GJC Chairman, Saiyam Mehra, has clarified the applicability of PMLA on jewellers, as conveyed by the Directorate General of Audit Indirect Taxes & Customs. The clarification covers the dates, cash transactions, client due diligence, and registration requirements for dealers in precious metals and stones.
Dear Jewellers,
In light of the updated Anti-Money Laundering (AML) Standards and Combating the Financing of Terrorism (CFT) guidelines issued by the government on 17.02.2023 for Dealers in Precious Metals & Precious Stones, we understand that there has been confusion and panic amongst jewellers regarding the applicability of PMLA. The GJC, along with its legal team, approached the Directorate General of Audit Indirect Taxes & Customs, who is the regulator for PMLA for Dealers in Precious Metals & Precious Stones, and received clarification on the following points:
Is PMLA applicable to jewellery manufacturers, wholesalers and retailers who sell jewellery to retail customers, or only to bullion dealers?
Reply: Yes, PMLA is applicable to jewellery manufacturers, wholesalers and retailers who sell jewellery to retail customers.
If the answer to the above question is affirmative, from which date is PMLA applicable?
Reply: As per the Directorate General of Audit Indirect Taxes & Customs, the Act is applicable from the date of publication of the revised guidelines, i.e., 17th Feb 2023.
As per the Notification dated 20th December 2020, does it mean that dealers in precious metals and precious stones, if they do not engage in transactions in cash above Rs. 10 lakhs, they will not be treated as Reporting Entities?
Reply: Yes, if dealers in precious metals and/or precious stones do not engage in cash transactions above Rs. 10 lakhs, they will not be treated as Reporting Entities.
Are jewellers supposed to register with the FIU as reporting entities even if they do not engage in cash transactions above Rs. 10 lakhs?
Reply: If jewellers do not engage in cash transactions above Rs. 10 lakhs, they need not register with the FIU.
The limit of Rs. 10 lakhs and the limit of Client Due Diligence of Rs. 50,000 are applicable to Reporting Entities from the year 2013. As dealers in precious metals and precious stones have been notified as Reporting Entities, does it mean that they have to follow Client due Diligence irrespective of whether they engage in cash transactions above Rs. 10 lakhs?
Reply: If a dealer of precious metals engages in cash transactions above Rs. 10 lakhs, only then they will be considered as a reporting entity. If a jeweller is not a reporting entity, then the limit of Rs. 50,000 for Client due diligence is not required.
The GJC has requested an increase in the limit of Rs. 50,000 to Rs. 2 lakhs, which is in line with the limit prescribed under the Income Tax Act.
We request jewellers not to get panicked with the rumours about the new KYC limit of Rs. 50,000. Our legal team is in touch with the highest authorities and shall keep you updated with the latest changes. Please consult your legal advisor and make decisions accordingly.
Best Regards,
Saiyam Mehra
Chairman
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