What Happened

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The FATF referred to digital precious metals as a relatively new online money transfer value system that involves the exchange of options or the right to purchase an amount of precious metals at a specific price.

"The oldest and best known of the digital precious metals dealers is e-gold Ltd., which says it has almost 2 million accounts. ...Transactions involving digital precious metals have immediate finality, which may appeal to on-line merchants that must pay high credit card fees due to high fraud rates. Some precious metals dealers also allow users to maintain anonymous accounts. These traits are concerning to U.S. federal law enforcement agencies," FATF noted.

The task force identified the following as potential risk factors for digital precious metals:

· Anonymous accounts

· Anonymous funding and receipt of funds

· High or nonexistent account funding limits

· Offshore service provides may not observe laws in other jurisdictions

However, FATF also suggested several current and potential strategies to mitigate possible DPM risks:

· Identify account holder

· Maintain transaction record with payer and recipient