To become a licensed gold dealer, you register your business with the state, register with the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) as a money services business once your activity crosses the federal threshold, build a written anti-money laundering program, and obtain whatever precious metals or secondhand dealer license your state or city requires. The federal threshold that pulls you into most of these obligations is $50,000 in purchases and $50,000 in sales of covered goods during a calendar year. Compliance is where this business lives or dies: several of the federal requirements carry felony penalties, and some state regulators can shut you down on the spot for operating without a permit.
Who the Federal Rules Apply To
Federal law defines a precious metals dealer as a person engaged in buying and selling covered goods — gold, silver, platinum, palladium, precious stones, and jewels — who, during the prior calendar or tax year, both purchased more than $50,000 in covered goods and received more than $50,000 in gross proceeds from selling them.1eCFR. 31 CFR 1027.100 – Definitions Both prongs have to be met. If you only buy gold without reselling it, or only sell inherited metal without purchasing inventory, you’re outside the definition. A retailer whose purchases from non-dealers exceed the $50,000 mark picks up some of these obligations, but only on the purchasing side.
Once you cross the threshold, FinCEN treats you much like a bank or a money transmitter. That brings three federal obligations: registering as a money services business, writing an anti-money laundering program, and filing ongoing transaction reports. The sections below walk through each.
One boundary worth naming: being under $50,000 on either side does not exempt you from state licensing, from IRS cash-reporting on Form 8300, or from local secondhand dealer rules. It only means the FinCEN MSB framework hasn’t captured you yet.
Set Up the Business Entity First
Nothing else can be filed until the business legally exists. Pick an entity structure before you apply for licenses, because the choice affects liability exposure, tax treatment, and how regulators view you. A sole proprietorship is simplest but gives no liability protection; most dealers form an LLC or corporation to separate personal assets from business risk. Register the entity with your state’s secretary of state.
Then get an Employer Identification Number from the IRS, which is free to obtain online.2Internal Revenue Service. Get an Employer Identification Number The EIN identifies the business for tax filings and federal reporting, and you’ll need it for the FinCEN registration, the state license application, and any bank that will open a business account for a precious metals operation. Gather government-issued photo ID and proof of residency for every owner and officer at the same time, because the banks, the state licensing agency, and FinCEN will all ask for them.
Register With FinCEN as a Money Services Business
Every covered dealer must register with FinCEN as a money services business, whether or not the state separately licenses you.3eCFR. 31 CFR 1022.380 – Registration of Money Services Businesses You file through the BSA E-Filing System on FinCEN’s website, which gives electronic confirmation on receipt.4Financial Crimes Enforcement Network. BSA E-Filing System Official acknowledgment of your MSB status can take several weeks.
Registration is not a one-time filing. You renew every two years using FinCEN Form 107 by December 31 of the applicable renewal period, and you re-register sooner if ownership or legal structure changes.5Financial Crimes Enforcement Network. Money Services Business (MSB) Registration Operating without registration, or letting it lapse, is a federal crime under 18 U.S.C. § 1960 and carries up to five years in prison.6Office of the Law Revision Counsel. 18 US Code 1960 – Prohibition of Unlicensed Money Transmitting Businesses This is not an area where regulators issue warnings first.
Build a Written Anti-Money Laundering Program
Federal law requires every covered dealer to develop and implement a written anti-money laundering program designed to keep the business from being used to launder money or finance terrorism.7eCFR. 31 CFR 1027.210 – Anti-Money Laundering Programs for Dealers in Precious Metals, Precious Stones, or Jewels Senior management must approve it, and you must make it available to Treasury on request. The program needs four components:
- Risk-based policies and internal controls that assess the money-laundering risks specific to your business: the products you handle, your customer base, your location, and whether you deal mostly with established accounts or walk-ins. The policies have to cover identifying suspicious transactions and refusing them when warranted.
- A designated compliance officer who is formally responsible for daily implementation and knows both the industry and the regulations well enough to catch problems early.
- Employee training on red flags, including unusual payment methods such as sequential money orders, customers who resist showing identification, and requests to skip normal recordkeeping.
- Independent testing of the program by someone who does not run it, with scope and frequency scaled to the risk level of the operation. A high-volume walk-in dealer needs more rigorous testing than one working exclusively with established wholesale accounts.
Treat the program as a living document. FinCEN expects it to evolve as the business changes: new locations, new payment methods, or a move into online sales each call for updates. An AML program that sits on a shelf is the kind of weakness regulators find quickly.
Get Your State and Local Licenses
Most states and many cities require their own permit to buy and sell precious metals on top of the federal registration. The name varies. Some jurisdictions call it a secondhand dealer license, others a precious metals dealer permit, and some fold the activity into pawnbroker regulation. Expect a background check, fingerprinting, and disclosure of any prior criminal or financial litigation. Processing generally runs 30 to 90 days, and some agencies include an on-site inspection of the premises before approval. The physical license or digital certificate usually has to be displayed at the place of business.
State rules commonly impose a mandatory holding period on items purchased from the public, so law enforcement can match them against stolen-property reports before you resell. Holding periods range from a few days to several weeks depending on the jurisdiction. Violating a holding period or operating without the required license can bring misdemeanor charges and fines, and in some places regulators can close the business immediately.
Several states also require a surety bond as a condition of licensing. The bond protects consumers: if you commit fraud or lose a customer’s property through misconduct, the bond gives the victim a source of recovery. Bond amounts and terms vary by state.
Reporting Obligations That Start Day One
Form 8300 for Cash Over $10,000
Any dealer who receives more than $10,000 in cash in one transaction, or in two or more related transactions, must file IRS Form 8300.8Office of the Law Revision Counsel. 26 USC 6050I – Returns Relating to Cash Received in Trade or Business The form collects the customer’s taxpayer identification number, address, and other identifying information. File it within 15 days of receiving the cash; if several payments from the same buyer push the running total past $10,000, the 15 days starts on the payment that crosses the line.9Internal Revenue Service. Instructions for Form 8300 By January 31 of the following year, you must also give the customer a written statement that the transaction was reported. Skipping that notice is a separate violation.
The penalties are severe. A willful violation is a felony with up to five years in prison and fines up to $25,000 per violation, or $100,000 for a corporation.10Office of the Law Revision Counsel. 26 USC 7203 – Willful Failure to File Return, Supply Information, or Pay Tax Civil penalties for intentional disregard are the greater of $25,000 or the amount of cash in the transaction.11Office of the Law Revision Counsel. 26 US Code 6721 – Failure to File Correct Information Returns Structuring a transaction to stay under the threshold, say by splitting a $15,000 purchase into two $7,500 payments, is separately illegal and carries the same penalties.8Office of the Law Revision Counsel. 26 USC 6050I – Returns Relating to Cash Received in Trade or Business
Suspicious Activity Reports
Separate from the hard cash threshold, a money services business must file a Suspicious Activity Report (SAR) for any transaction of $2,000 or more that the dealer knows, suspects, or has reason to suspect involves funds from illegal activity, is structured to evade reporting, or has no apparent lawful purpose. File within 30 days of becoming aware of the suspicious activity, and if the situation is urgent — for instance, an active money-laundering scheme — notify law enforcement by phone immediately.12Financial Crimes Enforcement Network. Fact Sheet for the Industry on MSB Suspicious Activity Reporting Rule
Unlike Form 8300, you never tell the customer a SAR was filed. Disclosing a SAR to its subject is itself a federal offense. This is where AML training earns its keep. Employees need to know how to spot red flags and route them to the compliance officer without alerting the customer.
Form 1099-B on Certain Customer Sales
When customers sell metal to you, IRS Form 1099-B may apply. The reporting trigger is narrow: the metal must be in a form approved for a regulated futures contract, and the quantity must meet or exceed the minimum needed to satisfy that contract. A customer selling a single gold coin usually falls below the threshold, since CFTC-approved gold contracts typically require 25 or more coins. Metals in forms the CFTC has not approved for futures trading aren’t reportable at all. Sales from a single customer within a 24-hour period must be aggregated to test the threshold, and the exception does not help customers splitting sales across days to dodge reporting: if you know or have reason to know that’s happening, you still must file.13Internal Revenue Service. Instructions for Form 1099-B (2026)
Keep the Right Records
Federal law requires precious metals dealers to keep detailed transaction records for at least five years.14eCFR. 31 CFR Part 1027 – Rules for Dealers in Precious Metals, Precious Stones, or Jewels Document every purchase and sale with the date, a description of the items, the price, and the identity of the other party. The same records support your BSA obligations and back up the Form 8300 and 1099-B filings.
State holding-period laws add their own layer. Many jurisdictions require a detailed log of every item purchased from the public, including serial numbers on bars and identifying marks on coins, available to local law enforcement on request. Build one record system that satisfies both federal and state demands from day one. Retrofitting after the fact is painful.
Taxes You’ll Pay and Collect
For federal tax purposes, gold and other precious metals are classified as collectibles. Net long-term capital gains on collectibles are taxed at a maximum rate of 28%, higher than the 15% or 20% rate that applies to most other long-term gains.15Internal Revenue Service. Topic No. 409, Capital Gains and Losses The 28% rate applies to metals held more than a year; shorter holdings are taxed as ordinary income. For a dealer, most inventory turns too quickly to generate capital gains, so most income will be ordinary business income. Any personal or long-term investment positions you hold separately get the collectibles treatment.
Sales tax varies dramatically by state. A majority of states now exempt gold and silver bullion from sales tax, but the details differ. Some exempt only bullion above a certain purity. Others tax collectible coins while exempting bars, or the reverse. A few tax all precious metals sales. Local taxes can layer on even where there’s a statewide exemption. Check your state’s department of revenue before setting prices, because adjusting margins after the fact is harder than pricing correctly on day one.
Insurance and Physical Security
Standard commercial property insurance will not adequately cover a precious metals business. The industry policy is a Jewelers Block, which gives all-risk coverage for inventory in the safe, in transit, at trade shows, or out for appraisal, and typically extends to stock owned by others in your possession, employee dishonesty, and shipping losses. Insurers price the policy against your security measures, inventory value, and anti-theft protocols.
Security also affects your licensing approval. Insurers and state licensing agencies expect a commercial-grade safe rated for burglary resistance. Industry practice for precious metals storage starts at a UL-rated TL-15 safe, tested to resist 15 minutes of physical attack with common tools. Higher-value operations typically use TL-30 or TRTL-30×6 safes, with the latter tested against attack on all six sides. Surveillance cameras with recording, alarm systems, and reinforced entry points reduce premiums and show regulators the operation takes physical security seriously.
Protect Customer Data
Because precious metals dealers collect Social Security numbers, government IDs, addresses, and financial details, data protection is part of the job. The Gramm-Leach-Bliley Act requires financial institutions, a category that can reach businesses offering financial or investment-related services, to explain their information-sharing practices and safeguard customer data.16Federal Trade Commission. Gramm-Leach-Bliley Act The FTC’s Safeguards Rule under GLBA requires covered businesses to maintain an information security program with administrative, technical, and physical controls over customer information.
Practically, that means encrypting digital customer records, limiting employee access on a need-to-know basis, and keeping a written security plan. Even if GLBA’s coverage of your particular operation is debatable, building these protections in from the start is sound practice. A breach exposing customer Social Security numbers and transaction histories would be ruinous for a dealer’s reputation and could trigger state breach notification obligations on top of any federal consequences.