https://www.kitco.com/news/article/2024-08-08/uae-suspends-32-gold-refineries-256-violations-crackdown-money-laundering

(Kitco News) – The government of the United Arab Emirates (UAE) has suspended the operations of 32 gold refineries – representing 5% of the total market – in a crackdown on money laundering and terrorist financing activities in the precious metals sector, according to an announcement from the Economy Ministry.

“The Ministry of Economy has affirmed its continued efforts to implement the legislative and regulatory system to combat money laundering in the country in accordance with the best international practices […] to combat money laundering and the financing of terrorism in the country,” the Ministry said in the press release.

“In this context, the Ministry indicated that it had carried out a series of field inspection tours on activities related to the trade and manufacture of precious metals and gemstones, to ensure the highest levels of compliance with anti-money laundering legislation in the gold sector in the country,” they said. “These inspections resulted in the temporary suspension of activity of 32 gold refineries in the local market, representing 5% of the gold sector in the country, for a period of 3 months, starting from July 24 until October 24, 2024.”

The Ministry said the 32 refineries committed 256 violations – an average of 8 violations for each refinery – “the most prominent of which were not taking the necessary measures and procedures to identify risks, not notifying the Financial Information Unit of a suspicious transaction when necessary, and not examining customer and transaction databases against names included in the terrorism lists.”

“The UAE affirms its firm commitment to developing an integrated legislative and regulatory system to combat money laundering, and to achieving the highest levels of compliance with the policy on due diligence regulations for the responsible gold supply chain, by keeping pace with the best global practices in this regard,” said Abdullah Ahmed Al Saleh, Undersecretary of the Ministry of Economy. “The Ministry is making continuous efforts to enhance its supervisory role over the designated non-financial business and profession sectors in the country, represented by the activities of trading and manufacturing precious metals and gemstones, the activities of real estate brokers, establishments operating in the corporate service providers sector, and the activities of auditors, by intensifying inspection campaigns to ensure the highest levels of compliance with the anti-money laundering legislation in force in the country.”

The Ministry said that the measures were taken “within the framework of its supervisory role over the gold sector and the activities of trading and manufacturing precious metals and gemstones, and in line with the country’s commitment to the approved international standards in this regard, the most important of which are the standards of the Organization for Economic Co-operation and Development (OECD).”

The UAE is facing pressure to clean up illegal practices within its gold sector as part of a broader effort to rehabilitate its international reputation in the world of finance in the wake of serious allegations that it was turning a blind eye to gold smuggling and money laundering.

In May, development organization Swissaid published a report that alleged that two-thirds of the gold imported from Africa into the UAE in 2022 was smuggled before being re-exported to other countries.

“[B]etween 321 and 474 tons of artisanal gold are produced annually in Africa without being declared, and at least 435 tons of gold were smuggled from the African continent in 2022 alone,” the report said. “These are significant figures that represent a significant loss of revenue for many African states.”

The top three importers of African gold are Switzerland, the United Arab Emirates, and India. “As the United Arab Emirates has no mines on its territory, it also imports gold, much of it from Africa,” Swissaid wrote. “But this gold is not always declared. The study reveals that between 2012 and 2022, 2596 tonnes of gold not declared for export were imported from Africa to the UAE.”

“This situation is problematic because for many years smuggled gold potentially linked to conflicts or human rights violations has been legally landing in Switzerland,” says Marc Ummel, head of the raw materials unit at SWISSAID and co-author of the study.