Precious Metal Traders Must Obtain Approval Before Dealing with PEPs

The tax authorities have instructed traders in gemstones and precious metals to strictly comply with legal and regulatory requirements governing dealings with politically exposed persons (PEPs), requiring them to obtain prior authorisation before establishing or continuing a business relationship with such individuals. The directive was issued in a new explanatory notice by the Directorate General of Taxes (DGI), which is responsible for supervising and overseeing the sector in matters relating to the prevention and combating of money laundering, terrorist financing and the financing of the proliferation of weapons of mass destruction. According to correspondence issued by the Directorate General of Taxes, which operates under the Ministry of Finance and was obtained by Echorouk, the notice is addressed to gemstone and precious metal traders. It clarifies the rules governing prior authorisation when dealing with clients classified as politically exposed persons, also referred to as politically exposed individuals presenting a heightened risk. The clarification is based on the provisions of Article 7 bis 1 of Law No. 05-01, dated 6 February 2005, on the prevention and combating of money laundering and terrorist financing, as amended and supplemented, as well as Article 15 of the annex to the decision dated 3 July 2025, establishing the framework for preventing and combating money laundering, terrorist financing and the financing of the proliferation of weapons of mass destruction among traders in gemstones and precious metals. The DGI explained that the purpose of the notice is to clarify how the legal and regulatory provisions governing the identification of politically exposed persons and business dealings with them should be applied, particularly the requirement to secure prior authorisation before establishing or maintaining a business relationship. The clarification was deemed necessary because the relevant provisions differ in their wording regarding the authority from which prior approval must be obtained. The DGI said it was therefore necessary to explain how each provision should be implemented within its respective scope, while respecting the hierarchy of legal norms and maintaining all other preventive obligations established by law and regulation. It stressed that this interpretation must neither undermine the substance of any legal provision nor extend its application beyond its intended limits. Legal hierarchy determines who must grant prior authorisation Regarding the authority responsible for granting prior authorisation, the DGI noted that the final paragraph of Article 15 of the annex to the decision governing gemstone and precious metal traders requires regulated entities, depending on the circumstances, to obtain approval from either the specialised body or the Directorate General of Taxes, in its capacity as the supervisory authority, before establishing or continuing a business relationship. However, the final paragraph of Article 7 bis 1 of amended and supplemented Law No. 05-01 stipulates that regulated entities must obtain authorisation from the decision-making body of the legal entity before entering into or maintaining such a relationship. This difference in wording was the immediate reason for issuing the explanatory notice, the tax authorities said. Invoking the principle of the hierarchy of legal norms, the DGI stressed that regulatory provisions must be applied in a manner consistent with the law, which takes precedence over subordinate regulations. Accordingly, where a regulated entity is a legal person with an established decision-making body, the prior authorisation required under Article 7 bis 1 must be issued by that body’s decision-making authority, in accordance with the law, the entity’s articles of association and its internal procedures. The DGI further emphasised that Article 15 of the annex to the aforementioned decision must not be interpreted as allowing approval from the specialised body or the Directorate General of Taxes to replace the authorisation legally required from the legal entity’s own decision-making body. Nor can either of these approvals be treated as a substitute for that internal authorisation. In other words, approval from the supervisory authority does not waive or replace the internal authorisation required by law. Individual traders must assume responsibility themselves For traders operating as natural persons on an individual basis, without relying on other individuals authorised to make decisions or act on their behalf, the DGI clarified that the trader must personally grant the required approval. This is because the individual trader is directly responsible for decision-making and for managing the money-laundering and terrorist-financing risks associated with the business relationship in question. The tax authorities also stressed that the requirement to obtain prior authorisation or approval applies in all cases before a business relationship is established or continued, in accordance with the scope of the legal and regulatory provisions applicable to each regulated entity. Consequently, prior authorisation is a mandatory prerequisite to any such business relationship, rather than a mere administrative formality to be completed afterwards. The DGI also made clear that this clarification does not exempt regulated entities from complying with the remaining provisions of Article 15 of the annex to the decision or any other legal and regulatory obligations that are consistent with the law. All other requirements remain fully applicable whenever their conditions are met. These include identifying politically exposed persons, their family members and individuals with whom they have close personal or business ties, in accordance with the legally established definition and applicable regulations. This obligation requires traders to exercise due diligence when identifying customers, assessing the level of risk they may pose and implementing the necessary preventive measures both before establishing a business relationship and throughout its duration. The objective is to prevent the misuse of this sensitive sector, which deals in high-value assets that are relatively easy to transport and conceal, for money laundering, terrorist financing or the financing of the proliferation of weapons of mass destruction.