Money Laundering In The Jewelry Business

Non-financial institutions companies often think that money laundering is not about them. However, this is a false assumption. The latest directives of the European Union prove that this is invalid. According to these directives, money laundering is a risk, especially for the luxury and jewelry sector, and they should take precautions in this regard.


Money laundering processes generally consist of very well camouflaged steps. However, because they are cross-border transactions, they become difficult to detect. Due to this complex structure, strict control and advanced technological measures must be taken. Supervisory authorities depend on the cooperation of various businesses for better anti-money laundering measures. These businesses are often thought of as financial institutions but actually include retailers who trade high-value products. These industries fall under the category of those most likely to deposit money from illegal sources. These industries play an essential role for two reasons. The first is to prevent unlawful acts, report suspicious actions to the authorities, and protect businesses from fraudulent activity and possible financial losses.


In general, precious metals are a convenient way to launder money. Criminals have used especially high prices such as gold in international money laundering since old times. As gold is also a global tool, it can be easily used in cross-border activities. Apart from gold, diamond is another metal that is widely used in money laundering activities. The size of the diamond is an element that makes it easy to use. The use of diamonds for money laundering and terrorist financing goes back a long way. There is a movie called "Blood Diamond" in 2006 about this. As can be seen from the film, the diamond industry is a place that can provide an environment for all kinds of financial crime. Today, the Kimberley Process commitment, represented by the World Diamond Council, is in effect to protect this sector. With the law, possible diamond crimes were tried to be prevented.



Regulatory Challenges

As it is known, new directives are echoed by the European Parliament. According to these directives, institutions are changing their AML policies. Parliament has the right to check and readjust the requirements for the obliged parties.


Whether the amount of money laundering is large or small, it hurts businesses. In addition to financial results, it enables companies to lose their credibility and reputation. Companies must take measures to protect themselves from such consequences. Since money laundering is a system that is constantly changing, and new challenges are added, regulators are expected to improve themselves in this sense continuously. At the same time, companies should take measures in addition to the recommendations of regulators. Retailers in the jewelry industry need to check customer-initiated bank transfers for items purchased before shipment. Therefore, it is recommended that the compliance unit's awareness is high or automatic prevention software.


Cash flows in retailers in the luxury and jewelry market should be limited and perhaps abolished. For transactions exceeding a certain amount, there must be a customer identification process, as well as systems for tracking incoming and outgoing payments. This is called transaction monitoring. In this way, real-time access to customers' transaction activities and possible high-risk transfers should be prevented. If such measures are not taken, money laundering may become widespread in the jewelry sector, which is a highly exploitable sector.



Sanction Scanner's Solutions For Luxury Brands & Jewelry

As we mentioned above, luxury brands are a sector preferred by criminals very easily. Since the prices of the products are high, there are high sums in shopping. As a result, brands can host financial crimes. In order to avoid this problem, brands should know their customers well and manage their payment processes well. Thanks to Sanction Scanner's Transaction Monitoring software, you can segment your customers, set specific rules for each segment, and automatically prevent purchases over the price you specify.


There are similar problems in precious metal exchanges. A high amount of shopping should be monitored and customers should be well known. Within the scope of recognizing customers, you can check whether each customer has a criminal record and whether they are searched on terrorist lists with Sanction Scanner's Name Screening software.



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