Cracking down on crime
In a report issued in 2013 dealing specifically with the diamond industry, FATF reiterated “the diamond supply chain at all of its stages, from production to consumption, can be the gateway to profitability, for laundering proceeds of crime, for money laundering or terrorist financing, and for moving proceeds of crime into the financial system.” Although FATF adopted specific recommendations to mitigate the vulnerability of this industry, it remarked “several countries have not yet implemented these in their national anti-money laundering and counter-terrorist financing (AML/CTF) legislation,” and “[in] those countries that do have national AML/CTF regulation on diamond dealers, the overall compliance is assessed to be medium”¦ Although there are supervisory authorities, no sanctions were imposed in the last two years, an indication of the low level of enforcement in the sector.”
In Canada, FINTRAC is the government body responsible for the enforcement of PCMLTFA and its regulations. In its 2014 annual report, FINTRAC shared FATF’s concerns over the high vulnerability of the DPMS sector to money laundering and terrorist-financing risks, as well as the sector’s low level of regulatory compliance as a whole. FINTRAC noted the vulnerabilities “reside in the fact precious metals are easily converted into cash and often transferred with minimal audit trails, making them attractive to criminals.” FINTRAC also found:
“This sector typically includes smaller entities with limited resources, compliance, experience, or industry association representation. Following our compliance examinations in this sector over the past two years, we have seen industry-wide non-compliance, particularly with respect to common regime elements that were often completely absent or,
if in place, incomplete or inadequate. Over the coming year, we will continue to increase our awareness and assistance activities while beginning progressive and measured enforcement actions within this sector.”
