Jewellers See Red on Plans to Put Them Under Money Laundering Act

The Centres move to include gem and jewellery sector under the Prevention of Money Laundering (Amendment) Bill, 2011(PMLA), has dampened the demand for bullion and jewelleries ahead of the Union Budget. Though there is an apprehension among the gold traders that the budget may see another round of import duty hike, there is hardly any move by the jewellers for restocking gold as they are nervous about how the PMLA will affect their business. The PMLA has come into effect for the gem and jewellery sector from February 15. The bill has paved the way for a more thorough compliance and reporting. The PMLA Bill has introduced the concept of reporting entity, whereby any person carrying out business in the notified sectors / designated activities is required to ensure KYC norms in respect of his clients. The Amendment Bill enlarges the scope and applicability of the Principle Act (2002) and places greater responsibility on the management in terms of compliance and reporting. We have heard that according to the PMLA Bill, both the seller and buyer who deal with gold worth Rs 50,000 will have to furnish identity proof. This is a matter of concern to us. We will have to discuss the issue with the Union finance minister after the budget, said Satish Chand Singhvi, president of Delhi Jewellers Association. The gem and jewellery sector joins banking, financial services and insurance (BFSI sector), real estate, and entertainment (games of chance) sectors, which have also been included under the Bill. We have not yet received any clarification from the finance ministry on the PMLA issues. But even for a small amount like Rs 50,000 one has to furnish identity, then it will become difficult for the jewellers to survive. This is not the right way to curb import of gold, said Bablu De, working president, Swarna Shilpa Bachao Committee. The announcement of the government to include jewellery sector in the Bills ambit has already affected the mood in Mumbais Zaveri Bazar. Prithviraj Kothari, director of RiddiSiddhi Bullion, said: We are extremely disturbed over the inclusion of gem and jewellery sector under the PMLA. The mood is very depressed here and there is hardly any demand in the market. People are also waiting for the budget announcements. No body is in a mood to pile up inventory. Jewellers are not waiting for the fineprint of the PMLA before they embark on a nationwide agitation. We will discuss the matter once we get the fineprint and accordingly we will decide our future course of action.

Economic Times, New Delhi, 27-02-2013