The U.S.A. PATRIOTS Act, passed by Congress in response to the events of September 11, requires all "financial institutions" to institute anti-money laundering programs which guard against exploitation for the purpose of financing criminal enterprises. Many diamantaires and jewelers may not be aware that under a separate U.S. federal law, many non-traditional financial entities are considered financial institutions, including "a dealer in precious metals, gemstones and jewels." The fact that diamond dealers are, at least under U.S. law, seen as "financial institutions" may have considerable ramifications for the industry.

In order to comply with the law, all entities covered by the law are required to develop internal policies and procedures, designate compliance officers, train employees and institute independent audit functions to test the programs. A group of industry organizations, under the leadership of Lawyer Cecilia Gardner, the executive director of the Jewelers Vigilance Committee, has submitted to the U.S. Treasury a practical and credible program of minimum standards for anti-money laundering programs in our industry.

The program calls for businesses to assess their relative risk for exposure to exploitation, and then to implement institutionalized programs to address those risks, including identifying business partners when appropriate. It is considered far more preferable to self-regulate and suggests regulations, than to wait for the U.S. government to impose the rules on the industry. The proposals make sense and every industry player - also firms not operating in the United States - should implement them. The fact that diamond and jewelry companies can come under the same scrutiny, as banks is, in a way, frightening. The only way to play it safe is to follow basically the same rules as financial institutions. Scary - but not impossible.