Are Gold Dealers Regulated?

Gold dealers are somewhat regulated, yet most fall outside of the SEC and CFTC’s purview; thus leaving states and cities to address any instances of fraud when necessary.

Bullion dealers must comply with KYC and AML regulations in order to avoid heavy fines, this regulation covering any dealer who sells or buys bullion.


Bullion dealers must comply with various reporting requirements that ensure market transparency and meet tax and anti-money laundering regulations, which may differ by type of metal traded and require detailed record-keeping practices.

Bullion dealers must abide by these regulations to maintain customer trust and prevent reputational harm, which many of the top US gold dealers already are doing by adhering to them fully and providing their customers with peace of mind knowing that they’re dealing with responsible dealers.

Unfortunately, federal enforcement of precious metal trading has been lax; leaving state departments such as that in Santa Monica to take actions against unreliable dealers. Furthermore, CFTC’s limited resources and focus on futures trading limit their ability to take legal action against physical precious metal dealers.

Know Your Customer (KYC)

Gold dealers perform one of their primary roles by conducting identity verification for buyers of bullion trade markets, helping to prevent fraud and maintain transparency while also mitigating money laundering and terrorist financing risks that plague precious metals markets.

A quality bullion dealer should conduct KYC and AML checks to identify potential fraudsters while keeping their customers’ personal details safe from compromise. This helps prevent crimes as well as enable law enforcement agencies to effectively track and investigate suspicious activity more efficiently.

Physical gold may not qualify as an investment contract under securities law, yet still must be subject to state sales and use taxes. Dealers are also obliged to report customer transactions voluntarily to FinCEN (Financial Crimes Enforcement Network).

Anti-Money Laundering (AML)

AML requirements aim to prevent money laundering, terrorist financing and other illegal activities in the bullion industry. They involve verifying customer identities, assessing risk profiles and monitoring transactions to detect suspicious activity. AML regulations also mandate dealers to create and implement an AML program with training and recordkeeping requirements in place.

While gold dealers experience little regulatory oversight, Registered Investment Advisers (RIAs) must abide by tighter standards. A 2019 SEC rule lifts a ban on celebrity endorsements and client testimonials for RIA firms while mandating disclosure and compliance regulations if these methods are utilized by these firms.

CFTC and SEC regulators have taken legal action against precious metals dealers who engage in fraudulent behavior, including Safeguard Metals of Los Angeles which was accused of defrauding senior investors out of over $185 million through undisclosed markups on gold and silver coins sold at oversold prices. Fisher Capital from Los Angeles advertises on conservative political radio shows hosted by Sean Hannity and Mark Levin to draw in new customers.


Bullion trading markets are subject to numerous laws and regulations, so it’s essential that before investing in precious metals you understand these policies and regulations. Look for gold dealers that are open about pricing, fees and policies – make sure they maintain physical presence as well as follow industry standards rigorously.

Some bullion dealers employ marketing strategies that bypass government oversight. Safeguard Metals in Los Angeles was accused of defrauding its customers out of $67 million by advertising on conservative political radio shows such as Sean Hannity and Mark Levin’s shows in order to attract customers with undisclosed premiums and fees.

Physical gold does not fall under the jurisdiction of either the Securities and Exchange Commission (SEC) or Commodity Futures Trading Commission (CFTC), but instead falls under various state departments that oversee mining companies or niche gold businesses, as well as tax and government policy decisions that could alter its price. With an alphabet soup of agencies regulating bullion trade, this helps prevent fraudsters and protect investors against unscrupulous dealers.

Raymond Banks Administrator
Raymond Banks is a published author in the commodity world. He has written extensively about gold and silver investments, and his work has been featured in some of the most respected financial journals in the industry. Raymond\\\'s expertise in the commodities market is highly sought-after, and he regularly delivers presentations on behalf of various investment firms. He is also a regular guest on financial news programmes, where he offers his expert insights into the latest commodity trends.

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