Precious Metals & Stones Trading

Criminals execute multiple cross-border transactions in precious metals and stones to obscure the original illicit source of funds. They leverage minimal formal identification requirements and complex commodity valuations to add layers of transactional distance.

After resale, the illicit funds appear to be legitimate revenue from commodity transactions, effectively cleaning the proceeds and merging them into the formal economy.

High portability and subjective valuation of precious metals and stones allow for swift conversion into cash or other assets. This provides criminals with readily transferable illicit funds that can be redeployed globally while minimizing detection risk.

Criminals exploit the inherently high-value and subjective nature of precious metals and gemstones to obscure illicit funds. Minimal identification requirements, ease of transport, and difficulty in establishing true market values allow criminals to under- or overvalue these commodities, blend illicit items with legitimate ones, and ultimately convert illegal proceeds into ostensibly lawful revenue through resale. This is the central vulnerability exploited by the technique.

Criminals exploit weak or inconsistent AML enforcement across multiple jurisdictions to conduct precious metals and gemstone transactions. By moving commodities through regions with minimal scrutiny, they add complexity to cross-border trades and hinder effective investigation of the true origin or destination of funds.

Encompasses official data on goods moving across borders, capturing shipping routes, multiple transshipment points, declared values, and inspection results. This contributes to:

• Uncovering suspicious or circuitous shipping paths for precious metals or gemstones with no clear commercial justification.
• Detecting potential misuse of relaxed oversight in certain jurisdictions.
• Enhancing investigations into cross-border movements tied to trade-based money laundering schemes.

Provides recognized market prices, indexes, and historical trends for commodities, including precious metals and gemstones. This information helps:

• Identify mispricing or undervalued/overvalued trades that may conceal illicit proceeds.
• Compare transaction values against prevailing market rates to detect significant discrepancies.
• Enhance investigations into possible fraudulent or artificial pricing schemes.

Captures all inflows and outflows of funds, including timestamps, amounts, counterparties, and transaction channels, enabling the detection of:

• Large or frequent purchases of precious metals or gemstones that deviate from a customer’s profile.
• Rapid resale or short holding periods indicative of quick layering or integration.
• Suspicious transaction flows potentially aimed at concealing illicit proceeds.

Consists of shipping logs, invoices, customs declarations, certificates of origin, and appraisal reports for precious metals or gemstones. This data helps:

• Detect mismatched certificates or inconsistent provenance records.
• Validate transaction details (e.g., quantity, quality, or type of precious commodities) against declared documentation.
• Uncover potential trade-based money laundering tactics, such as falsified documentation or over-/undervaluation schemes.

Aggregates verified customer profiles, including financial standing, business activities, and risk assessments. Specifically relevant for:

• Identifying customers newly or unexpectedly engaged in high-value precious metals or gemstone trading.
• Comparing declared sources of wealth or business profiles against actual commodity trading volumes.
• Exposing sudden or unexplained escalation in trading activity that may suggest money laundering.

Offers detailed records of commodity purchases, sales, or exchanges, including transaction dates, parties involved, commodity types, and prices. This data helps to:

• Verify the legitimacy and scope of precious metals or gemstone transactions.
• Detect unusual patterns or repeated trades that deviate from typical market behavior.
• Support investigations into potential layering or integration tactics within trade-based laundering schemes.

Contains information on cross-border financial transactions and the institutions involved, covering origins, destinations, currencies, and settlement details. This data assists in:

• Identifying frequent or high-value movement of precious metals or gemstones across jurisdictions incongruent with a customer’s usual operations.
• Detecting trade flows through high-risk or non-transparent channels.
• Tracing cross-border patterns consistent with layering and integration strategies.

Contains details on registered businesses, their ownership structures, and key personnel. This data supports:

• Verifying the legitimacy of intermediaries or shell entities involved in precious metals or gemstone trades.
• Identifying beneficial owners who may conceal illicit proceeds under complex corporate setups.
• Detecting undisclosed or suspicious business relationships tied to trade-based laundering.

Classify jurisdictions known for limited oversight of precious metals and gemstones as high risk, and impose stricter due diligence and closer monitoring of cross-border shipments. Restrict or apply additional scrutiny to transactions linked to regions with conflict mineral activity or poor AML enforcement practices.

Conduct thorough checks on customers dealing in precious metals or gemstones, verifying proof of legitimacy for stocks, such as assay reports and gemological certificates. Ensure the sources of wealth and the alignment of declared commodity values with known market benchmarks. Investigate inconsistencies or unusual volumes to expose hidden ownership or fake provenance behind high-value trades.

Implement specialized monitoring scenarios for large or frequent precious metals and gemstone trades, ensuring they align with the customer’s stated business profile. Trigger enhanced reviews when unusual price movements, short turnaround times on resale, or recurring shipments from high-risk jurisdictions are detected.

Routinely screen suppliers, buyers, and shipping agents involved in precious metals or gemstone transactions against conflict mineral advisories, international sanctions lists, and negative media references. Flag or prohibit dealings with restricted entities to prevent illicit commodity flows.

Provide targeted instructional sessions for frontline and compliance teams focusing on red flags in the precious metals and gemstone sectors, such as forged assay certificates, inconsistent valuation appraisals, and abrupt cross-border shipments. Emphasize techniques for spotting under-invoicing or identifying questionable intermediaries.

Require escrow services for high-value metals or gemstone trades, withholding final payment until independent third parties verify the authenticity, quality, and regulatory compliance of shipments. Funds are released only after the completion of all required checks and documentation reviews.

Leverage public databases, industry registries, and specialized resources (e.g., stolen or conflict mineral lists, gemological data) to validate the legitimacy of transaction parties and provenance claims. Cross-check reported suppliers or intermediaries against external watchlists and news sources for undisclosed risks.

Systematically review trade invoices, shipping documents, and certificates of origin for precious metals and gemstones. Cross-reference declared prices with reputable market data to identify over- or under-invoicing, detect anomalies in purity or quality claims, and flag mismatched shipment details.

• Criminals manipulate or falsify documents (e.g., invoices, shipping papers) to misrepresent the value or quantity of precious metals and gemstones being traded.
• Under- or over-invoicing facilitates the layering of illicit funds, introducing spurious values into cross-border trade that appear legitimate on paper.
• By exploiting international trade channels, criminals create additional complexity and obscure the illicit origin of the commodities’ proceeds.

• Criminals acquire or craft jewelry containing precious metals or stones, leveraging the high value-to-weight ratio and variability in appraisals to disguise illicit funds.
• Jewelry's portability and ease of cross-border transport allow criminals to move concealed value to different jurisdictions with minimal scrutiny.
• Rapid resale, often through dealers or auctions, transforms illicit assets into ostensibly legitimate revenue by merging them with lawful transactions.

• Criminals purchase or directly smuggle these commodities using illicit funds, exploiting minimal identification requirements and the subjective pricing nature of metals and stones.
• Cross-border movement is facilitated by under- or misdeclaring value and origin, allowing criminals to blend illicitly sourced items with legitimate supply chains.
• Upon resale, the funds received appear to be legitimate proceeds from commodity trading, enabling both layering and integration.

• Enables direct purchase and sale of gold, silver, or other metals as a way to convert illicit proceeds into portable, high-value assets.
• After transporting or holding metals, criminals resell them for ostensibly legitimate revenue, complicating AML oversight.

• Illicit metals or stones can be hidden among legitimate cargo, with criminals mislabeling or routing shipments through multiple jurisdictions to avoid detection.
• Minimal oversight in certain corridors enables the discrete movement of high-value commodities to be sold elsewhere for ‘clean’ funds.

• These accounts can handle precious metals and gemstones (including gold and diamonds), allowing criminals to obscure transactions among legitimate commodities trades.
• Under- or overstating commodity values across jurisdictions provides cover for layering and integration.

• Falsified invoices, shipping manifests, and certificates of origin help criminals misstate actual quantities or the quality of precious metals or gemstones.
• Inaccurate paperwork masks funds’ true source and destination, enabling criminals to blend illegal trades with legitimate ones.

• Criminals can obtain letters of credit or documentary collections under false pretenses to move precious metals or gemstones internationally, obscuring their true origin.
• By under- or over-invoicing the value of shipments, illicit funds are introduced into legitimate trade channels under the guise of standard import/export transactions.

• Intermediaries may manage customs procedures, shipping documentation, and logistics in ways that conceal or misrepresent the true nature and declared value of precious metals or gemstones.
• Criminals exploit these cross-border mechanisms to layer illicit funds through apparently legitimate trade channels.

• Criminals register on these platforms to buy and sell metals, using rapid trades and complex order chains to hide transaction trails.
• Inconsistent pricing or volume patterns across different markets allow for laundering methods like overvaluing and undervaluing of commodities.

• Criminals turn illicit proceeds into gold items and quickly convert them back to cash via these services with minimal documentation.
• Inconsistent or lax appraisal standards enable underreporting or overpayment to cloak actual transaction values.

Import-export entities facilitate cross-border trade involving precious metals or gemstones by:

• Managing shipping documents and customs declarations that can be manipulated to overvalue or undervalue shipments.
• Providing a veneer of legitimate trade through which criminals circulate illicit goods across multiple jurisdictions, hindering financial institutions' ability to detect the original illicit source of funds.

Criminals, including organized crime groups or professional launderers, employ precious metals and gemstones to layer illicit funds by:

• Purchasing these commodities with proceeds of crime, taking advantage of minimal identification requirements or subjective pricing.
• Moving or transporting the assets across borders, misrepresenting their value or origin before reselling them as seemingly legitimate revenue, adding complexity for financial institutions attempting to trace the original source of funds.

Dealers in metals or gemstones are knowingly or unwittingly exploited by:

• Receiving large cash payments or non-transparent transfers from criminal buyers intending to convert illicit funds into tangible assets.
• Conducting transactions with irregular or unverifiable valuations, which obscure the true price or provenance and complicate financial institutions’ attempts to monitor fund flows.