Anti-Money Laundering (AML) Compliance for Pawn Shops

Anti-Money Laundering (AML) compliance means following laws and best practices to stop criminals from using your pawn shop to “clean” stolen, illegal, or unreported money. Every pawn shop is required to follow certain rules regardless of size to prevent fraud and protect your business. Even one missed step can mean fines or a loss of your license.

What is AML in a Pawn Shop?

AML refers to federal and state laws designed to identify and report suspicious activities like unusually large cash transactions, people hiding their identity, or sales of items with questionable origins. Pawn shops are considered “money services businesses” and must monitor for suspicious behavior, especially cash deals over $10,000.

What Do You Have to Do?

1. Have a Written AML Program: Your shop must have documented policies and procedures for identifying, reporting, and preventing suspicious activity. This is usually a simple manual or section in your employee handbook.
2. Train Your Staff: Make sure every employee knows what “suspicious activity” might look like (for example, avoiding ID checks, structuring cash transactions, or attempting to pawn unusual quantities).
3. Keep Records: Log and save all deals and customer ID for at least 5 years. Use pawn shop software to automate recordkeeping.
4. File Reports: If you see activity that could indicate money laundering, file a Suspicious Activity Report (SAR) and, for large cash deals, a Currency Transaction Report (CTR).

Why It Matters

AML compliance protects you from heavy fines or loss of license, helps law enforcement fight serious crime, and keeps your reputation solid with local banks and partners. Shops found non-compliant often get flagged for increased audits.

How to Get Started

- Download a sample AML plan for pawn shops (available from state associations)
- Train staff on red flags and safe procedures
- Use digital pawn software to streamline logs and reporting
- Update your policies annually