Dealers in precious metals and precious stones

Dealers in precious metals and precious stones (DPMS) must fulfill specific obligations as required by the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and associated Regulations, to help combat money laundering and terrorist activity financing in Canada. For the purposes of the PCMLTFA, a dealer in precious metals and precious stones is a person or an entity that buys or sells precious metals, precious stones or jewellery in the course of its business activities.

As a dealer in precious metals and precious stones, you are subject to PCMLTFA obligations once you engage in the purchase or sale of precious metals, precious stones or jewellery in the amount of $10,000 or more. In other words, you are not subject to these requirements if you only engage in purchases or sales of less than $10,000 per transaction.

The sales referred to above include sales of precious metals, precious stones or jewellery that are left on consignment. However, goods left with an auctioneer for sale at auction are not considered to be left on consignment.

The purchases or sales referred to above exclude those carried out in the course of or in connection with:

If you purchase precious metals, precious stones or jewellery in an amount of $10,000 or more for inventory purposes, you are subject to these requirements.

If all of your purchases and sales are related to extracting, cutting or polishing activities, you are not subject to these requirements.

If 90% or more of all your purchases and sales are related to manufacturing activities, you are considered to be a manufacturer and you are not subject to these requirements. However, if your manufacturing activities represent less than 90% of all your purchases or sales, you are not considered a manufacturer and are subject to these requirements. Manufacturing activities are understood to include the manufacturing of jewellery made from gold, silver, palladium, platinum, pearls, or precious stones. This includes jewellery-making components commonly referred to as findings, which includes the bits and bobs made from precious metals that help to piece jewellery together. Findings do not include beads, gemstones or stringing materials.

Additionally, if you are a jewellery manufacturer and you sell goods to your employees, you remain exempted from the requirements under the PCMLTFA. In this context, employees are not considered to be consumers. This exemption is limited to employees only and is not extended to family and friends of employees.

If you are an agent of the Crown (i.e. a government department or an agent of Her Majesty in right of Canada or of a province) and you sell precious metals to the public in the amount of $10,000 or more, then you are also considered to be a dealer in precious metals and precious stones subject to the requirements of the PCMLTFA and associated Regulations.

Precious metals include gold, silver, palladium and platinum; they can be coins, bars, ingots, granules or in other similar forms. Precious stones include diamonds, sapphires, emeralds, tanzanites, rubies or alexandrites. Jewellery means objects made of precious metals, precious stones or pearls that are intended for personal adornment.

If you are the employee of a dealer in precious metals and precious stones, the requirements described further below are the responsibility of your employer, except with respect to reporting suspicious transactions, which is applicable to both you and your employer.

Dealers in precious metals and precious stones are responsible for the following requirements under the PCMLTFA and associated Regulations.

*Note: On June 1, 2021, regulatory amendments, which will create or change obligations for all reporting entities (REs) subject to the PCMLTFA and associated Regulations, will come into force. FINTRAC expects that REs will comply with the amended Regulations, but will exercise flexibility in assessing and enforcing compliance with certain record keeping and reporting requirements. See the Notice on forthcoming regulatory amendments and flexibility for more information.

Table 1—Summary of requirements for dealers in precious metals and precious stones (DPMS)
Category of requirement under the PCMLTFA and associated Regulations Requirements
Compliance program

Dealers in precious metals and precious stones must implement a compliance program. A strong compliance program will form the basis of meeting all your regulatory requirements. For more information, see Compliance program requirements and the Risk assessment guidance.

Know your client

Dealers in precious metals and precious stones must verify the identity of persons and entities for certain activities and transactions, and carry out other customer due diligence activities, as described below:

When to verify the identity of persons and entities
Dealers in precious metals and precious stones must verify the identity of persons or entities for certain transactions and activities. For more information, see When to verify the identity of persons and entities – Dealers in precious metals and precious stones.

Methods to verify the identity of persons and entities
Dealers in precious metals and precious stones must verify the identity of persons and entities using the methods prescribed by the PCMLTFA and associated Regulations. For more information, see Methods to verify the identity of persons and entities.

Business relationship requirements
Dealers in precious metals and precious stones enter into a business relationship with a client the second time they are required to verify the identity of that client. For more information, see Business relationship requirements.

Ongoing monitoring requirements
Dealers in precious metals and precious stones have ongoing monitoring requirements when they enter into a business relationship with a client. For more information, see Ongoing monitoring requirements.

Beneficial ownership requirements
Dealers in precious metals and precious stones must obtain and take reasonable measures to confirm the accuracy of beneficial ownership information for entities. For more information, see Beneficial ownership requirements.

Third party determination requirements
Dealers in precious metals and precious stones have third party determination requirements when they are required to submit certain reports and keep certain records. For more information, see Third party determination requirements.

Politically exposed persons (PEP) and heads of international organizations(HIO) requirements
Dealers in precious metals and precious stones are required to take reasonable measure to make PEP and HIO determinations for certain activities or transactions. If a dealer in precious metals and precious stones determines that a person is a PEP or a HIO then they have additional related requirements. For more information, see Politically exposed persons and heads of international organizations guidance and Politically exposed persons and heads of international organizations guidance for non-account-based reporting entity sectors.

Reporting

Dealers in precious metals and precious stones must submit the following reports to FINTRAC:

Suspicious transaction reports
For more information, see:

Terrorist property reports
For more information, see:

Large cash transaction reports 
For more information, see:

Large virtual currency transaction reports
For more information, see:

24-hour rule

Dealers in precious metals and precious stones have 24-hour rule requirements for large cash transaction reports and large virtual currency transaction reports. For more information, see Transaction reporting guidance: the 24-hour rule.

Record Keeping

Dealers in precious metals and precious stones must keep certain records, including records related to transactions and client identification. For more information, see Record keeping requirements for dealers in precious metals and precious stones.

Ministerial directives

Ministerial directive requirements apply to all reporting entity sectors. For more information, see Ministerial directives and transaction restrictions.

Penalties for non-compliance

FINTRAC has the legislative authority to issue administrative monetary penalties (AMPs) to reporting entities that are found to be non-compliant with the PCMLTFA and associated Regulations. For more information, see Penalties for non-compliance.

Glossary

The FINTRAC Guidance glossary includes terminology defined in the PCMLTFA and associated Regulations, as well as terms used throughout the guidance. For more information, see FINTRAC’s Guidance Glossary.

Date Modified: