AML Programme Guide for Precious Metals Dealers

Precious metals and stones dealers are among the highest-risk business categories in Australia's expanded AML/CTF framework. From 1 July 2026, dealers who buy, sell, swap, or exchange precious metals (gold, silver, platinum) or precious stones (diamonds, rubies, sapphires) must enrol with AUSTRAC, implement a formal AML/CTF programme, and apply rigorous customer due diligence. With 62 days until the Tranche 2 deadline, understanding exactly what your programme needs to cover is no longer optional.

Why Are Precious Metals and Stones Dealers Considered High Risk?

The precious metals and stones sector sits at the intersection of several money laundering typologies that AUSTRAC and the Financial Action Task Force (FATF) have consistently flagged as serious concerns. Four structural features make this industry particularly vulnerable:

• High value in small volume. A handful of diamonds or a single gold bar can represent hundreds of thousands of dollars — making these assets ideal for layering illicit funds without triggering obvious scrutiny.
• Cash intensity. Many transactions in the sector are conducted in cash, obscuring the origin of funds and the identities of the parties involved.
• Portability and anonymity. Precious metals and stones are easily transported across borders and can change hands multiple times, making the chain of ownership difficult to reconstruct.
• Trade-based money laundering risk. Over- and under-invoicing of precious metals is a well-documented method used to move value between jurisdictions without detection.

These factors explain why Australian regulators have moved to bring this sector under the AML/CTF Act 2006 as part of the Tranche 2 reforms.

Who Must Comply Under the Tranche 2 Reforms?

The Tranche 2 obligations apply to dealers in precious metals and precious stones — a category that captures a wider range of businesses than many operators expect:

• Jewellers who buy or sell precious metals or gemstones
• Bullion dealers and gold traders
• Pawnbrokers dealing in jewellery or precious metals
• Antique dealers who regularly trade in items containing precious metals or stones
• Auction houses that sell jewellery, bullion, or precious gemstones

If your business provides any of these services — even as a secondary activity alongside other retail — you will be required to enrol with AUSTRAC and comply with the AML/CTF Act 2006 from 1 July 2026. Sole traders and small businesses are not exempt.

What Must an AML/CTF Programme Include?

Under the AML/CTF Act 2006, a compliant programme must be documented, risk-based, and kept up to date. For precious metals and stones dealers, the programme must address the following elements:

1. ML/TF risk assessment. A written assessment of the money laundering and terrorism financing risks your business faces, taking into account your customer base, transaction types, geographic exposure, and delivery channels.
2. Customer due diligence (CDD) procedures. Clear policies for identifying and verifying customers before — or as soon as practicable after — providing a designated service.
3. Ongoing due diligence. Procedures for monitoring customers and transactions throughout the relationship, with heightened attention on higher-risk customers or unusual patterns.
4. Enhanced due diligence (EDD) triggers. Defined criteria for when to apply additional scrutiny — such as for politically exposed persons (PEPs), high-value cash transactions, or customers from high-risk jurisdictions.
5. Suspicious matter reporting (SMR) procedures. A clear process for identifying and reporting suspicious matters to AUSTRAC, including staff guidance on red flags specific to your industry.
6. Record-keeping obligations. Retention of customer identification documents and transaction records for a minimum of seven years.
7. Staff training. Regular, documented training ensuring all relevant staff understand their obligations and can recognise the warning signs of money laundering.

A compliant AML/CTF programme is a living document — it must be reviewed and updated as your business evolves and as new AUSTRAC guidance is issued.

How Should Dealers Conduct Customer Due Diligence?

Customer due diligence is the backbone of any AML/CTF programme. For precious metals and stones dealers, the standard approach involves:

• Identifying the customer — collecting the full legal name, date of birth (for individuals), and registered business name and ABN (for companies).
• Verifying identity — using reliable, independent source documents such as a driver's licence, passport, or Australian Business Register extract.
• Understanding the purpose of the transaction — particularly for high-value or unusual purchases, documenting why the customer is transacting and the stated source of funds.
• Identifying beneficial owners — if a customer is transacting on behalf of a company, trust, or association, you must identify the individuals who ultimately own or control that entity.

For transactions involving significant sums — or where the customer is a PEP, a non-resident, or has links to a high-risk jurisdiction — enhanced due diligence is required. This means going beyond standard verification to understand the source of wealth and applying closer ongoing monitoring of the relationship.

What Transactions Must Be Reported to AUSTRAC?

Precious metals and stones dealers will be subject to two key reporting obligations once Tranche 2 takes effect:

1. Suspicious matter reports (SMRs). You must submit an SMR to AUSTRAC as soon as practicable — and no later than three business days after forming a suspicion — where you suspect a transaction is related to money laundering, terrorism financing, or other serious criminal activity. Suspicion does not require certainty; a reasonable basis is sufficient to trigger the obligation.
2. Threshold transaction reports (TTRs). Cash transactions of $10,000 AUD or more (or the foreign currency equivalent) must be reported to AUSTRAC within 10 business days. This is particularly relevant in a sector where large cash payments are not uncommon.

Note that tipping off a customer that an SMR has been filed — or is under consideration — is expressly prohibited under the AML/CTF Act 2006.

How Can Dealers Get Compliant Before 1 July 2026?

With just 62 days to the deadline, dealers who haven't started their compliance journey need to move quickly. A practical step-by-step approach:

1. Enrol with AUSTRAC. This is the first mandatory step and should be completed immediately if not already done.
2. Conduct a ML/TF risk assessment. Document the specific risks that apply to your business, your customer profile, and the types of products you deal in.
3. Draft your AML/CTF programme. Using your risk assessment as the foundation, build out your CDD procedures, EDD triggers, reporting workflows, and staff training plan.
4. Implement your CDD processes. Update your customer onboarding to capture the required identification and verification information from new — and, where required, existing — customers.
5. Train your staff. Every team member who deals with customers or handles transactions needs to understand their obligations and be able to recognise the red flags relevant to your industry.
6. Appoint a compliance officer. Designate a responsible individual to oversee the programme, maintain records, and be the point of contact for AUSTRAC matters.

Platforms like AMLify are purpose-built for Tranche 2 reporting entities and can help dealers build a compliant programme, automate CDD workflows, and maintain audit-ready records — without needing to hire a dedicated compliance team. If you're a jeweller, bullion dealer, or pawnbroker looking for a tailored solution, explore how AMLify supports the precious metals and stones industry.

Key Takeaways

• Precious metals and stones dealers must comply with the AML/CTF Act 2006 from 1 July 2026 — the 62-day countdown has already started and enrolment with AUSTRAC is the immediate first step.
• The sector is classified as high risk due to cash intensity, asset portability, and vulnerability to trade-based money laundering — making a robust, documented programme essential.
• A compliant AML/CTF programme must be written, risk-based, and regularly reviewed — covering CDD, EDD, SMR procedures, record-keeping, and staff training.
• Customer due diligence must be applied at onboarding and maintained on an ongoing basis, with enhanced scrutiny required for PEPs, large cash transactions, and high-risk jurisdictions.
• Two key AUSTRAC reporting obligations apply: suspicious matter reports (within three business days of forming a suspicion) and threshold transaction reports for cash transactions of $10,000 or more.

Frequently Asked Questions

Q: Do all jewellers need to register with AUSTRAC under Tranche 2?

Yes. Any business that buys, sells, or exchanges precious metals or precious stones as part of its ordinary commercial activities will be classified as a reporting entity under the amended AML/CTF Act 2006 and must enrol with AUSTRAC by 1 July 2026. This applies equally to sole traders, small boutique jewellers, and large retail chains. The size of your business does not determine whether you are in scope — only the nature of the services you provide.

Q: What counts as a 'precious metal' for the purposes of the AML/CTF Act?

For AML/CTF purposes, precious metals include gold, silver, and platinum group metals — such as palladium, rhodium, iridium, osmium, and ruthenium — in any physical form, including bars, coins, jewellery, and unrefined material. Precious stones include diamonds and coloured gemstones such as rubies, sapphires, and emeralds. If you are uncertain whether your specific products bring you within scope, seek independent legal advice.

Q: What happens if a precious metals dealer fails to comply with Tranche 2?

Non-compliance with the AML/CTF Act 2006 can result in significant civil penalties, enforceable undertakings, compulsory external audits, and — in the most serious cases — criminal prosecution. AUSTRAC has demonstrated a willingness to take strong enforcement action against reporting entities that fail to meet their obligations, including those with systemic or persistent failings. Failing to enrol with AUSTRAC, failing to maintain a compliant programme, and failing to submit required reports are each treated as separate offences.

Q: When does enhanced due diligence apply to precious metals transactions?

Enhanced due diligence (EDD) is required when a customer or transaction presents heightened risk. For precious metals and stones dealers, common EDD triggers include: the customer is a politically exposed person (PEP) or closely associated with one; the transaction involves a large cash payment; the customer is based in or the transaction has links to a high-risk jurisdiction as designated by FATF; or the transaction pattern is inconsistent with the customer's stated purpose or profile. Your AML/CTF programme must define specific EDD triggers relevant to your business.

Q: Can compliance software help a small precious metals dealer meet its obligations?

Yes. Purpose-built compliance platforms like AMLify can significantly reduce the administrative burden of AML/CTF compliance by automating customer identity verification, maintaining digital records, generating prompt reminders for ongoing due diligence, and producing audit-ready reports. For small dealers without a dedicated compliance team, software support can be the difference between a programme that works in practice and one that exists only on paper.

This is general information only and not a substitute for legal advice.