Singapore continues to be a prime destination for multinational companies looking to establish retail operations in Asia. However, understanding the legal framework governing various sectors of the retail industry is critical for success. This article will explore the key requirements that dealers of jewellery or other products comprising precious stones and metals must navigate in order to operate in compliance with Singapore laws. For businesses seeking to sell jewellery in Singapore, knowing the legal framework is critical in ensuring that those businesses avoid costly penalties and operate successfully in this dynamic market.
Before embarking on the journey of selling jewellery in Singapore, it is essential to first establish a legal foundation for one’s business. This step would include selecting the appropriate business structure - whether it is a sole proprietorship, partnership or private limited company.
Based on our experience, most jewellery businesses opt to incorporate a Singapore private limited company due to its advantages in terms of limited liability, tax benefits, and greater credibility with customers and suppliers. The following are some points to note on the process of incorporating a Singapore private limited company:
Now that the company has been incorporated, the next step to take, before any item is marketed or placed for sale, is to consider whether the company will need to obtain any licensing or registration to carry out the intended retail activity. In this case, the intended retail activity is the sale of jewellery or other products comprising precious stones and metals, and such activity may fall within the scope of the Precious Stones and Precious Metals (Prevention of Money Laundering and Terrorism Financing) Act 2019 (PSPM Act).
In accordance with the PSPM Act, a person must not act as, or hold himself out to be, a person who carries on a business of “regulated dealing”, without first being registered under the PSPM Act as a “registered dealer”. The PSPM Act defines “regulated dealing” as doing any of the following:
As the list of regulated dealing includes the sale (or offering for sale) of any “precious stone”, “precious metal” or “precious product”, it is important to understand what falls within the scope of “precious stone”, “precious metal” and “precious product”.
For the purposes of the PSPM Act, the term “precious metal” refers to any gold, silver, platinum, iridium, osmium, palladium, rhodium, ruthenium and an alloy with at least two per cent. (2%) in weight of any of the metals mentioned. The term “precious stone” refers to any diamond, sapphire, ruby, emerald, jade and pearl.
For any business looking to sell jewellery and other products comprising precious stones and metals, the important definition is that of “precious product”. Under the PSPM Act, the term “precious product” means any jewellery, watch, apparel, accessory, ornament or other finished product:
but excludes:
A person who acts as, or holds himself out to be, a “regulated dealer” but who has not been registered under the PSPM Act shall be guilty of an offence and shall be liable on conviction to a fine not exceeding S$75,000 or to imprisonment for a term not exceeding three (3) years or to both. In the case of a continuing offence, the person shall be liable to a further fine not exceeding S$7,500 for every day or part of a day during which the offence continues after conviction.
Below is an overview of the registration process as a regulated dealer under the PSPM Act:
As may be seen from the above, the sale of jewellery and other precious products in Singapore is governed by a range of legal requirements, including those related to business registration. Given the consequences and the heightened scrutiny on money laundering, terrorism financing and proliferation financing, it is crucial for retail businesses in this sector to ensure compliance with all applicable laws and regulations in Singapore before embarking on the sale of jewellery or other products comprising precious stones and metals. When in doubt, it is highly recommended to seek professional legal advice to navigate the legal landscape effectively and mitigate potential risks.
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