New regulations for responsible sourcing of gold announced in UAE

New regulations for responsible sourcing of gold announced in UAE

New policy will come into effect from January 2023

The UAE's Ministry of Economy on Thursday announced a new policy regarding the implementation of regulations for responsible sourcing of gold.

The due diligence regulations specify the supply of gold for the regulated establishments, which include companies working in the field of gold refining, gold refineries, and the recycling of gold products inside and outside the country, which fall under the precious metals and gemstones trade sector, which in turn are classified as designated non-financial businesses and professions (DNFBPs).

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.

"These regulations are set to promote the competitiveness of the UAE's business and investment environment, elevating it to higher levels that would strengthen the reputation of the national economy, both regionally and internationally. Furthermore, it supports the UAE's status as a favoured destination for the manufacturing and selling of gold and precious metals, regionally and internationally,"

said Safeya Hashim Al Safi, Director of the Anti-Money Laundering Department, Ministry of Economy.

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 of the gold supply chain. The programme includes training on general supply chain due diligence and specific topics for defining roles.

2. Submission of all the audited reports as stipulated in the gold importing regulations to the Ministry on an annual basis. The approved members operating in accordance with the UAE Good Delivery Standard for Gold are required to submit the reports prepared for approval to the Ministry on an annual basis to fulfil reporting obligations as per these regulations.

3. Appointment of an employee to handle compliance tasks within the controlled entity and assumption of direct responsibility towards the due diligence process for the gold supply chain.

4. The Ministry has determined the requirements for selecting approved auditors in accordance with international best standards. The auditor must be well-acquainted with all due diligence regulations related to the gold importing process. Furthermore, the Ministry's website includes a list of approved account auditors.

"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.

News Source: Khaleej Times

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