A new policy regarding the ethical sourcing of gold for importers and refiners was announced by the UAE's Ministry of Economy on Thursday.
The enterprises involved in gold refining, recycling gold goods both domestically and abroad, and the trading in precious metals and gemstones are categorised as designated non-financial businesses and professions and will be subject to the new requirements for responsible sourcing of gold (DNFBPs). There are currently 28 precious metal refineries operating in the country.
Safeya Hashim Al Safi, director of the Anti-Money Laundering Department, Ministry of Economy said, “The new law will apply to gold refineries, importers, those dealing with scrap gold and dealing with gold mining. This rule will apply to companies in the UAE mainland and free zones as part of UAE’s efforts to implement all Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) regime."
The new policy, which will take effect in January 2023, complies with the recommendations made by the Organisation for Economic Co-operation and Development (OECD) and its related treaty for gold.
According to her, new regulations will help the UAE become a more popular location for the production and export of gold and precious metals on a regional and global scale.
Dh50,000-Dh5 million penalty
Companies violating the rules under these new regulations could face a penalty ranging from Dh50,000 to Dh5 million for not adhering to the new norms. Violators could face jail terms as well.
Al Safi further said, “The main purpose of new regulations is to make very clear where the gold is being sourced from. The refineries should know that gold is not coming from conflict zones or high-risk countries. We will implement the OECD standards for responsible sourcing and it will be obligatory for all refineries to implement them within their premises. They will have to hire compliance officers who will be responsible for the KYC and also know exactly the suppliers they’re dealing with. He has to take all required documents to ensure that this customer is not importing gold from unknown sources".
The regulations included the compliance of regulated establishments with a set of policies to manage risks while importing gold from conflict-affected or high-risk areas following a 5-step framework and including:
● Create an effective governance system
● Risk assessment in the supply chain
● Mitigation of identified risks
● Independent third-party review
● Periodic reports
The regulations set several supportive steps to reduce the severity of risks to strengthen the gold supply system. These include:
● Provision of a training programme for all individuals involved in the due diligence process
● Submission of all the audited reports on an annual basis
● Appointment of an employee to handle compliance tasks
● Appoint auditors as per international best standards
● The auditor must be well-acquainted with all due diligence regulations
“Our efforts in this regard are in line with international best practices and the results and recommendations of the Financial Action Task Force (FATF),” said Al Safi.
“We have witnessed the implementation of due diligence in various jurisdictions around the world to varying degrees. This is the first time that gatekeepers, which are DNFBPs -represented by gold refiners – have committed to a third-party review of their gold supply chain, enhancing the confidence of the international trade community in consolidating the UAE’s position as a global trading hub for the manufacturing and trading of gold,” Al Safi further said.
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