Tranche 2 AML Compliance: Impact on Precious Metals and Stone Dealers

The new regulatory requirements for precious metals dealers focus on several key areas listed below.

Following the reforms, dealers of precious metals and stones will be required to develop and maintain an AML/CTF program tailored to their specific risk profile. This involves assessing risks related to the following:

Dealers of precious metals and stones will now be required to verify customer information to establish their identity and understand the nature of the business relationship. Additionally, they are required to determine if customers are politically exposed persons (PEPs) or appear on sanction lists.

The new reporting entities will need to continuously monitor customer transactions and behaviour to detect any changes in the risk profile by updating the customers’ risk assessments. They also need to implement measures to identify suspicious activities.

Dealers of precious metals and stones must submit:

Like other reporting entities, dealers in precious metals and stones must maintain detailed records of CDD measures, transactions, and be able to demonstrate to AUSTRAC their compliance with AML/CTF obligations.

These reforms will necessitate significant changes in how precious metals dealers conduct their business, including the following:

The Australian government recognises that this is a significant change for the industry and will be assisting Tranche 2 entities through the following actions:

As Tranche 2 takes effect, precious metals dealers must adapt swiftly. Vigilance and adherence to AML/CTF obligations will help maintain integrity in the industry. By complying with these reforms, Australia aims to protect dealers of precious metals and stones from exploitation by criminals to launder money or fund terrorism, comply with the most recent FATF standards, and contribute to the global fight against financial crime.

What is the Tranche 2 Reforms?

The Tranche 2 Reforms are a set of proposed legislative reforms aiming at broadening the scope of Australia's Anti-Money Laundering and Counter-Terrorism Financing laws to include more businesses and professions.

Which industries will be affected by the Tranche 2 Reforms?

The Tranche 2 Reforms will affect real estate agents, precious metals dealers, lawyers, trust and company service providers, and accountants.

When will the Tranche 2 Reforms become effective?

The exact timing for the implementation of the Tranche 2 Reforms is dependent on the legislative procedure. Stakeholders should keep an eye on statements from appropriate government authorities, such as the Australian Transaction Reports and Analysis Centre (AUSTRAC), for specific dates and transitional periods after the Act is passed.

Why are the Tranche 2 Reforms necessary?

The Tranche 2 Reforms are required to align with global standards established by the Financial Action Task Force (FATF), which recommends that countries regulate DNFBPs within their AML/CTF frameworks and to strengthen Australia's ability to detect, prevent, and combat money laundering and terrorism financing activities.

What steps should regulated entities take to comply with the Tranche 2 Reforms?

Regulated entities must conduct detailed risk assessments, develop and implement strong AML/CTF programs, ensure that employees receive adequate training on AML/CTF obligations and the entity's compliance program, establish systems for reporting suspicious activities and keeping records in accordance with regulatory requirements.