The UAE’s Ministry of Economy on Thursday announced a new policy regarding the responsible sourcing of gold for importers and refiners and violators could face a penalty of up to Dh5 million.

The new regulations for responsible sourcing of gold will apply to the companies working in the field of gold refining, recycling of gold products inside and outside the country, precious metals and gemstones trade sector, which are classified as designated non-financial businesses and professions (DNFBPs).

“The new law will apply to gold refineries, importers, those deal 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,” said Safeya Hashim Al Safi, director of the Anti-Money Laundering Department, Ministry of Economy.

There are currently 28 precious metal refineries operating in the country.

The new policy, which will come into effect from January 2023, is in accordance with the guidance from the Organisation for Economic Co-operation and Development (OECD) and its corresponding protocol for gold.

She said that these regulations will further support the UAE to become a favoured destination for the manufacturing and selling of gold and precious metals, regionally and internationally.

Dh50,000-Dh5 million penalty

Under the new regulations, companies violating the rules could face a Dh50,000 to Dh5 million penalty for not adhering to the new norms. Violators could face jail terms as well.

“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 to exactly know 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,” she told Khaleej Times in an interview on the sidelines of a press conference on Thursday.

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 include:

  1. Create an effective governance system
  2. Risk assessment in the supply chain
  3. Mitigation of identified risks
  4. Independent third-party review
  5. Periodic reports

In order to strengthen the gold supply system, the regulations set several supportive steps to reduce the severity of risks. These include:

  1. Provision of a training programme for all individuals involved in the due diligence process
  2. Submission of all the audited reports on an annual basis
  3. Appointment of an employee to handle compliance tasks
  4. Appoint auditors in accordance with international best standards
  5. 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,” she said.

SOURCE: UAE’s new laws on gold imports: Up to Dh5 million fine for violators – News | Khaleej Times