UAE to introduce new gold import rules with up to $1.36m in fines for businesses in breach

Regulations will come into effect from January 2023 amid efforts to thwart money laundering through gold trade

The new rules require companies to take steps to prevent the misuse of gold imports by money launderers. AFP

The UAE will introduce a new set of regulations on gold imports in line with international rules that seek to thwart money laundering and the financing of terrorism and illegal organisations.

The guidelines were announced by the Ministry of Economy on Thursday and are the latest in a series of initiatives by the Emirates to enhance oversight of the trade and circulation of gold in line with international standards.

The new policy, which governs the responsible sourcing of gold by precious metal importers and refiners, aims to consolidate the UAE’s position as a leading global centre for bullion.

Those found in breach of the regulations face fines in the range of Dh50,000 to Dh5 million ($13,623 to $1.36m).

Regulated businesses must comply and enforce the new provisions. These include companies operating refineries and the recycling of gold products inside and outside the country.

The initiative includes the establishment of the Emirates Gold Bullion Committee to unify national efforts to enhance oversight of the gold sector, with the participation of the private sector, and the setting up of a federal platform for gold trading.

The country unveiled the UAE Good Delivery Standard for Gold in November 2021, a voluntary national standard for the gold sector to establish a framework that favours ideal specifications in the delivery and circulation of the yellow metal.

The regulations on gold imports will come into effect from January 2023. They have been drafted in accordance with guidance from the Organisation for Economic Co-operation and Development (OECD) and its corresponding protocol for gold.

The regulations are expected to promote the competitiveness of the UAE’s business and investment environment, the Ministry of Economy said.

“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,” said Safeya Al Safi, director of the Anti-Money Laundering Department at the Ministry of Economy.

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

The new guidelines support legislation to counter money laundering and combat terrorism financing, in line with the directives of the OECD and its annex related to gold, said Ms Al Safi.

“These guidelines are expected to enhance the competitiveness of our national business and investment environment, and strengthen our national economy’s reputation at the regional and global levels,” she said.

The regulations specify the affected entities, which include companies involved in gold refining and the recycling of gold products inside and outside the country, businesses falling under the precious metals and gemstones trade sectors, and those labelled as designated non-financial business or professions.

The rules require these companies to take the necessary steps and adapt their policies and procedures to prevent the misuse of gold imports in money laundering or other financial crimes.

“Companies 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, to counter money laundering and combat the financing of terrorism,” the Ministry of Economy said.

The regulations state that the gold import centres must comply with a number of risk management policies when supplying gold from conflict-affected and high-risk areas by following a five-step framework.

The framework stipulates the establishment of an effective governance system, provides for risk assessment within the supply chain, mitigates identified risks, allows for independent third-party reviews and calls for periodic reporting.

The guidelines require affected entities to hire an in-house officer to handle compliance tasks within the controlled entities, whose role would entail taking direct responsibility for the due diligence process related to the gold supply chain.