Precious Metals, Stones and Jewellery

This guide covers the AML/CTF obligations specific to dealers in precious metals, stones and jewellery under AUSTRAC Tranche 2. Read this alongside the general AML/CTF guide for the shared compliance framework.

Why precious metals dealers are regulated

Precious metals, stones, and jewellery products are attractive to criminals because they:

• Are easily transported — gold, diamonds, and jewellery are compact, high-value, and easily concealed
• Retain or appreciate in value — providing a stable store of wealth outside the banking system
• Accept cash payments — providing a channel to convert large amounts of physical currency into portable, valuable assets
• Can move between licit and illicit markets — stolen or conflict-sourced goods can re-enter legitimate trade
• Cross borders easily — precious goods are internationally tradeable with established global markets
• Are difficult to trace — once melted, recut, or resold, precious goods lose their provenance trail

The $10,000 threshold — your key trigger

Your industry has a unique regulatory trigger that differs from all other Tranche 2 sectors. Unlike real estate agents or accountants, where regulation is triggered simply by providing a designated service, your regulation is triggered by the payment method and amount:

Your AML/CTF obligations apply when you buy or sell precious metals, stones, or jewellery products where:

1. The transaction value is $10,000 or more (Australian dollars or equivalent), AND
2. Payment involves physical currency (cash — notes and coins) or virtual assets (cryptocurrency), or a combination of both

This means:

• A $50,000 gold purchase paid entirely by bank transfer → not a designated service (no cash or virtual assets)
• A $12,000 diamond ring paid in cash → designated service (cash ≥ $10,000)
• A $15,000 watch paid partly in cash ($8,000) and partly by card ($7,000) → designated service (involves cash, and the transaction value exceeds $10,000)
• A $9,500 gold chain paid in cash → not a designated service (below $10,000) — but monitor for linked transactions

Regulation scope — four options

During Verifia onboarding, you select the regulation scope that best describes how your business operates. This fundamentally determines your compliance obligations and the Verifia features enabled for your account.

Option 1: Avoid regulation entirely

Description: Your business has a policy of not accepting physical currency or virtual assets for any transaction, regardless of amount.

Obligations: Minimal — you are generally not providing a designated service. However, you must maintain and enforce your policy, and train staff to direct customers to electronic payment methods.

How to maintain this status: Implement clear business policies refusing cash and virtual asset payments. Display signage. Train staff. Document any instances where customers attempt to pay in cash.

Option 2: Cap transactions below $10,000

Description: You accept physical currency and/or virtual assets, but your business policy is to cap individual cash/virtual asset transactions below $10,000.

Obligations:

• A reduced AML/CTF program focused on structuring detection
• Transaction monitoring to detect customers attempting to split transactions to stay below $10,000
• Must still report suspicious matters if you form a suspicion
• No CDD required for individual transactions (each is below the threshold)

Key risk — structuring: Customers may attempt to structure their purchases — deliberately splitting a larger purchase into multiple smaller transactions to avoid triggering the $10,000 threshold. Structuring is itself a criminal offence and a suspicious matter that must be reported.

Verifia features enabled:

• Transaction recording with payment method tracking
• Structuring detection monitoring rules
• SMR reporting capability
• Basic compliance program

Option 3: Limit customer types

Description: You accept physical currency/virtual assets at or above $10,000, but only from low or medium-risk individual customers. You divert high-risk individuals, companies, trusts, and other entities to electronic payment methods.

Obligations:

• Streamlined CDD for individual customers only
• Cannot accept cash/virtual asset payments of $10,000+ from entities (companies, trusts, partnerships) or high-risk individuals
• Transaction monitoring including linked transaction detection
• Full reporting obligations (TTR, SMR)

Verifia features enabled:

• Individual customer CDD (entity CDD blocked for cash/virtual asset transactions at or above $10,000)
• Transaction monitoring with linked transaction detection
• Full reporting suite (SMR, TTR)

Option 4: Full compliance

Description: You accept all payment types (including cash and virtual assets) from all customer types (individuals and entities) at any transaction value.

Obligations:

• Full AML/CTF program
• CDD for all customer types (individuals, companies, trusts)
• Enhanced CDD for high-risk customers
• Full transaction monitoring including linked transaction detection
• All reporting obligations (SMR, TTR, annual compliance report)

Verifia features enabled: Complete feature set.

What are "precious metals, stones and jewellery"?

Understanding what falls within the regulated scope is important for determining when your obligations apply.

Precious metals

Gold, silver, platinum, and platinum group metals (iridium, osmium, palladium, rhodium, ruthenium), or alloys containing 2% or more of these metals by weight.

Precious stones

Gem-quality substances including: diamond, pearl, opal, topaz, corundum (ruby, sapphire), beryl (emerald, aquamarine), garnet, jade, spinel, tanzanite, tourmaline, and other minerals or substances recognised as precious or semi-precious.

Precious products (jewellery)

• Jewellery and personal adornment items incorporating precious metals or stones
• Watches containing precious metals or stones
• Goldsmiths' and silversmiths' wares
• Other items made from or incorporating precious metals or stones

Linked transaction detection

The $10,000 threshold applies not just to single transactions, but to transactions that are linked or appear to be linked. This is a critical concept that is unique to your industry and directly affects when CDD and TTR obligations are triggered.

What makes transactions "linked"?

Transactions are considered linked when they are connected in a way that suggests they are, in substance, part of the same dealing. AUSTRAC identifies several types of linkage:

How Verifia detects linked transactions

Verifia includes pre-configured monitoring rules specifically designed for precious goods dealers:

• Invoice-linked rule: Automatically sums all transactions sharing the same invoice reference. Alerts when the cumulative total reaches $10,000.
• Date-linked rule: Sums all transactions from the same customer on the same date. Alerts when the total reaches $10,000.
• Instalment-linked rule: Tracks lay-by and instalment payment plans. Alerts when cumulative payments reach $10,000.
• Structuring detection: Identifies patterns suggesting deliberate splitting — e.g., multiple cash transactions just below $10,000 from the same customer within a rolling 7-day window.

When linked transactions are detected:

1. An alert is created showing all component transactions and the linkage reason
2. CDD is triggered for the customer (if not already completed)
3. TTR assessment is triggered if physical currency was involved
4. The alert is documented in the audit trail for compliance record-keeping

Risk factors specific to precious metals dealers

High-risk indicators

Medium-risk indicators

Suspicious behaviour to watch for

• Customer wants to pay for a large purchase entirely in cash and resists alternative payment methods
• Customer attempts to split a purchase into multiple smaller transactions to stay below $10,000
• Customer is unconcerned about the price or quality of goods — focus is on spending money rather than acquiring specific items
• Customer purchases items that seem inconsistent with their apparent means
• Customer asks about resale value before purchasing — may indicate the goods are being used as a value transfer mechanism rather than for personal use
• Scrap metal dealer selling large quantities of precious metals with questionable provenance or incomplete documentation
• Customer wants to buy and immediately resell the same items — may indicate placement of illicit funds
• Customer pays with cryptocurrency and is evasive about the source of the virtual assets
• Customer purchases goods and requests shipping to a high-risk jurisdiction
• Customer is overly interested in reporting thresholds — asks what amounts trigger reporting requirements
• Customer makes multiple purchases across different stores in the same chain — may indicate structuring

Example scenarios

Scenario 1: Cash purchase above threshold

A walk-in customer wants to buy a gold necklace priced at $15,000 and offers to pay in cash.

1. Designated service triggered: $10,000+ in physical currency for precious goods.
2. CDD required: Before completing the sale, verify the customer's identity and assess their ML/TF risk. You cannot complete the sale without satisfactory CDD.
3. TTR required: File a Threshold Transaction Report within 10 business days.
4. Risk assessment: Consider the source of funds — why is the customer paying $15,000 in cash? Is this consistent with their profile?
5. If low risk: Complete the sale, file the TTR, archive all records in the vault.
6. If suspicious: File an SMR in addition to the TTR. Consider whether to proceed with the sale.

Scenario 2: Lay-by reaching $10,000

A regular customer places a $12,000 watch on lay-by, paying $3,000 per month in cash over 4 months.

1. Verifia tracking: Each lay-by payment is recorded with the instalment plan reference.
2. Alert at $10,000: When cumulative cash payments reach $10,000 (after the fourth payment of $3,000, bringing the total to $12,000), Verifia generates an alert.
3. CDD triggered: The customer's identity must now be verified. If CDD was not performed at the start of the lay-by, it must be completed now.
4. TTR assessment: Total physical currency involved exceeds $10,000 — file a TTR within 10 business days.
5. Best practice: Consider performing CDD at the start of any lay-by arrangement where the total value is $10,000 or more, even if individual payments are below the threshold.

Scenario 3: Suspected structuring

A customer visits your store three times in one week:

• Monday: Buys earrings for $3,800 in cash
• Wednesday: Buys a bracelet for $4,200 in cash
• Friday: Buys a ring for $3,500 in cash

Total: $11,500 across three cash transactions.

1. Verifia detection: The structuring detection rule flags the pattern — three cash transactions from the same customer within 7 days, each below $10,000, but totalling above the threshold.
2. Alert created: All three transactions are linked in the alert with the reason "Potential structuring."
3. CDD assessment: The linked total exceeds $10,000 — CDD should be considered.
4. SMR consideration: The pattern strongly suggests deliberate structuring to avoid the $10,000 threshold. Structuring is itself a criminal offence. You should file an SMR regardless of whether the customer appears otherwise legitimate.
5. Document: Record your assessment and the basis for your suspicion.

Scenario 4: Scrap dealer selling gold

A scrap metal dealer brings in a large quantity of gold scrap (rings, chains, dental gold) for sale, valued at $25,000. They want payment in cash.

1. CDD: Enhanced CDD triggered — scrap dealers are a high-risk customer type in this industry.
2. ECDD requirements: Source of goods verification (where did this gold come from? Is the provenance documented?), source of wealth for the dealer, adverse media screening, senior manager approval.
3. Red flags to assess: Is the gold potentially stolen? Does the dealer have documentation showing legitimate acquisition? Are the quantities consistent with a legitimate scrap business? Is the dealer registered with any industry body?
4. TTR: You are paying $25,000+ in physical currency — file a TTR within 10 business days.
5. SMR consideration: If provenance cannot be verified, or you suspect the goods may be stolen or conflict-sourced, file an SMR.

Recording transactions in Verifia

When recording transactions as a precious goods dealer, Verifia collects additional fields that are essential for linked transaction detection and compliance monitoring:

These fields enable Verifia's linked transaction detection rules and ensure accurate TTR and SMR reporting.

Key Verifia features for precious metals dealers