UAE tightens gold import guidelines, violators face up to Dhs5m fine

The UAE Ministry of Economy (MoE) on Thursday held a media briefing on the issuance of the Due Diligence Regulations for Responsible Sourcing of Gold, in line with the Federal Decree-Law No. 20 of 2018 concerning anti-money laundering, combatting the financing of terrorism, and the financing of illegal organisations and its executive regulations.

The announcement of these guidelines is the latest in a series of initiatives and policies launched by the UAE to enhance and govern the trade and circulation of gold in line with international standards and best practices, consolidating the UAE’s position as a leading global hub for gold trade.

Most prominent among these initiatives was the adoption of the Federal Policy for the Gold Sector by the Ministerial Development Council in December 2020.

This initiative included the establishment of the Emirates Gold Bullion Committee to unify the national efforts to enhance the governance of the gold sector with the participation of the private sector, and the launch of a federal platform for gold trading.

The UAE also launched the UAE Good Delivery Standard for Gold in November 2021, a voluntary national standard for the gold sector to establish a framework that favors ideal specifications in the delivery and circulation of gold.

Safeya Al Safi, Director of the Anti-Money Laundering Department at the Ministry of Economy, said, "Today marks the culmination of the UAE’s efforts to enhance the system of good delivery of gold through the issuance of Due Diligence Regulations for Responsible Sourcing of Gold.

“The adherence to these guidelines is mandatory for all gold refineries operating in the country, starting from next January, in line with national trends in this regard" she said.

She stressed that violations and penalties for non-compliance in accordance with laws and regulations may reach from Dhs50,000 to Dhs5 million.

She also pointed out that the Ministry's risk inspection committees had detected nearly 69 violations in general, with a total violation of Dhs350,000, including two violations of two companies working in gold

“It takes international best practices and the findings and recommendations of the Financial Action Task Force (FATF) into account, and helps consolidate the UAE’s position as a major player in supply chains and global trade networks for the gold sector."

"Furthermore, the new guidelines support the legislation to counter money laundering and combat terrorism financing, in line with the directives of the Organisation for Economic Cooperation and Development (OECD) and its annex related to gold,” she said further.

“These guidelines will enhance the competitiveness of our national business and investment environment and strengthen our national economy’s reputation at the regional and global levels," she added.

Coinciding with these efforts, MoE recently worked in collaboration with its federal, local, and private sector partners to keep up with the best practices and apply the latest international standards that are compatible with the requirements of the FATF to continue to combat money laundering risks and crimes.

The Due Diligence Regulations specifies the facilities under its control, which include companies working in the field of gold refining and refineries and the recycling of gold products inside and outside the country, falling under the precious metals and gemstones trade sectors, and categorised as Designated Non-Financial Business and Professions (DNFBP).

Al Safi explained that these facilities must follow all the regulations’ provisions and adhere to the requirements regarding their policies and procedures.

They must consider the risks of financial crime in their relations with their suppliers, and communicate with the supervisory authority to find out the measures needed to be taken with regard to the responsible supply of gold from conflict-affected and high-risk areas, in light of the legislative controls and frameworks to counter money laundering and combat the financing of terrorism.

The regulations state that the controlled facilities must comply with a number of risk management policies when supplying gold from conflict-affected and high-risk areas by following a 5-step framework which stipulates the establishment of an effective governance system, risk assessment in the supply chain, mitigation of identified risks, independent third-party review, and periodic reporting.

The regulations also emphasise the importance of hiring an in-house employee to handle compliance tasks within the controlled facilities, whose role would entail taking direct responsibility for the due diligence process for the gold supply chain.

These facilities are obligated to present all audit reports required by the regulations annually, while the accredited members operating under the Good Delivery Standard for Gold in the UAE are obligated to submit reports prepared for accreditation purposes to the Ministry on an annual basis in order to fulfill their reporting obligations under these regulations.

Moreover, the regulations stipulate the provision of a training programme for everyone participating in the due diligence process for the gold supply chain.

The programme includes a combination of general supply chain due diligence training and topics relevant to specific roles.

The Ministry specified several conditions for choosing accredited auditors based on international best practices.

Most notably, the auditors must be aware of all due diligence regulations concerning the supplying of gold. A list of accredited auditors is available on the Ministry’s website.

WAM