As the sale of precious metals continues to grow as a legitimate investment, so too does the need for vigilance in monitoring transactions for potential money laundering activities. In Australia, bullion dealers are required to adhere to anti-money laundering (AML) legislation. Two key thresholds often targeted for avoidance by those attempting to launder money are the $5,000 customer identification threshold (IDV) and the $10,000 transaction reporting threshold (TTR). In this blog post, we'll explore a red flag behaviour that may indicate attempts to circumvent these regulations.
One of the most prevalent money laundering behaviours is structuring, where individuals deliberately manipulate the size and frequency of transactions to avoid triggering regulatory reporting requirements.
A common method involves breaking down a large purchase into smaller amounts to stay below the $5,000 IDV threshold or the $10,000 TTR requirement. For instance, an individual might make multiple purchases over consecutive days or use different branches of the same bullion dealer to avoid detection. A bullion dealer who does not have the ability to detect individuals structuring smaller purchases over multiple days to avoid IDV risks not meeting their AML obligations.
Purchasing bullion using cash, especially in frequent or significant amounts, can be another warning sign. Cash transactions are harder to trace, making them an attractive option for those looking to avoid scrutiny. The bullion dealer cannot simply ignore all cash transactions under the thresholds as one, four thousand dollar transaction each day for three days breaks both the IDV and TTR thresholds in total (ie $12K) and that purchasing behaviour suggests structuring.
Individuals may collaborate with others to split a large bullion purchase into smaller transactions. By dividing the purchase among multiple people, each staying below the IDV and TTR thresholds, they aim to reduce the visibility and potential scrutiny of their activities.
Bullion dealers must remain vigilant for these red flag behaviours to comply with Australia's AML laws. By understanding and identifying these patterns, dealers can play a crucial role in preventing money laundering and ensuring the integrity of the financial system. As regulations evolve and criminals find new ways to evade them, ongoing education and awareness are key to staying one step ahead.
To effectively detect and prevent structuring and other suspicious activities, bullion dealers must incorporate and implement effective Know Your Customer (KYC) and transaction monitoring policies, procedures and controls into their AML/CTF program.
If you're a bullion dealer, it’s essential to keep abreast of the latest AML guidelines and implement robust monitoring and reporting processes. This not only protects your business but also contributes to the broader effort to combat financial crime.
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