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Amending the Amendments! 2020 AML Changes for Jewellers


Back on July 10, 2019, the highly anticipated final version of the amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and its enacted regulations were published. However, on June 10, 2020, further amendments to those amended regulations were published in the Canada Gazette. To make reading these changes a little easier, we have created a redlined version of the regulations, with new content showing as tracked changes, which can be found here.

The purpose of this round of amendments is to better align measures with international standards and level the playing field across reporting entities by applying stronger customer due diligence requirements and beneficial ownership requirements to designated non-financial businesses and professions (DNFBPs). The amendments come into force on June 1, 2021.

We have summarized the changes that will have an impact on Dealers in Precious Metals and Stones (DPMS) below.


The amendments will require DPMSs to make a Politically exposed persons (PEP) determination when they enter into a business relationship with a client. In addition, they will also be required to take reasonable measures to determine whether a client from whom they receive an amount of CAD 100,000 or more is a PEP.

A reminder that a business relationship is defined as:

If a person or entity does not have an account with you, a business relationship is formed once you have conducted two transactions or activities for which you have to:

  • verify the identity of the individual; or
  • confirm the existence of the entity.

Given the definition of a business relationship, we do not expect this requirement to be overly burdensome. If you currently conduct list screening, PEP screening could easily be added to that process.

If a positive determination is made, the following records must be kept:

  1. the office or position, and the organization or institution, in respect of which the person is determined to be a politically exposed foreign person, a politically exposed domestic person or a head of an international organization, or a family member of, or a person who is closely associated with, one of those persons;
  2. the date of the determination; and
  3. the source, if known, of the person’s wealth.

Beneficial Ownership

The amendments will require DPMSs to comply with existing beneficial ownership requirements that apply to other reporting entities.

This means when identifying an entity, a reporting entity needs to collect the following information for all Directors and individuals who own or control, directly or indirectly, 25% or more of the organization:

  • Their full legal name;
  • Their full home address; and
  • Information establishing the ownership, control, and structure of the entity.

A record of the reasonable measures to confirm the accuracy of the information, when it is first obtained and in the course of ongoing monitoring of business relationships, must be retained.

We’re Here To Help

If you would like assistance in updating your compliance program and processes, or have any questions related to the changes, please get in touch!

Are On Demand Products Right For You?

For certain industries, including dealers in precious metals and stones (DPMSs) and real estate, Outlier’s on-demand products are anti-money laundering (AML) and counter terrorist financing (CTF) programs that you can buy, customize online using our set up wizard, and download in fully customizable formats.

These can be purchased as single elements (Policies & Procedures, Risk Assessments, Training, Compliance Effectiveness Reviews) or bundled to save you money.

Why On Demand Products

Outlier’s co-founder, Amber D. Scott, noticed two things that made her believe that on-demand products could help Canadian reporting entities. First, for many small and medium sized businesses, there are very similar business models and risk profiles. Second, many businesses don’t have the means to pay for consulting services but have the same obligations as larger reporting entities. She had a vision of creating a model that could level the playing field by making it easier for these businesses to create plain language documents in an affordable way.

Are On Demand Products Right For You?

While we’ve worked to keep the on demand products as plain language as possible, they will still require you to be able to read and understand the content and adjust them for your business model and compliance processes. You’ll also need to review and update them regularly (once a year – no matter what, and more often if Canadian laws and/or your business models change).

These program elements can save you money by providing a customizable framework for you to work with, but you’ll need to put in the time and effort to customize them and keep them up to date.

What If You Download A Product And Need Help?

If you’ve downloaded on demand products and you’re stuck, we can help. Please contact us and let us know what you need. In your request, include the product that you’ve purchased and describe the problem that you’re trying to solve. We’ll get back you within two business days. If you need help sooner, please mark your request as urgent, and we’ll do our best to get back to you sooner.

Is Outlier The Only Company That Can Help?

There are a number of professionals in Canada that can help you customize your program, including consultants, lawyers and Compliance Officers working in your field. Using Outlier’s on demand product doesn’t mean that we’re the only people that can work with you, in fact, we believe that competition makes us all better at what we do.

How Do I Buy On Demand Products?

You can buy our on demand products through this website using a credit card. Start by selecting the type of reporting entity that you are to view the products that are currently available.

If you’re looking for something that doesn’t seem to be on the list, please contact us.

An Unwitting Accomplice to Money Laundering

Handcuffs 1

When many of us think of money laundering, it involves large well organised criminal organizations, like the mafia or large drug cartels. We think of elaborate schemes, with money funnelled through many layers and across international borders, numbered bank accounts off shore accounts hiding millions. While these things do happen, money laundering also happens on a much smaller scale with much less elaborate plots. Since money laundering is something that is done to hide the proceeds of crime, it can relate to any amount of money that someone do not want to be traceable back to them (because that money was obtained through illegal means). The more easily something is passed from person to person anonymously, the more easily it can be used for money laundering. High value items can be used to launder money, as they can be bought or sold on secondary markets. Because jewellery can have a high value and be passed from person, it is a potential vehicle for money laundering. Jewellers in Canada and in the USA are required to report certain transactions, and the consequences for failing to do so can be severe.

The Case

On January 14, 2014, Alan Kashi of Pittsburg, PA (USA) plead guilty to failing to file a report of currency received by non financial business. In the USA, this report is called ‘IRS form 8300 Report of Cash Payments over 10,000,’ is similar to the report that Canadian Dealers in Precious Metals and Stones (DPMSs) are required to file with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC). In the Kashi case, an undercover agent purchased an expensive watch, claiming during his conversation with Alan Kashi that the money that he was using came from cocaine distribution. In addition to the charges and related press, Mr. Kashi was required to forfeit $933,075. Sentencing in the criminal case is still pending.1

Alan Kashi maintains that he was ignorant of the law and didn’t realize that he had to report large cash transactions. In order to educate others that may face the same situation, he made a YouTube video explaining what happened and as a warning to other jewellers. It can be viewed here: Filing Form 8300 Part 1 and Part 2.

An Ounce Of Prevention

Perhaps you may think that criminals would be more likely to use a large jeweller, maybe because they have such a high volume of sales going on, they might be less likely to notice something suspicious happening. However, many larger companies have high tech systems in place such as cash registers that automatically request certain information on specific types of transactions (such as large cash transactions) before the transaction can be completed. These systems are in place to make sure that they are following the law. They have many more employees and therefore likely have a well trained Compliance Officer on their staff whose specific duties are to implement and maintain compliance policies and procedures. Smaller companies may not have the money or ability to implement such technologies, making them easier targets for criminals. In the Kashi case, the owner was operating a single store; with no one working there (including him) that knew the law. Unfortunately for Mr. Kashi, being ignorant of the law is not an excuse for breaking it. Anyone running a business is responsible for knowing and abiding by any laws and regulations that apply to it. In Canada, the rules that apply to DPMSs are the same, regardless of a company’s size or sophistication. It is imperative that you know the rules that apply to you and your business.

While the example of Kashi may have happened in the USA, it is still pertinent to companies in Canada. The forms and regulators are different, but the underlying obligations are similar. . In Canada, FINTRAC requires that reporting entities such as DPMSs submit reports about any cash transactions valued at CAD 10,000 or more (within a 24-hour period) and any suspicious transactions, even if they are not over the $10,000 threshold (and whether or not the transaction was completed They require that every reporting entity has a program in place to ensure that they are in compliance. FINTRAC can also request a review of your compliance program at any time, which must be submitted within 30 days of the request. All of this may seem a bit overwhelming, especially when the financial and legal risks are so great. Fortunately, there are very basic and easy to follow steps listed below that will help you to protect your business.

What You Need To Know

All DPMSs in Canada need to have an up to date compliance program that includes:

  • A Compliance Officer,
  • Documented Policies & Procedures,
  • A Risk Assessments,
  • Training and
  • AML Compliance Effectiveness Reviews (every two years).

Your AML Program should describe the things that you are doing in order to prevent, detect and deter money laundering and terrorist financing including:

  • Identifying your customers under certain conditions and keeping customer information up to date,
  • Reporting certain transactions to FINTRAC,
  • Monitoring the transactions that take place to determine whether or not there are reportable suspicious transactions, and
  • Keeping your records (including your program documents) up to date.

Red Flags

In the Kashi case, there were many red flags that should have warned him that something was amiss. For those familiar with Canadian legislation, it may be obvious that both a suspicious transactions report and a large cash transaction report should have been filed. Would it have been obvious to the members of your staff that deal with your customers every day? It’s important to keep your training program up to date and include examples of reportable transactions, including suspicious transactions. Here are some of the red flags that you should be aware of:

  • A customer that mentions involvement in criminal activities;
  • A customer that pays a large sum in cash in a way that is unusual;
  • A customer that asks about identification requirements and changes the transaction or payment method to avoid being identified;
  • A customer that refuses to be identified and refuses to complete a transaction rather than allowing you to see their identification documents;
  • A customer that pays for a high value item in cash, then returns the item and asks for a cheque or draft.

There are many more indicators in FINTRAC’s Guideline 2: Suspicious Transactions. If you are a Compliance Officer or business owner, you should read these indicators and train your staff to be aware of the indicators that apply to your business model.

Outlier has developed compliance resources for DPMSs. You can buy and customize program components online through our website or contact us if you need immediate assistance. If you are a member of the Canadian Jeweller’s Association or Jewellers Vigilance Canada, discounts apply to you, including free resources.

1 The United States Attorney’s Office, Western District of Pennsylvania, 01/15/14.

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