Red Flags for DPMS

يسري تنفيذه من تاريخ 16/6/2021

Trade practices

	•	Precious metals and stones originate from a country where there is limited production or no mines at all.
	•	Trade in large volumes conducted with countries which are not part of a specific precious metals and stones pipeline.
	•	An increase of the volume of the activity in a DPMS account despite a significant decrease in the industry-wide volume.
	•	Selling or buying precious metals and stones between two local companies through an intermediary located abroad (lack of business justification. uncertainty as to actual passage of goods between the companies).
	•	Volume of purchases and/or imports that grossly exceed the expected sales amount.
	•	Sale of gold bars, coins, and loose diamonds from a jewelry store (retail).
	•	Payments related to the appearance of rare or unique precious stones in the international market outside of known trading procedures (e.g., Argyle's rare pink diamond appearing in the international marketplace outside of the annual tender process). This to the best knowledge of the financial institution.
	•	A single bank account is used by multiple businesses.

Transactions/financing of precious metals and stones trade

•	Unusual forms of payment in the trade, for example, use of travelers cheques (all stages according to the accepted forms of payments).
•	Date of payment not customary in the trade, (e.g. receiving/sending funds for a precious metal and stone deal conducted a very long time ago (outside accepted payment terms). Or, a customer paying upfront where the customary payment date is within a 120 days term.
•	Financial activity is inconsistent with practices in the precious metal and stone trade. For example,
	o	Foreign currency deposits followed by currency conversion and cash withdrawal in local currency.
	o	Cheque deposits followed by immediate cash withdrawals in slightly lower amounts (possible use of the DPMS account for cheques discounting).
	o	Transfers of foreign currency and/or foreign currency cheques deposits, followed by currency conversion and immediate withdrawal from the account (possible use of the DPMS account for exchange services)
•	No economic rationale for transactions involving an individual or company in the precious metal and stone industry.
•	Deposits immediately followed by withdrawals, atypical of practices in the precious metal and stone trade, including but not limited to:\|
	o	Circular transaction related to import/export of precious metals and stones.
	o	Circular transactions related to local trade (between local bank accounts).
	o	Circular financial transactions between a precious metal and stone company's account and the private account of the company's shareholder/director, without business or economic reason.
	o	High turnover of funds through an account with a low end of day balance.
•	Deposits or transfers to a precious metal and stone dealer's account from foreign companies followed by immediate transfer of similar amounts to another jurisdiction.
•	Immediately after a precious metal and stone dealer's related account is opened, high-volume and high-value account activity is observed.
•	Transactions between accounts of different companies which are affiliated with the same customer, particularly to or from Free Trade Zones or countries with tax leniencies 119 (may be an indication of transfer pricing or trade mispricing).
•	Open export is settled by offsetting to, and receiving payment from, a third party.
•	Open export is settled abroad by offset in front of the importer.
•	Settling an open export invoice with unrelated companies that engage in a specific precious metal and stone and not through value/return from abroad or return of goods to the precious metal and stone merchant.
•	Details of the transaction are different from the details of the commercial invoice presented by the DPMS to the bank (name of importer/exporter, sum, place etc.)
•	High-value funds deposited or transferred to an account described as short-term loans with no transactions showing repayment of loans.
•	Early repayment of DPMS loan (a loan for 25 years is repaid after five month) with no reasonable explanation.
•	Sale of diamonds and jewelry at small incremental amounts (retail).
•	Multiple cheques drawn on the same DPMS' account on the same day.
•	Origin/destination of funds is different from the destination/origin of the specific precious metal and/or stone.
•	DPMS is credited by transactions with no evidence of sales.
•	Numerous returns of advanced payments.

Customers

•	Activity does not match KYC, for example:
	o	Actual trade volumes are significantly larger than the expected volume.
	o	Customers and/or suppliers of the customer do not correspond to the stage of the trade initially declared.
•	DPMS is not familiar with trade practices.
•	DPMS maintains high level of secrecy.
•	DPMS conducting activity in a branch not specializing in precious metals and stones (where such branches exist).
•	Use of a bank account in the name of a charity to transfer funds to/from DPMS.
•	Frequent changes in company name and contact person for a business in the industry (mainly wholesale)

Use of third parties

	•	Customer consults a third party while conducting transactions.
	•	Receiving/transferring funds for import/export activity to/from entities that are not known to be involved in the precious metals and stones trade (either an individual or a legal entity).
	•	Return of an advanced payment from a third party.
	•	Receiving/transferring funds for import/export where the ordering customer/beneficiary is an MSB.
	•	Use of third parties to deposit funds into single or multiple DPMS' accounts.
	•	Return of an advanced payment from a third party.
	•	Name of sender in the payment transfer to the DPMS is not the importer/buyer (mainly rough and polished trade).
	•	Name of receiver in the payment from the DPMS is not the exporter/supplier.
	•	A single bank account with multiple deposit handlers (retail and wholesale).

Use of missing/suspicious/falsified documents

	•	For diamond dealers, Kimberly Process (KP) certificate is or seems to be forged.
	•	Long validity of a KP certificate
	•	Transfers of funds or an attempt to transfer funds through a DPMS company's account without producing appropriate documentation.
	•	DPMS claims funds received/transferred are an advanced payment without producing any appropriate export/import invoice to support it.
	•	Transfers between a DPMS and a private account that are reported to the bank as precious metal and/or stone transactions, without presenting appropriate documentation.
	•	Invoice presented by the DPMS appears to the bank as unreliable/fake.
	•	Failing to provide a customs declaration in relation to a foreign currency cash deposit resulting from selling precious stones abroad.