May 20, 2024
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UAE Reveals New and Stricter Laws for Gold Sourcing: Penalty as High as Dh5 Million

UAE Reveals New and Stricter Laws for Gold Sourcing: Penalty as High as Dh5 Million :

UAE Reveals New and Stricter Laws for Gold Sourcing: Penalty as High as Dh5 Million

The UAE’s Ministry of Economy recently released a policy containing best practices for sourcing gold in the UAE. The policy also enforces stricter penalties for unethical gold sourcing. Government officials have stated that the policy aims at reducing the execution of money laundering and terrorism financing through gold transactions.

According to Safeya Hashim Al Safi, the Director of Anti-Money Laundering at the Ministry of Economy, the policy is a part of the UAE’s comprehensive efforts to curb money laundering in the territory. Reports have also shown that the policy complies with the OECD’s standards on ethical gold sourcing.

Background on the Gold Sourcing Policy

In 2021, many African countries expressed concern about the high rate of gold smuggling in their territories. These countries stated that the smugglers used the funds to finance violence and banditry in African mining communities. However, the outcries backfired on the UAE because the emirate was accused of purchasing gold from the smugglers. Due to this, the UAE was tagged as the hub of unethical gold sourcing. In reaction, countries like Switzerland cautioned their gold refiners against purchasing UAE’s gold for fears that it was linked to smuggled African gold.

The Ministry released the current policy to restore confidence in UAE’s gold by preventing the importation of illicit gold into the UAE market.

Details on the Gold Sourcing Policy

The policy contains extensive guidelines on responsible gold sourcing. It was developed to stall gold-enabled money laundering in the UAE. The policy also mandates gold refiners to conduct risk assessments before importing gold from high-risk areas. These high-risk areas are conflict-affected territories that have experienced high rates of violence and banditry. The Ministry of Economy recently stated that the policy will take effect in January 2023.

Some of the policy’s provisions include mandating gold importers to adopt a five-step risk framework that includes supply chain risk assessment, a strong governance system, periodic reporting, independent third-party operational reviews and mitigation of identified risks. Also, the policy requires controlled gold facilities to employ in-house compliance officers. These compliance officers will be responsible for conducting due diligence and monitoring all sourcing activities within the gold supply chain.

The Ministry of Economy has clarified that the policy is expected to apply to all gold importers, miners, refineries, and people who scrap gold. Thus, all these entities will be expected to implement internal controls to help identify their suppliers and prevent financial crimes. The policy also imposes penalties ranging from Dh50,000 to as high as Dh5 million on companies found guilty of a breach.

Conclusion

The new policy requires gold refineries to strengthen internal controls and monitor supply routes. With these requirements, most UAE gold players will have to overhaul their compliance systems. It is only left to see whether the UAE will achieve its anti-money laundering goals upon the policy’s implementation in January 2023.

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Last Updated on 2 months by newseditor

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