WASHINGTON (1/4/16)--Alleged violations of federal anti-money laundering laws led the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) to assess a $200,000 civil money penalty against a Los Angeles precious metals dealer. B.A.K. Precious Metals, its sole owner, Bogos Karaoglanyan and its designated compliance officer, Arman Karaoglanyan, have admitted to willfully violating the laws.
According to FinCEN, B.A.K. failed to adequately assess its risks and did not conduct due diligence on its highest risk customers. In 2011, B.A.K. began dealing in large sums of gold with new customers, with transactions ranging between $14 and $23 million. This helped B.A.K. nearly double its total yearly volume, which reached $120 million by the end of 2012.
Despite this significant change in volume and customer base, B.A.K. allegedly chose not to require any documentation or identification prior to conducting business with many of these new, high-volume customers. Moreover, the purchase orders documenting these transactions, many of which were over $100,000, contained only the business name and included no identifying information on the underlying individuals.
The Credit Union National Association/National Association of State Credit Union Supervisors Bank Secrecy Act Conference in November highlighted the growing trend of metals such as gold being used for criminal purposes.
During his presentation, World Council of Credit Unions Vice President and General Counsel Michael Edwards said that gold’s high value, low volume and anonymous nature have made entities such as cash-for-gold businesses attractive to organized crime.
The Financial Action Task Force released a report in July 2015 highlighting the money laundering and terrorist financing risks and vulnerabilities associated with gold.