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New Anti-Money Laundering Rules Required By March 31, 2012

The federal government (FinCEN) announced new rules that require sellers of "pre-paid access" products such as gift cards, or any other mechanism that provides access to transferable funds paid in advance, including such cards issued by a seller to provide credit for returns, to comply with anti-money laundering (AML) rules pertaining to this activity. Increased use of pre-paid access products presents additional risks for money laundering and terrorist financing, according to FinCEN, the agency that issued the rules. These rules go into effect on March 31, 2012.

Retailers that sell gift cards that can be used only in their stores OR who accept a return and issue gift cards to use in the store, in the amount of $2,000 or more are required to take certain steps to ensure these products are not being used to launder money.
Retailers who issue a gift card in an amount of $2000 or less ONLY for credit and ONLY to be used for a purchase in their store do not have to comply, unless this card can be used internationally or “reloaded” remotely.

If a gift card in the amount of $1,000 or more can be used at outside stores (another store or chain) for other items, than retailers have to comply.

Retailers that issue any pre-paid access products to a customer in the aggregate amount of $10,000 or more in one day have to comply.

Retailers who already have an AML program under the USA PATRIOT Act and also issue gift cards in the qualifying amounts can add the new requirements to their already existing AML program.

Retailers who are exempt from the USA PATRIOT Act but do issue qualifying gift cards can use the JVC’s PACK - USA PATRIOT Act Compliance Kit - to implement an AML program in compliance with these new rules.

Compliance Requirements:
FinCEN requires that retailers who have to comply gather customer identification information, maintain records of the transactions and implement an anti-money laundering program similar to the requirements of the USA PATRIOT Act.

Sellers of such products will also be obliged to report any suspicious activity using an IRS form called a "Suspicious Activity Report."

"Compliance for sellers of pre-paid products is required by March 31, 2012. These new regulations are sure to engender questions and uncertainty by retailers that provide gift cards and store credits", said Cecilia Gardner, JVC’s President, CEO and General Counsel.
JVC, the industry’s "go–to" legal compliance expert, can help retailers comply with FinCEN’s new requirements. JVC’s PACK - USA PATRIOT Act Compliance Kit - provides compliance solutions for these requirements as well. Jewelers are welcome to email questions to the JVC at mail to:askamlexpert@aol.com.

Jewelers Vigilance Committee, founded in 1917, is a not-for-profit legal trade association fulfilling its mission to maintain the jewelry industry’s highest ethical standards. JVC offers dispute mediation and arbitration services for trade and consumers, compliance monitoring and precious metals testing, among many other services. JVC, long considered the industry’s guardian of ethics and integrity, is a resource for the entire jewelry industry and its customers as well as an industry representative before government agencies, media and adjunct fields. For more information visit: www.jvclegal.org.
AT: 02/27/2012 01:22:43 PM   LINK TO THIS NEWSLETTER
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