New laws have been introduced establishing a framework for importing gold into the UAE, and they will take effect from January 2023.
The UAE Ministry of Economy recently announced new laws concerning responsible gold sourcing for importers and refiners in the UAE. These laws aim to prevent money laundering and the financing of terrorism and illegal organizations through the gold trade.
Anyone who fails to comply with these new measures may face very substantial fines of up to AED 5 million.
Who is affected by the new laws?
Gold trading in Dubai and the OECD
These new regulations directly apply to all companies registered in Dubai and the UAE that operate in gold refining, the recycling of gold products inside and outside the country, and the precious metals and gemstones trading sector, which are classified as designated non-financial businesses and professions (DNFBPs). The UAE currently has no fewer than 28 active precious metals refineries. These are therefore the first businesses affected by these new measures. Safeya Hashim Al Safi, Director of the Ministry of Economy's Anti-Money Laundering Department, stated: "The new law will apply to gold refineries, importers, those who process gold waste, and those involved in gold extraction. This rule will apply to companies located on the UAE mainland and in free zones, as part of the UAE's efforts to implement the entire anti-money laundering and counter-terrorist financing (AML/CFT) regime." As mentioned at the beginning of the article, these laws will enter into force from January 2023. They comply with the guidelines of the Organisation for Economic Co-operation and Development (OECD) and its protocol concerning gold. Safeya Hashim Al Safi also stated that these regulations will help Dubai become a preferred destination for the manufacture and sale of gold and precious metals at the regional and international levels. In Dubai, for example, the DMCC Free Zone is known for specializing in activities related to gold and precious metals.Penalties ranging from AED 50,000 to 5 million!
All companies concerned by these new measures that fail to comply with them may face fines ranging from AED 50,000 to AED 50 million! These same offenders may also face prison sentences in the UAE. Safeya Hashim Al Safi explains that "The main objective of the new regulations is to clearly indicate the origin of the gold. Refineries must know that the gold does not come from conflict zones or high-risk countries. We will implement the OECD standards for responsible sourcing, and it will be mandatory for all refineries to apply them at their facilities. They will have to appoint compliance officers who will be responsible for KYC and for knowing exactly which suppliers they deal with. The compliance officer must obtain all the required documents to ensure that this client is not importing gold from unknown sources."What rules must be followed?
The regulation requires regulated entities to comply with a set of policies aimed at managing risks when importing gold from conflict-affected or high-risk areas, according to a five-step process:- Create an effective governance system
- Assess risks in the supply chain
- Mitigate identified risks
- Independent third-party review
- Periodic reporting
- Establishing a training program for all persons involved in the due diligence process;
- Submitting all audit reports annually;
- Appointing an employee responsible for managing verification tasks;
- Appointing auditors in accordance with the best international standards;
- The auditor must have a thorough understanding of all due diligence regulations.
