What Happens When a Dealer Has No AML Program

The four parts of a dealer AML program can look like paperwork. The enforcement record says otherwise. FinCEN, IRS examiners, and federal prosecutors have acted against bullion dealers, a refinery, and small retail jewelers, and in nearly every case the problem started with a program that did not exist, existed only on paper, or ignored where the gold came from.

What the rule requires

A business that meets the dealer definition in 31 CFR 1027.100 must have a written AML program, approved by senior management and available to FinCEN on request. Under 31 CFR 1027.210, the program must, at a minimum:

incorporate policies, procedures, and internal controls based on the dealer's own risk assessment, which must take into account its products, customers, suppliers, distribution channels, and geographic locations;
designate a compliance officer responsible for implementing the program effectively, keeping it updated, and making sure appropriate personnel are trained;
provide ongoing training for appropriate persons; and
provide for independent testing, with scope and frequency tied to the risk assessment, by someone other than the compliance officer or anyone who runs the program.

These four parts are required of every dealer by Part 1027. A retailer that crosses the purchase threshold needs a program covering only its purchases from persons other than dealers and other retailers. If you are not sure whether you are a dealer, start with Are You a Dealer Under the BSA?

Two other obligations show up in the cases below, and neither comes from Part 1027. Form 8300 applies to any trade or business that receives more than $10,000 in cash (26 U.S.C. 6050I and 31 CFR 1010.330). OFAC sanctions apply to every U.S. person. A business that falls outside the dealer definition still has both.

Why dealers draw attention

The Treasury Department's 2024 National Money Laundering Risk Assessment (February 2024) says precious metals, stones, and jewels are "an attractive money laundering vehicle due to their high value, high value to low mass ratio, stable pricing, anonymity, and exchangeability for other commodities," and calls the industry "a cash-intensive trade."

The Financial Action Task Force and the Asia/Pacific Group on Money Laundering, in their July 2015 report Money Laundering and Terrorist Financing Risks and Vulnerabilities Associated with Gold, called gold "an extremely attractive vehicle for laundering money." The report singles out two exposures that matter to U.S. dealers: cash-for-gold buying from the public, where sellers "do not have to prove that they own the second-hand gold presented for sale," and refining, where illegally mined gold "will often need to be smuggled to a refinery to be smelted." Both are purchase-side risks, and both appear in the cases that follow.

B.A.K. Precious Metals: a program on paper

On December 30, 2015, FinCEN assessed a $200,000 civil money penalty against B.A.K. Precious Metals, Inc., a Los Angeles wholesale dealer, together with its owner and its designated compliance officer. FinCEN called it its "first action against a dealer in precious metals, precious stones, or jewels." The business and both individuals admitted to willful violations.

According to FinCEN's assessment, B.A.K. had no AML program until 2011, five years after it opened, and adopted one only after IRS examiners told it to. When the examiners returned in 2013, the program had failed on all four parts:

Risk assessment and controls. B.A.K. began dealing with new gold customers whose transactions ranged from $14 million to $23 million, helping push its yearly volume to about $120 million by the end of 2012. It required no documentation or identification from many of them, and many purchase orders over $100,000 named only a business, with nothing on the individuals behind it.
Compliance officer. The designated officer did not implement the program, did not update it for the risks the examiners had identified, and did not make sure staff, including himself, were trained.
Training. None was conducted, although the program B.A.K. adopted after the 2011 exam required it.
Independent testing. None was conducted, for the same reason.

The undertakings ran through 2020: an external auditor, annual reports to FinCEN on the improved program, and annual certification of training attendance and results. A written program the business does not follow is treated much like no program at all, and the compliance officer can be named personally.

Newport Gold Post: told "multiple times"

On December 19, 2025, the husband-and-wife owners of several precious metals businesses in the downtown Los Angeles Jewelry District, and one of their companies, Newport Gold Post Inc., pleaded guilty in federal court in Los Angeles to conspiracy. One owner also pleaded guilty to filing a false tax return.

According to the IRS Criminal Investigation release, the businesses failed to file Form 8300, or filed incomplete or inaccurate ones, on more than 350 occasions involving at least $127,446,066 in cash. Examples in the release include a suitcase holding $140,000 in cash, half of it in heat-sealed packages, exchanged for 5,118 ounces of silver, and $100,000 in shrink-wrapped cash for 50 one-ounce gold bars with no identification requested and no questions about the source of the cash.

The defendants also admitted they failed to develop, implement, and maintain an AML program. IRS auditors had advised them "multiple times" to set one up. They admitted lying to IRS auditors and the FBI about whether they took cash at all.

The owners faced up to eight years and five years in prison, respectively, and the company up to five years' probation and a $500,000 fine. Sentencing was set for June 5, 2026. The court docket shows the sentencing was later continued, and as of late October 2026 we had found no published sentence.

The point for other dealers is the sequence. An IRS examiner who says "you need a program" is not a suggestion, and ignoring it is the fact that turns a compliance gap into evidence of willfulness.

Elemetal and NTR Metals: the supplier side

On March 16, 2018, the U.S. Attorney's Office for the Southern District of Florida announced that Elemetal, LLC, a U.S. gold refinery that did business as NTR Metals, had pleaded guilty to a single count of failing to maintain an adequate AML program. The stipulated facts covered August 2012 through November 2016.

This was a purchase-side failure. According to the release, Elemetal accepted gold from "gold collectors" and from third parties in foreign countries supplying gold on consignment, without adequate information on its source. Its own records allegedly showed patterns consistent with gold being smuggled across borders after law enforcement crackdowns, and customers using rotating front companies, without adequate follow-up.

Under the plea agreement, Elemetal agreed to recommend forfeiture of $15,000,000, five years' probation, an effective compliance and ethics program, and a ban on buying precious metals from outside the United States during probation. In a related case, United States v. Barrage, three former employees of NTR's Miami office were sentenced in January 2018 to 80, 72, and 90 months in federal prison.

The rule anticipated this risk. Section 1027.210 requires the risk assessment to consider suppliers and dealings with anyone other than established customers or sources of supply, and requires procedures for making reasonable inquiries and refusing suspicious transactions. A program that looks only at the customers you sell to misses the side of the business where Elemetal's problems began.

Small jewelers and Form 8300

Form 8300 cases do not require a large business. Two retail examples:

Kashi Jewelers, Pittsburgh. The owner pleaded guilty in January 2014 to failing to file Form 8300 after receiving about $12,500 in cash for a Breitling watch. The case grew out of an undercover IRS investigation into sales of high-end jewelry to known drug traffickers for cash. In May 2014 he was sentenced to three years' probation, the first six months on home detention, a $12,000 fine, and 100 hours of community service. About $933,000 in cash seized from the store's safes was forfeited.
Gold-N-Time and Jawa Jewelers, Independence, Missouri. On August 4, 2023, the owner of two mall jewelry stores pleaded guilty to evading cash reporting by not filing Form 8300. An undercover agent posing as a heroin dealer paid $21,100 in cash for custom jewelry and said he wanted no government forms filed. The owner later admitted he had never filed a Form 8300, despite multiple cash sales over $10,000. He agreed to a $21,100 money judgment and faced up to five years in prison.

Both cases turned on Form 8300, not Part 1027. A retail jeweler that never crosses the dealer purchase threshold still must file Form 8300 on every cash sale over $10,000.

What the penalties look like now

Civil BSA penalties are set by statute and adjusted for inflation in 31 CFR 1010.821. For penalties assessed on or after January 17, 2025:

Provision	Conduct	Maximum
31 U.S.C. 5321(a)(1)	Willful violation	The greater of the amount involved (capped at $286,184) or $71,545
31 U.S.C. 5321(a)(6)(A)	Negligent violation	$1,430 per violation
31 U.S.C. 5321(a)(6)(B)	Pattern of negligent activity	$111,308, in addition

For a willful AML program violation, the statute treats each day the violation continues, at each place of business, as a separate violation, so the per-violation figure understates the exposure. As of October 2026, the 2025 amounts remain in effect: OMB guidance told agencies there would be no 2026 cost-of-living adjustment, and FinCEN had not published a new table. Check 1010.821 before relying on these figures. Criminal penalties, as the cases above show, are separate.

What a defensible program looks like

None of these cases turned on a subtle legal question. Each involved a missing program part, or one that existed only on paper. A program that holds up has these features:

A risk assessment that covers the purchase side. Who sells to you, in what form (scrap, bars, coins, stones), from where, paid how, and how often you deal with sellers who are not established sources of supply. Write down the answers and the controls that follow from them, including when staff must ask questions and when they must walk away from a transaction.
A compliance officer with real authority and time. The rule makes this person responsible for effective implementation, updates, and training. B.A.K. shows that the title alone does not satisfy the rule, and that the person holding it can share the penalty.
Training that fits the job. Counter staff need to recognize the red flags listed in 1027.210(b)(1)(ii): unusual payment methods such as large amounts of cash, sellers who will not give complete information, requests for secrecy, and transactions that are unusual for that customer or supplier. Record who attended and what they were taught.
Independent testing on a risk-based schedule. Documented testing by someone outside the program, with findings tracked to completion. Annual testing is common, though the rule sets no fixed frequency.
Form 8300 and OFAC procedures alongside the program. They are separate obligations, but they belong in the same operating manual.

Industry standards point the same way, though none of them is the legal requirement for a U.S. dealer. LBMA's Responsible Gold Guidance, Version 9 (November 2021), which binds refiners on LBMA's Good Delivery List, requires know-your-counterparty and supply chain due diligence on gold-supplying counterparties, an ongoing training program for staff involved in the gold supply chain, and annual independent assurance. LBMA has a Version 10 out for consultation. The World Gold Council's voluntary Retail Gold Investment Principles (August 2020) ask retail gold providers to conduct "due diligence and ongoing monitoring of gold suppliers" and to "establish robust controls and compliance functions." A dealer outside those programs is not bound by them, but they show what counterparties may expect.

Keep the program to what the dealer rule requires and what your business actually does. Bank rules such as CIP, the CDD beneficial ownership certification, and mandatory SAR filing do not apply to dealers, and promising them in writing creates findings of its own; see Your AML Program Is Not a Bank's. For short answers on these rules, see the FAQ.