Objective
To ensure businesses understand who they are working with and establish appropriate checks to identify and mitigate risks related to money laundering, terrorist financing, sanctions evasion, and illicit business practices.
Why This Matters
KYC and AML measures are a legal requirement in many jurisdictions and form a foundational component of supply chain due diligence. KYC is particularly important in the jewellery sector, where complex supply chains may be exploited to launder money or disguise the origins of conflict-affected materials.
Key actions checklist
- Identify which counterparties require screening
Determine which business partners require KYC checks. At a minimum, include direct suppliers and buyers of jewellery materials. - Collect essential KYC data
Gather company registration documents, ownership structure, contact details, tax identification numbers, and a description of the business. - Screen for red flags
Check against sanctions lists, PEP lists, and high-risk jurisdiction lists. Document all results. - Risk-rate the counterparty
Determine low, medium, or high risk based on country of operation, ownership structure, and product category. - Implement enhanced due diligence for high-risk counterparties
Conduct further checks; seek additional documentation. Consider terminating the relationship if risk cannot be mitigated. - Maintain records and re-check periodically
Store KYC data securely and review periodically, especially when contracts are renewed. - Train relevant staff
Ensure employees in procurement, sales, and finance understand how to implement KYC and identify red flags.
Key Red Flags
- Limited knowledge of the industry
- Requests for unusual financial terms and conditions
- Lack of an established place of business or offices in a high-risk jurisdiction
- Unusually complex organisational structure
- Unexplained involvement of third parties in transactions
- Refusal to identify beneficial owners or controlling interests
- Use of cash in a non-standard manner