FinCEN: Precious metal buyers are money transmitters

August 18, 2015

WASHINGTON (8/18/15)--Persons or entities issuing physical or digital certificates of ownership of precious metals are classified as money transmitters, according to an administrative ruling by the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN).

“FinCEN finds that the company would be a money transmitter and a dealer in precious metals, precious stones, or jewels pursuant to our regulations,” the ruling reads.

FinCEN defines “money transmitter” to include a person who provides money transmission services, or any other person engaged in the transfer of funds. Transmitters are part of the larger group known as money services businesses (MSBs), which participate in one or more of the following services: currency dealer or exchanger; check casher; issuer of traveler’s checks or money orders; seller or redeemer of traveler’s checks; money transmitter; and the U.S. Postal Service.

Dealers in precious metals, precious stones or jewels are defined as persons who purchase more than $50,000 in covered goods and received more than $50,000 in gross proceeds in covered goods.

The ruling was sent in response to a July 2014 inquiry to FinCEN, stating that the company in question:

  • Provides Internet-based brokerage services between buyers and sellers of precious metals. Buyers pay sellers directly by check, wire transfer or bitcoin;
  • Buys and sells precious metals on its own account; and
  • Holds precious metals in custody for buyers who purchase this service, opens a digital wallet for the customer and issues a digital proof of custody that can be linked to the customer’s wallet on the Bitcoin ledger. The customer then can trade or exchange its precious metals holdings at the company by any means.

 “When acting as either a money transmitter or a dealer in precious metals, precious stones, or jewels, the company must assess the money laundering risk involved in its non-exempt transactions, and implement an anti-money laundering program to mitigate such risk,” the ruling reads. “In addition, the company must comply with the recordkeeping, reporting, and transaction monitoring requirements under FinCEN regulations.”