Terrorist financing, money laundering, and the Canadian jewellery industry (Part 2)

How’s your compliance regime?

Part 2 of 9

By Ken Brander

Canada’s anti-money laundering (AML) legislation is by no means unique in the world. In fact, you might be interested to know most countries have very similar laws in place. This is not just a coincidence. Canada is part of the global anti-money laundering and terrorist-financing (TF) regime that took hold in 1989 with the advent of the Financial Action Task Force (FATF), an inter-governmental body formed by the Group of Seven (G7) countries. Canada is a member state of both the G7 and FATF, and has a great deal of national pride and actual resources invested in these organizations. Each has become a permanent fixture in geo-economic politics, which means AML/TF compliance is not a transient affair. It’s here to stay and if anything, enforcement, regulations, and monetary fines are on the rise in Canada and internationally.

The G7 leaders created FATF in response to the gross amounts of money laundering transactions chartered banks were conducting on behalf of organized crime during the 1970s and 1980s, most notably Colombia’s drug cartels. After the 9/11 attacks, FATF also became involved in recommending actions to identify terrorist financing. As a G7 and FATF member, Canada has, therefore, long been involved in the effort to keep proceeds of crime and terrorist financing out of the world’s legitimate financial system.

FATF is the global authority on anti-money laundering and terrorist financing regulatory framework. As such, it makes recommendations, sets policies and procedures, and assesses AML regimes of member states. Currently, there are 34 FATF member states, eight regional FATF-style organizations (e.g. Eastern and Southern Africa Anti-Money Laundering Group [ESAAMLG]), and 25 FATF observers, including the United Nations, World Bank, and Interpol. FATF has made 40 recommendations that member states are expected to adopt fully into domestic legislation. They address the following:

• Anti-money laundering and terrorist-financing policy and co-ordination;

• Laws relating to money laundering and confiscation of proceeds of crime;

• Financial activities related to the funding and proliferation of terrorism;

• Preventative measures, including customer due diligence, record keeping, etc.;

• Transparency and beneficial ownership;

• Powers and responsibilities of competent authorities, including financial intelligence units (FIUs); and

• International co-operation.

To be compliant with FATF’s recommendations, Canada has enacted federal legislation that directly affects you as a dealer in precious metals and stones (DPMS). Specifically:

• In 2000, Canada passed the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. There have been a number of amendments over the years.

• The act establishes the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) as the country’s financial intelligence unit.

• The act establishes 10 types of business sectors in Canada required to be in compliance. These businesses are termed ‘reporting entities’ (RE).

• Among other things, FINTRAC conducts examinations on Canada’s reporting entities to evaluate and ensure compliance with the act and regulations.

• FINTRAC has authority to assess administrative monetary fines and recommend criminal charges against individuals and reporting entities found to be in non-compliance with the act and regulations.

• FINTRAC receives reports from reporting entities, analyzes those reports, and creates intelligence packages that assist domestic and international law enforcement agencies investigate money laundering and terrorist financing.

• DPMSs became reporting entities and subject to the act and regulations in 2008.

More to come of this story in Part 3.

Read the full article: Terrorist financing, money laundering, and the Canadian jewellery

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Terrorist financing, money laundering, and the Canadian jewellery industry (Part 1)

How’s your compliance regime?

Part 1 of 9

By Ken Brander

If, after reading the title of this article, your chest tightened a bit, your pulse rate spiked, and you had a hard time swallowing, rest assured, these are not uncommon responses. There’s no need to speed dial your physician quite yet. However, you should keep reading, since just like a lingering health concern, your anti-money laundering compliance program requires your ongoing attention, lest it flare up and cause you some serious grief.

Money laundering, terrorist financing, compliance regimes, administrative monetary penalties, and criminal charges may seem out of place in the jewellery industry. However, since 2008, Canada’s dealers in precious metals and stones (DPMSs) have been deemed one of the 10 reporting entities of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and its regulations. As such, you have a number of legal obligations with which you must comply. These requirements are not optional and you ought to consider them as another cost of doing business, similar to insurance and advertising.

As a former officer with the Edmonton Police Service, I spent 25 years investigating fraud, corruption, and money laundering in Canada and internationally.

In this article, I am going to help you understand how and why this law came about and the implications for you and your business. I’ll also share my thoughts on what you can expect from regulators, as well as some common misconceptions jewellers have that could lead them into serious trouble.

More to come of this story in Part 2.

Read the full article: Terrorist financing, money laundering, and the Canadian jewellery

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Jewelers Mutual introduces victim services

Victims of a jewellery store robbery or a natural disaster will now have access to counselling as part of a business’s coverage with Jewelers Mutual Insurance Co.

“Jewellers work in a dangerous industry, and I think I speak for everyone at Jewelers Mutual when I say there is nothing more heart-wrenching than news one of our jewellers has been involved in an armed robbery or a shooting or another traumatic situation,” said Darwin Copeman, president and chief executive officer (CEO) of Jewelers Mutual.

“At Jewelers Mutual, we want to do more for you than pay for your stolen goods or repair your store. We want to help you and your employees recover however we can, so you can move forward with your lives and resume your life’s work.”

Called the RELI(E)VE Program, the new benefit is the result of a partnership between Jewelers Mutual and Ceridian LifeWorks, a provider of employee assistance programs, work-life, wellness, and crisis support services in the United States and Canada.

Services include 24-7 telephone access to LifeWorks’ masters-level counsellors, face-to-face sessions with a qualified local counselling professional, and onsite crisis support in the form of one-on-one and group counselling sessions.

The following are signs an individual could be having difficulty recovering from psychological trauma:

• vivid and frequent flashbacks;

• a pervasive change in personality or demeanor;

• dramatic emotional swings;

• anxiety or paranoia;

• insomnia or fitful sleep;

• depression; and/or

• heightened feelings of stress.

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Canadian jewellery industry gathers for 24 Karat Club gala

Jewellery Business managing editor Jacquie De Almeida; Chris Kundakci, owner of Designed By Chris Jewellers; and Jewellery Business publisher and 24 Karat Club member, Erik Tolles.

The marble décor of Toronto’s Fairmont Royal York Hotel set the scene for the 57th annual Canadian Jewellers 24 Karat Club’s yearly gala dinner.

A who’s who of the Canadian jewellery industry—including Jewellery Business publisher and 24 Karat Club member, Erik Tolles, and managing editor, Jacquie De Almeida—attended the fête on Oct. 18, which coincided with the group’s annual general meeting.

Members and their guests from across the country converged on the Royal York’s elegant Imperial Room after enjoying a cocktail reception. Following dinner, Canadian jazz musician/vocalist Matt Dusk took to the stage with his renditions of classics like “The way you look tonight.”

“For 57 years, members have been gathering to celebrate friendship and camaraderie within Canada’s jewellery industry,” said Gino DeVuono, president of the Canadian Jewellers 24 Karat Club. “It’s an evening enjoyed by all.”

Founded in 1957, the Canadian Jewellers 24 Karat Club was designed to be a fellowship that brought together members, retailers, and suppliers in a social environment. Although it was originally Ontario-based, the club now has members across the country.

Membership—which is capped at 75 active members—is by invitation-only.

The annual general meeting saw the following named to the executive for the coming year:

• Gino DeVuono, director of sales at Movado Group, as president;

• Jay Cameron, vice-president of sales and marketing at Fiori Watch Canada, as vice-president;

• Darrell King, president and chief executive officer (CEO) of Gunther Mele, as treasurer;

• Jason Kelly, president and CEO of Cachet Consulting & Management Services, as secretary; and

• Joe Gonçalves, owner of Time Central, as immediate past-president.

24 Karat Club past-president Tim Bromwich, Ryan Gonçalves of Time Central, and Tibor Finesz, owner of Right Time Inc., were appointed to the board of directors for this year.

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Midore named official Canadian distributor for Festina

Photo courtesy Festina Group

Festina Group has appointed Montreal-based Midore as its Canadian distributor.

The official timekeeper of the Tour de France, Festina is available in more than 90 countries.

“We see Canada as the perfect market for our watches, be it for our large, sporty men’s chronographs or our fashionable ladies’ feminine timepieces,” says Manon Colombies, Festina Group’s general manager.

“Canada has a spectacular range of demographics, and a multifaceted lifestyle brand is ideal for the market.”

Michael Negreanu, co-founder of Midore, says the introduction of a ladies’ line and downsized cases in the men’s collection will help create better appeal among consumers, as will lower price points. The Canadian-specific models range from $135 to $455, with 90 per cent of the watches priced from $149 to $265.

Negreanu says Midore’s established dealer network of more than 400 stores and a sales force across the country helped seal the deal.

“Festina has seen in Midore a worthy representative of the brand in this market, a company having both the capacity and understanding of the Canadian consumer,” he explains.

“As the exclusive Canadian distributor, we see great potential in the Festina brand for its attractive price points and value. We are confident we can mirror the success the group has had in other markets.”


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A stroll down memory lane (Part 3)

Changing times, new challenges

Part 3 of 3

By Mark T. Cartwright

Synthetic morganite has become relatively common in the market and mounted stones can be difficult to detect; however, the 0.007-carat ‘pink diamond’ melee presented the greatest challenge. Photo courtesy Mark T. Cartwright.

Five or six years ago, the trade was wrestling with names for corundum treatments involving beryllium diffusion and flux ‘healing’ of rubies, as well as whether such treatments were ‘acceptable.’ The gemstone-manipulation industry in Thailand quickly made those previously ‘extreme’ techniques seem mild by comparison. The flood of so-called ‘rubies’ into the market composed primarily of glass quickly overshadowed concerns the trade may have had about extreme high-temperature treatments involving various chemicals to alter the colour and clarity of otherwise ‘natural’ stones. Today, it’s not unusual to find high-end jewellery with ‘flux-healed’ rubies, while the composites have flooded the lower end of the market. For what it’s worth, at least laboratories have quickly agreed that ‘lead-glass-filled rubies’ aren’t actually rubies at all and shouldn’t have ruby associated with their name.

What hasn’t changed in the last half-decade is the lack of public awareness and trade transparency in regard to the manipulation of gems in the corundum family. Apparently, there is still no consensus on what the word ‘natural’ actually means when it comes to absurdly altered stones. As appraisers, we’re on the frontline of public disclosure and consumer education whether we like it or not. To that end, I’ll once again repeat my mantra that I’m sure readers are tired of reading: education is the most important investment we can make in ourselves and our businesses. We learn what we previously didn’t know and discover how much else there is to understand.

For the independent gemmologist/appraiser, these ‘advances’ can present challenges that may initially seem insurmountable. I prefer to view them as ‘growth opportunities.’ The truth, however, is some of them actually are insurmountable for the average gemmologist without access to advanced equipment. The good news is there is increased access to affordable advanced testing. Equipment that was once only available to institutions with huge budgets can be purchased for a few thousand dollars. Scientists are constantly working to develop easy and inexpensive tests and equipment to combat the thieves and con men in the industry. As consumers come to rely upon us more and more to help them navigate the mysterious waters of the jewellery industry, we need to be certain we’re staying vigilant.

On a personal note, this is my last Valuer’s Notebook column for Jewellery Business magazine. After six years, I felt it was time readers were treated to a different perspective, although I’m sure some of you may have felt that way a while ago! It’s been my honour and great privilege to have had this opportunity to share what little I may have learned over the years with readers and to force you to listen to my opinions (sorry about that). I know you’ll enjoy and find great value in the wisdom provided by my friend and colleague who will be writing the column beginning with the February issue. Please feel free to keep in touch if you wish, and thank you very much for your patience and perseverance. And in case

I haven’t mentioned it before, keep learning and growing your skill at the best job in the industry.

Read the full article: A stroll down memory lane

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