UAE suspends Emirates Gold refinery from its 'good delivery list'

The London Bullion Market Association also stops the company’s affiliate membership

Gold bars at the Emirates Gold refinery in Dubai. Pawel Dwulit / The National

The UAE has suspended one of its biggest gold refineries, Emirates Gold DMCC, from its approved “good delivery list”, a certification scheme that sets responsible sourcing rules.

The suspension of Dubai-based Emirates Gold, which has been operating for 30 years, is temporary and was effective from July 7, the government website showed on Friday.

The country unveiled the UAE Good Delivery Standard for gold in November 2021, a voluntary national standard for the sector to establish a framework that favours ideal specifications.

Refiners must meet anti-money laundering and responsible sourcing standards to be included on the list, that grants them access to the nation’s gold market.

On Friday, the London Bullion Market Association, which regulates the world’s largest gold trading hub, followed and suspended Emirates Gold's affiliate membership, citing a recent “due diligence review”.

“As the independent authority for precious metals, LBMA sets standards and upholds trust in the global market,” the regulator said.

“Our rules are an essential part of this function. It is a condition of continued LBMA membership that these rules and obligations are accepted and observed. We, therefore, take very seriously any breaches of the rules.”

Emirates Gold, which was established by Swiss citizen Mohamad Shakarchi, changed ownership in 2022, a year after his death.

The UAE is proactively working to implement a Financial Action Task Force action plan to strengthen the effectiveness of its anti-money laundering and counter-terrorism financing regime, the Paris-based body said.

The Emirates has made considerable efforts to shore up its anti-money laundering regime and combat the financing of terrorism.

In 2021, it founded an Executive Office for Anti-Money Laundering and Counter-Terrorism Financing after passing an anti-money laundering and terrorism financing law in 2018.

The UAE issued fines of more than Dh115 million ($31.3 million) in the first quarter of the year to combat money laundering. This is a sharp increase from the Dh76 million issued last year.

News agency Wam reported that 161 fines were handed out to 76 entities in the first three months of this year. Confiscations have also increased, with frozen assets surpassing Dh925 million in value seized from November 2022 to February 2023.

In January, the UAE introduced 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 new policy governs the responsible sourcing of gold by precious metal importers and refiners. Those found in breach of the regulations face fines in the range of Dh50,000 to Dh5 million ($13,623 to $1.36 million).

Regulated businesses must comply and enforce the new provisions. These include companies operating refineries and involved in 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 sector, with the participation of private companies, and the setting up of a federal platform for gold trading.

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

The regulations state that 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 the hiring of an in-house officer to handle compliance tasks, taking direct responsibility for due diligence.