The UAE has discontinued 32 local gold refineries for three months for neglecting to follow anti-money laundering laws, as the country strengthens its crackdown on financial offences. The Ministry of Economy undertakes a series of inspections on movements related to the trade and manufacture of precious metals and gemstones to ensure adherence to anti-money laundering rulings in the gold sector.
Following this, the ministry assessed the refineries with 256 breaches, with eight violations for each, state news agency Wam said. The alleged violations include failing to take reasonable measures to identify money laundering threats, not making required notifications of suspect transactions to the Financial Information Unit and not looking at customer and transaction databases against names on terrorism watch indexes.
The suspensions started on July 24 and will last until October 24. The 32 refineries account for 5 per cent of the country’s gold sector, the ministry stated. However, the refineries were not called. “The UAE is a significant player in the global gold industry. Dubai has evolved into one of the largest gold trading hubs in the world, where the Emirates is presently the fourth largest country in the world for gold imports,” stated James Willn, partner for the energy and natural resources group at law firm Reed Smith.
“This phenomenal growth has unfortunately brought trouble, especially to money laundering, given the gold enterprise has in the past been a pathway for ill-gotten funds to enter the financial system. “No doubt live to this problem, the UAE Ministry of Economy has been both dynamic and vocal for some years now, in terms of drafting to UAE-based gold refineries the need to tighten up their due diligence restrictions (on both suppliers and customers) for the responsible supply of gold in the area, otherwise these refineries run the threat of sanctions and penalties. The suspensions set by the ministry this week are clearly in respect of those refineries who have failed to heed the signs.”
The Financial Action Task Force, the global anti-money laundering watchdog, released the UAE from its “grey list” earlier this year, stating it had made some “key reforms” to its laws. The country has made significant efforts to shore up its anti-money laundering regime and fight the financing of terrorism.
In 2021, it launched an Executive Office for Anti-Money Laundering and Counter-Terrorism Financing after passing an anti-money laundering and terrorism financing rule in 2018. The value of fines levied by regulatory authorities in the field of AML/CFT between January and October last year matched Dh249.2 million ($67.9 million), which corresponds with Dh76 million in 2022.
Last year, the UAE presented a new set of regulations on gold imports in line with international rules that seek to prevent money laundering and the financing of terrorism and illegal associations.
