UAE Suspends 32 Gold Refineries in Anti-Money Laundering Investigation

The UAE’s Ministry of Economy said that its field inspections discovered 256 violations, eight from each refinery, which indicated they were not following regulations meant to identify and prevent money laundering activity.

These audits were carried out across the country’s entire precious metals and gemstone sector, with a focus on areas responsible for their trade and production.

The violations included the non-observance of various Know Your Client protocols, such as failing to check customer and transaction databases against names included in the country’s terrorism files.

Ministry officials also said that the refineries failed to notify the proper authorities when they came across suspicious transaction reports.

Altogether, the suspension of the 32 refineries will halt 5% of all operations within the UAE’s gold sector for a period of three months, until Oct. 24, 2024.

Historically understood as a hedge against inflation — meaning that its value appreciates to protect investors from rising inflation rates — gold is an effective way to offset year-over-year decreases in purchasing power.

The past few years have been no exception; since 2020, its value has appreciated more than 50%, according to Market Insider.

However, this also makes gold an attractive avenue for money laundering activity. Criminals and the corrupt can buy and sell gold in order to move their ill-gotten gains out of one country and into another.

Its liquidity is also high, meaning that it can be sold quickly on the open market without negatively impacting its price.

In February 2024, the Paris-based Financial Action Task Force (FATF) removed the UAE from its list of countries deemed to lack adequate countermeasures against money laundering and terror financing.

This decision, however, drew attention to reports that gold smuggled out of Dubai and into Africa is used to finance ongoing civil wars in Sudan and other Sub-Saharan countries. The FATF thus pledged in June to review such findings, reported on by OCCRP.

The UAE’s Ministry of Economy, meanwhile, stated its intention to preserve the country’s laws aimed at curbing money laundering behaviour through its gold sector.

“The UAE affirms its firm commitment to developing an integrated legislative and regulatory system to combat money laundering,” said Abdullah Ahmed Al Saleh, Undersecretary of the Ministry of Economy. The Undersecretary further said that the country will strive to achieve “the highest levels of compliance” within its gold sector’s due diligence regulations “by keeping pace with the best global practices in this regard.”