Gold trade in financial squad cross hairs

The hundreds of gold traders and pawn shops that have sprung up across Greece over the past three or four years are rapidly making it into the police?s crime bulletins on an almost daily basis.

Behind many of the garish store signs advertising ?I buy gold,? found on almost every main street in every neighborhood in the country, what is abundantly clear is that laws and regulations stay at the door, as authorities in Greece find themselves stymied by the massive trade in gold and unable to get a grip on the number of such stores that are cropping up or the manner in which they go into business.

The Bank of Greece, which is responsible only for gold traded for investment purposes (in the form of coins, slabs and ingots), has been taken by surprise by the surge in the domestic gold market, but there is little it can do as the street trade in gold is beyond its jurisdiction. What is under its jurisdiction is the ?protection of credit,? and according to the interpretation of this task in Law 3601 from 2007, this also includes pawn shops, as it is the duty of the Bank of Greece to issue licenses only to certified professionals.

The people actually practising the trade, however, and even those doing so legally, evoke a regulation issued by the police in 1996 that allows the Greek police to issue licences for shops that buy or trade in gold or act as pawnbrokers, differentiating between those who hold valuables for one month and those who can hold them for up to six months.

Even so, the number of licenses issued by the police in recent years in no way justifies the number of stores that are operating in the country, with a recent survey showing that in Attica alone there are currently more than 4,500 establishments trading in gold.

Even more obscure than the actual number of such stores operating in Greece is the manner in which they set up shop and do business, as it appears that the only thing most proprietors do is declare their business with the tax authority. The police, meanwhile, appear to conduct spot checks only on the establishments it has on its list.

The fact is that the majority of these new pawnbrokers rarely follow the rules, not even in a rudimentary manner, such as keeping the item for the agreed period in its original condition, informing the customer prior to a sale or maintaining a record of the item the customer has handed over.

The anarchy that prevails in this newly booming sector also raises questions as to whether the standards of the gold trade are being adhered to when the precious metal is sold or purchased in the form of valuables or melted gold, and whether certificates of quality are issued (and if so, whether they are accurate).

Last Monday, Finance Minister Filippos Sachinidis presented Parliament with evidence showing that 674 violations were recorded at the 58 of the 93 businesses audited by the Financial Crimes Squad (SDOE) recently. In 2011, SDOE conducted 1,700 spot checks in which it recorded 1,200 violations.

Responding to a question by two deputies of the Popular Orthodox Rally (LAOS) party, Kyriakos Velopoulos and Angelos Kolokotronis, Sachinidis said that the ministry is exploring issuing a framework by ministerial decree to improve the way transactions at pawnshops are recorded in order to better monitor their activities and ensure that all transactions are properly taxed.

Meanwhile, police reports are increasingly featuring cases of large shipments of gold and silver being intercepted as they leave Greece for other countries without being accompanied by the proper documentation.

The long list of sins that prevail in the gold market is compounded by complaints showing a trend of rising crime related to the businesses, whether these crimes are thefts or even more serious ones such as kidnappings that have been linked to people active in the sector.