FinCEN Red Flags for Precious Metals Dealers (DPMS)
20+ verified BSA red flags for DPMS under 31 CFR § 1027. Every flag traces to FIN-2014-G001 or FinCEN precious metals advisories.
FinCEN Red Flags for Precious Metals Dealers: What Compliance Officers Need to Know
Dealers in precious metals, stones, and jewels (DPMS) are subject to BSA/AML requirements under 31 CFR § 1027. The DPMS industry faces unique money laundering risks because precious metals are highly portable, universally valuable, and easily convertible to cash across borders. Criminals exploit DPMS businesses for structuring, cross-border value transfer, sanctions evasion, and integration of illicit proceeds.
FinCEN's FIN-2014-G001 advisory and the precious metals section of the BSA examination manual provide specific guidance on DPMS red flags, including bullion structuring across multiple dealers, premium indifference, offshore vaulting requests, melting requests to destroy traceability, and shipments to conflict zones or sanctioned jurisdictions.
This page covers the most critical FinCEN red flags for precious metals dealers, including cash purchases in drug-tainted currency, wire purchases from shell companies, nominee trust structures, wash trading of metals, and gold-as-collateral schemes for sanctions evasion.
21+ Verified BSA Red Flags
Customer purchases gold or silver bullion with cash in amounts just below the $10,000 Form 8300 threshold, and returns on subsequent days to make similar purchases at the same or affiliated dealer.
Customer breaks a large cash purchase into multiple transactions across different precious metals dealers in the same geographic area, each transaction below the reporting threshold.
Customer purchases gold bullion and immediately requests the dealer to ship it to a third-party vault or storage facility in a different country, with no stated investment or business reason for the offshore storage.
Customer requests shipment of purchased precious metals to a jurisdiction under comprehensive OFAC sanctions, using an intermediary freight forwarder in a non-sanctioned country to conceal the final destination.
Business customer purchases large volumes of gold using funds wired from a sanctioned jurisdiction, then requests the metals be held in a third-party vault and used as collateral for a letter of credit in a non-sanctioned country.
PEP purchases large quantities of gold bullion with funds wired from a government-owned bank account, and requests discreet shipping to a private vault with no stated investment rationale.
Customer brings large quantities of cash in small denominations ($20 and $50 bills) to purchase gold coins, with the cash wrapped in rubber bands and stored in a duffel bag rather than a bank envelope.
Customer consistently pays premiums well above the spot price for bullion or numismatic coins, showing no interest in the investment value and asking only about resale liquidity and anonymity.
Customer wires funds from an account in a high-risk jurisdiction to purchase precious metals for physical delivery, with no prior relationship with the dealer and no explanation for the international purchase.
Corporate customer wires funds for a large bullion purchase from an account that receives frequent unexplained cash deposits, suggesting the wire is a layering step in a cash conversion scheme.
Customer provides identification that appears tampered with or forged, or refuses to provide a government-issued photo ID for a cash purchase above the dealer’s internal threshold.
Trust or LLC wires funds for a precious metals purchase but the beneficial owners are concealed, and the trustee or manager is a professional nominee with no independent relationship to the metals.
More AML Red Flags by Industry
Common Questions About FinCEN Red Flags for Precious Metals Dealers
What FinCEN red flags apply to precious metals dealers?
DPMS dealers must watch for: gold purchases in amounts just below the $10,000 Form 8300 threshold; customers buying across multiple dealers on the same day; large cash volumes in small-denomination bills typical of drug proceeds; requests to ship bullion to offshore vaults with no business purpose; melting requests to destroy coin serial numbers; wires from high-risk or sanctioned jurisdictions; and business customers with no legitimate commercial need for precious metals.
Do precious metals dealers have to file SARs and Form 8300?
Yes. DPMS dealers must file Form 8300 for cash transactions of $10,000 or more (or related transactions exceeding $10,000 in aggregate). They must also file SARs for suspicious transactions regardless of amount. The $10,000 threshold applies to the total cash received in a single transaction or related transactions within a 12-month period from the same buyer.
How do criminals use precious metals for money laundering?
Criminals launder money through precious metals by: purchasing gold with drug cash and melting it to destroy traceability; buying bullion and immediately shipping it to offshore vaults in secrecy jurisdictions; using gold as collateral for letters of credit in non-sanctioned countries while the funds originate from sanctioned jurisdictions; conducting wash trades to create false paper trails; and purchasing through shell companies with concealed beneficial owners to hide the true source of funds.
What is a "melting request" and why is it a red flag?
A melting request occurs when a customer asks the dealer to melt down purchased gold coins or bars into untraceable granules or dust, with no legitimate manufacturing or industrial purpose. This destroys the serial numbers, mint marks, and other traceable features of the bullion, making it impossible for law enforcement to trace the metal back to the original purchase. FinCEN identifies melting requests as a primary DPMS money laundering red flag.
What are sanctions evasion red flags for precious metals dealers?
Sanctions evasion red flags for DPMS include: wires for bullion purchases originating from sanctioned jurisdictions; requests to ship precious metals to jurisdictions under OFAC comprehensive sanctions; customers using gold as collateral for credit in non-sanctioned countries while the purchase funds come from sanctioned sources; and business entities purchasing large volumes with no verifiable operations beyond the metals transaction. The 2022 Russia/BIS Export Evasion Advisory specifically warns about precious metals used for sanctions circumvention.
More BSA Red Flags & Compliance Resources
FinCEN Red Flags for Auto Dealers
15+ verified BSA red flags for auto dealers under 31 CFR § 1027 and FIN-2009-G002. Every flag includes the exact SAR checkbox and source cit...
AML Red Flags by Industry
427+ verified BSA red flags organized by 13 regulated industries. Every red flag traces to a FinCEN advisory, FFIEC manual, or federal regul...
BSA Red Flags List
427+ verified Bank Secrecy Act red flags covering every compliance category, industry, and risk level. Every flag traces to an official FinC...
AML Red Flag Library
Browse all 427+ verified BSA red flags across 13 regulated industries. Searchable by keyword, filter by category, industry, or risk level.
Explore related AML-BSA compliance resources
Browse All 20+ DPMS Red Flags
Access the complete AML Red Flag Library. Filter by precious metals-specific categories including structuring, offshore shipments, and sanctions evasion.