2.1.1 Risks of Precious Metals and Stones

يسري تنفيذه من تاريخ 16/6/2021

The characteristics of precious metals and stones make them uniquely appropriate as media to store, transfer, and exchange value:

	i.	Precious metals and stones are generally compact, durable, odourless, and of high value.
	ii.	Certain metals and stones (e.g., gold or diamond) are widely accepted as a method of exchange or currency.
	iii.	Precious metals and stones retain their value over time, and have roughly the same value all over the world.

In addition to these properties, precious metals and stones have characteristics that make them particularly attractive to criminals seeking to launder funds and others engaged in illicit behaviour:

	i.	Differentiating precious metals and stones often requires laboratory techniques, so it can be difficult or impossible to track their movement;
	ii.	Precious metals and stones can be transformed (through re-cutting or recycling) into different objects while retaining their value, interrupting known custody and transfer chains;
	iii.	Purchase, sale, and exchange of precious metals and stones often takes place outside the formal financial system.

For these reasons, DPMS may be targeted by illicit actors seeking to abuse their services and exploit the advantages of precious metals and stones. Although the majority of transactions involving DPMS are legal, these businesses may trade in items that could be the proceeds of crime, purchased with the proceeds of crime, and/or used to launder the proceeds of crime, unknowingly or complicitly.

Because they are themselves at high risk of abuse, DPMS pose a risk to LFIs. Complicit DPMS may knowingly partake in illicit activities and may in turn use their business relationships with LFIs to launder the proceeds of crime or carry out other illicit activity. Even DPMS that are not knowingly involved in illicit activities may use their accounts with an LFI to deal in the proceeds of crime. For example, a DPMS may wire payment for illegally mined gold to the entity responsible for mining and processing the gold.

Gold as a High-Risk Medium of Exchange

Gold is easy to exchange and transfer, and may provide anonymity when processing transactions, as it is difficult to trace. It also has a universal price standard, a relatively stable market for investment, and may be used as a currency. Gold dealers may provide specific services to their clients, such as metal accounts, for storage or for investment properties. This may enable criminals to move gold under the guise of legitimate business.