AML Obligations for Precious Metals Refiners

1. Introduction

The precious metals refining industry plays a crucial role in the UAE economy, especially given Dubai’s position as a global hub for gold trading and bullion exports. However, the very features that make this sector attractive — high value, liquidity, and ease of cross-border movement — also make it vulnerable to money laundering (ML) and terrorist financing (TF).

In recognition of these risks, the UAE authorities have implemented stringent Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) regulations for precious metals refiners, ensuring they operate transparently and ethically in line with Financial Action Task Force (FATF) standards.

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2. Regulatory Framework Governing Precious Metals Refiners

Key UAE AML Laws and Regulations:

1. Federal Decree-Law No. (20) of 2018 – On Anti-Money Laundering and Combating the Financing of Terrorism and Illegal Organisations.

2. Cabinet Decision No. (10) of 2019 – Executive Regulation defining obligations for both Financial Institutions (FIs) and Designated Non-Financial Businesses and Professions (DNFBPs).

3. Cabinet Decision No. (109) of 2023 – Establishing updated compliance requirements for DNFBPs, including refiners, bullion dealers, and traders.

4. Ministry of Economy (MOE) AML Guidelines for Dealers in Precious Metals and Stones (DPMS) – Issued to clarify obligations on KYC, reporting, and internal controls.

5. UAE FIU Circulars – Requiring all precious metals refiners to register and report transactions through the goAML platform.

These frameworks ensure that refiners, like other high-risk DNFBPs, implement robust AML controls to detect and deter illicit financial flows through gold and precious metals.

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3. Why Precious Metal Refiners Are High-Risk Entities

Precious metals refiners are considered high-risk for ML/TF due to the following factors:

• Ease of value transfer: Gold and other metals can be easily melted, re-cast, and transported.

• Anonymity in transactions: Refiners often deal with intermediaries or third-party suppliers with limited traceability.

• High volume of cash transactions: Large payments in cash can obscure the origins of funds.

• Cross-border supply chains: Sourcing from conflict or sanction-affected regions increases exposure.

• Trade-based money laundering (TBML): Manipulated invoices and misdeclared purity levels may conceal illicit transfers.

To mitigate these risks, refiners must adopt risk-based AML systems integrated with due diligence and traceability protocols.

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4. AML Obligations for Precious Metals Refiners

The AML compliance framework for refiners is built around five key obligations:

a. Customer Due Diligence (CDD)

Refiners must identify and verify the identity of all customers, suppliers, and business partners — especially when:

• Buying or selling gold, silver, or other precious metals.

• Dealing in transactions valued at AED 55,000 or above (cash or equivalent).

• Conducting ongoing or repeated transactions with the same counterparty.

CDD must include:

• Verification of individual or corporate identity (passport, license, or incorporation documents).

• Identification of the Ultimate Beneficial Owner (UBO).

• Understanding the purpose and nature of the transaction.

• Applying Enhanced Due Diligence (EDD) for high-risk customers or PEPs.

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b. Record Keeping

Refiners must maintain comprehensive records of:

• Customer identification data.

• Transaction details (amount, metal type, purity, and origin).

• Internal review notes and risk assessments.

These records must be retained for a minimum of five (5) years and made available upon request by the Ministry of Economy, FIU, or law enforcement authorities.

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c. Reporting Obligations

Refiners are legally required to register on the UAE goAML platform and submit the following reports:

Report Type Purpose Reporting Frequency Authority

Suspicious Transaction Report (STR) To report suspected ML/TF activity Immediately upon detection UAE FIU

Suspicious Activity Report (SAR) For unusual activities not directly tied to a transaction Immediately UAE FIU

Threshold Transaction Report (TTR) For cash transactions ≥ AED 55,000 Regular basis UAE FIU

Sanctions Report For dealings with sanctioned individuals or entities As required UAE FIU / MOE

Failure to report suspicious activity may lead to administrative fines, business suspension, or criminal liability.

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d. Risk Assessment and Internal Controls

Refiners must implement a comprehensive AML risk assessment framework that covers:

• Customer risk: Based on nationality, business type, and transaction patterns.

• Product risk: Differentiating between refined bullion, scrap gold, and semi-finished products.

• Geographical risk: Screening supply chains linked to high-risk jurisdictions.

• Delivery and payment risk: Monitoring unusual shipping routes or payment methods.

Additionally, internal policies must define escalation procedures and maintain clear segregation of duties between operations and compliance.

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e. Appointment of MLRO

Every refiner must appoint a Money Laundering Reporting Officer (MLRO) responsible for:

• Reviewing internal alerts and filing STRs/SARs.

• Coordinating with the Ministry of Economy and FIU.

• Conducting annual AML risk assessments.

• Overseeing staff training and compliance audits.

The MLRO should operate independently and report directly to senior management.

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5. Sanctions Screening and Supplier Due Diligence

Given the global nature of gold refining, refiners must screen all suppliers, customers, and counterparties against:

• UN, UAE, OFAC, and EU sanctions lists.

• Conflict-affected and high-risk jurisdictions (as defined by FATF).

• Suppliers linked to conflict minerals or smuggling networks.

Refiners are encouraged to adopt the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals to trace the ethical sourcing of gold and prevent trade-based ML.

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6. Staff Training and AML Awareness

Ongoing AML training ensures that employees — from procurement to finance — can recognize and escalate suspicious activity. Training should cover:

• FATF recommendations on precious metals.

• AML/CFT obligations under UAE law.

• How to identify red flags (e.g., inconsistent purity levels, underpriced gold).

• Reporting processes and internal communication.

Training must be conducted annually and documented for regulatory inspection.

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7. Penalties and Enforcement

Non-compliance with AML obligations can result in severe penalties under Cabinet Decision No. (16) of 2021, including:

• Fines up to AED 5 million per violation.

• Temporary suspension of business license.

• Public disclosure of violations.

• Referral to prosecution for criminal liability.

The Ministry of Economy actively inspects refiners and has intensified enforcement following the FATF Mutual Evaluation Report (2022), ensuring accountability across the DPMS sector.

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8. Conclusion

As one of the world’s largest gold hubs, the UAE is setting global benchmarks for transparency in the precious metals sector. Refiners must proactively adopt risk-based AML programs, supply chain due diligence, and regulatory reporting systems to safeguard both their operations and the nation’s reputation.

Compliance is no longer optional — it’s essential to maintain trust, avoid penalties, and sustain business growth in the international marketplace.

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About Sheikh Anwar Accounting & Auditing LLC

Sheikh Anwar Accounting & Auditing LLC is a Dubai-based audit and compliance firm offering specialized AML advisory, compliance audits, and outsourced MLRO services for gold refiners, jewellers, and DPMS entities across the UAE.

We assist clients in aligning with MOE, FIU, and FATF standards through customized AML frameworks, training, and risk assessments.

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📞 Contact Us

Sheikh Anwar Accounting & Auditing LLC

📍 Office No. M-35, Dubai Creek Tower, Deira, Dubai, UAE

📧 info@sa-auditors.com

🌐 www.sa-auditors.com

📞 +971 52 692 7072