinCEN) has imposed a US$200,000 fine on a precious metals trader for “willfully violating” anti-money laundering (AML) laws.
This is the first time FinCEN has taken action against a dealer in precious metals, precious stones or jewels.
Los Angeles based precious metals business, BAK Precious Metals Inc. (BAK), as well as its owner and compliance officer, respectively Bogos Karaoglanyan and Arman Karaoglanyan, have admitted to willfully violating federal AML laws under the Bank Secrecy Act (BSA).
The fine follows investigations by the US’ Internal Revenue Service (IRS), which has been tasked by FinCEN with examining dealers in precious metals, precious stones, or jewels for compliance with the BSA.
BAK was the subject of a BSA compliance examination in 2011 and again in 2013. The IRS found that the business failed to adequately assess its risks and did not conduct due diligence on its highest risk customers.
In 2011, it began dealing in large sums of gold with new customers, with transactions ranging between US$14 and US$23 million, helping the metal dealer nearly double its total yearly volume, which reached US$120 million by the end of 2012.
Despite this significant change in volume and customer base, BAK chose not to require any documentation or identification prior to conducting business with many of these new, high volume customers.
Moreover, the purchase orders documenting these transactions, many of which were over US$100,000, contained only business names and included no identifying information on the underlying individuals.
These failures, according to FinCEN, presented great risks for criminal abuse.
In addition to the fine, BAK, Bogos Karaoglanyan, and Arman Karaoglanyan also agreed to several undertakings up until 2020, including retaining an external auditor.
The business must also provide a comprehensive annual report to FinCEN outlining the implementation of its improved AML programme, and annually providing a copy of, and certifying attendance and testing results of the firm’s AML training programme.
Categories: Trade Based Financial crimes News