UAE issues due diligence regulations for responsible sourcing of gold

In a recent article published in the Arabian Business by a staff writer dated, Fri 22 Jul2022, the writer speaks of the mandatory adherence to new guidelines for all gold refineries operating in the country, starting from January. Here is the article below:

“The UAE has issued a new set of due diligence regulations for responsible sourcing of gold.

The new regulations are issued in line with the Federal Decree-Law No. 20 of 2018 concerning anti-money laundering, combatting the financing of terrorism, and the financing of illegal organisations and its executive regulations.

The adherence to these guidelines is mandatory for all gold refineries operating in the country, starting from January.

Safeya Al Safi, director of the anti-money laundering department at the Ministry of Economy, said the new guidelines took international best practices and the findings and recommendations of the Financial Action Task Force (FATF) into account.

“This would help consolidate the UAE’s position as a major player in supply chains and global trade networks for the gold sector,” Al Safi said.

She said the new guidelines also supported the legislation to counter money laundering and combat terrorism financing, in line with the directives of the Organisation for Economic Cooperation and Development (OECD) and its annex related to gold.

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

The announcement of these guidelines is the latest in a series of initiatives and policies launched by the UAE to enhance and govern the trade and circulation of gold in line with international standards and best practices, consolidating the UAE’s position as a leading global hub for gold trade.

Most prominent among these initiatives was the adoption of the Federal Policy for the Gold Sector by the Ministerial Development Council in December 2020.

This initiative included the establishment of the Emirates Gold Bullion Committee to unify the national efforts to enhance the governance of the gold sector with the participation of the private sector, and the launch of a federal platform for gold trading.

The UAE also launched the UAE Good Delivery Standard for Gold in November 2021, a voluntary national standard for the gold sector to establish a framework that favors ideal specifications in the delivery and circulation of gold.

“Today marks the culmination of the UAE’s efforts to enhance the system of good delivery of gold through the issuance of Due Diligence Regulations for responsible Sourcing of Gold,” Al Safi said.

The new Due Diligence Regulations specifies the facilities under its control, which include companies working in the field of gold refining and refineries and the recycling of gold products inside and outside the country, falling under the precious metals and gemstones trade sectors, and categorized as designated non-financial business and professions (DNFBP).

Al Safi said these facilities must follow all the regulations’ provisions and adhere to the requirements regarding their policies and procedures.

The regulations state that the controlled facilities must comply with a number of risk management policies when supplying gold from conflict-affected and high-risk areas by following a 5-step framework.

The framework stipulates the establishment of an effective governance system, risk assessment in the supply chain, mitigation of identified risks, independent third-party review, and periodic reporting.

The regulations also emphasise the importance of hiring an in-house employee to handle compliance tasks within the controlled facilities, whose role would entail taking direct responsibility for the due diligence process for the gold supply chain.

These facilities are required to present all audit reports required by the regulations annually.

The accredited members operating under the Good Delivery Standard for Gold in the UAE are obligated to submit reports prepared for accreditation purposes to the Ministry on an annual basis in order to fulfill their reporting obligations under these

regulations.”