To curb illegitimate trade, UAE to audit all gold refineries

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Synopsis

UAE is one of the world's largest gold trade centers
Refiners would be subject to responsible sourcing standards
Industry figures think the move should limit illicit gold trading
The UAE is under pressure to tighten its laws and implement them more strictly.

To prevent illegal trafficking, the United Arab Emirates will compel all gold refineries to undergo yearly audits to guarantee their suppliers are accountable. According to industry sources, annual inspections should improve standards in the UAE which is one of the world’s largest bullion trade hubs. Still, it might also move gold flows tied to crime or human rights violations to other countries, such as Africa, where the number of gold refineries is fast increasing.

According to one of the investigations published in 2019, the UAE imported gold worth billions of dollars smuggled from Africa. Some of it mined in deplorable and polluted conditions in conflict-torn countries.

The Financial Action Task Force (FATF), also referred to as an intergovernmental anti-money laundering watchdog, urges the country to enhance laws and enforcement. The UAE has stated that this is a national priority.

According to the UAE’s Economy Ministry, a UAE Good Delivery Standard would require refiners to thoroughly examine suppliers and demonstrate their compliance to outside auditors. It stated that “all gold refiners will be expected to comply with the responsible sourcing obligations.” “Annual compliance audits will be required under the UAE Good Delivery Standard.”

The purpose of the Ministry, according to the Ministry, is to bring the entire industry into compliance with responsible sourcing criteria. It declined to comment further until later this month when it announced a precious metals industry convention in Dubai.

Economy's Base

Millions of people work as small-scale gold miners, which can be dangerous and release poisonous chemicals. The metal is frequently used to fund criminal activity, disputes, and terrorism.

Due to “severe supervision concerns” in Turkey’s gold trade, the FATF placed Turkey on its “grey list” last month, possibly damaging foreign investment.

The London Bullion Market Association (LBMA), which supervises the world’s largest responsible sourcing accreditation scheme for refineries, warned last year that it might bar refiners who certify from buying gold from nations with insufficient regulations.

The United Arab Emirates claimed it had taken several steps to combat unlawful trading, including requiring businesses to register with anti-money laundering authorities and state substantial cash transactions.

Thani Al Zeyoudi, UAE Minister of State for Foreign Trade, who chairs a commission supervising the gold trade, also said: “The gold and precious metals industry is vital to our economy.” The good delivery standard “would reinforce the UAE’s AML/CFT (anti-money laundering and counter-terrorist financing) framework, which is a crucial national objective and a central focus of the UAE leadership,” according to Al Zeyoudi.

Balloon Squeezing

According to the UAE, the Dubai Good Delivery Standard is a voluntary accreditation scheme sponsored by the Dubai Multi Commodities Centre (DMCC), which is also a UAE free-trade region.

Two of the UAE’s more than ten refineries have been accredited by DMCC, which requires responsible sourcing procedures and audits. Most gold refiners and merchants in the UAE are unaccredited and have no way of knowing where their gold comes from.

“This is the most substantial thing the UAE government has done (to discourage unethical commerce),” said Tyler Gillard of the Organization for Economic Cooperation and Development, who advises governments and firms on responsible sourcing (OECD).

Prohibited trading, on the other hand, will not go away, he claims. “It’s like squeezing a balloon… there are still enough spaces and chances for gold to penetrate the market in other countries.”

Sourcing audits are not required in most countries. In Sub-Saharan Africa, dozens of refineries are in operation or under construction, and India, a major importer of gold from small-scale mines, has a large number of refineries that are not subject to inspection.

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About the Author

Pathik Shah

FCA, CAMS, CISA, CS, DISA (ICAI), FAFP (ICAI)

Pathik is an ACAMS-certified AML consultant specialising in governance, risk, and compliance for regulated entities in the UAE. He brings over 28 years of experience, with 1,000+ hours of AML training and 200+ advisory engagements across DNFBPs, VASPs, and FIs. He supports businesses in aligning with AML/CFT requirements from the CBUAE, DFSA, MoET, MoJ, VARA, CMA, FSRA, and FATF. Known for translating complex regulations into audit-ready procedures, Pathik enables operational clarity and compliance readiness.

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