FATF’s View on Gold & Jewellery Sectors Globally

Publish On : 06-03-2026

The global gold and jewellery sector is one of the most significant industries in international trade, investment, and wealth preservation. However, due to the high value, portability, and liquidity of precious metals and stones, this sector has long been identified by the Financial Action Task Force (FATF) as vulnerable to money laundering (ML), terrorist financing (TF), and illicit financial flows.

As a result, FATF has issued several recommendations and guidance documents to help governments and businesses strengthen Anti-Money Laundering (AML) and Counter-Terrorist Financing (CFT) controls in the precious metals and jewellery industry.

________________________________________

Why the Gold & Jewellery Sector Is High Risk

Gold and jewellery possess several characteristics that make them attractive for financial criminals:

• High value in small volume

• Easy transport across borders

• Ability to convert quickly into cash

• Difficulty in tracing origin after melting or refining

Criminals may exploit these characteristics to store value, move funds internationally, and disguise the origin of illicit money.

FATF studies show that precious metals are often used as an alternative financial system outside traditional banking channels, particularly in regions with weak regulatory controls.

________________________________________

FATF Classification of Gold & Jewellery Dealers

FATF classifies dealers in precious metals and precious stones under Designated Non-Financial Businesses and Professions (DNFBPs).

This means businesses such as:

• Gold traders and bullion dealers

• Jewellery manufacturers and retailers

• Diamond and gemstone traders

• Precious metal refiners

• Scrap gold dealers

must comply with AML/CFT requirements similar to financial institutions when dealing with high-value transactions.

Typically, compliance requirements apply when:

• Cash transactions exceed USD/EUR 10,000 or equivalent

• Suspicious transactions are detected

• High-risk customers are involved

________________________________________

FATF Risk-Based Approach (RBA)

FATF recommends that countries and businesses adopt a Risk-Based Approach (RBA) to identify and mitigate money laundering risks in the gold and jewellery sector.

Under this approach, businesses should assess risk based on:

Customer Risk

• Politically Exposed Persons (PEPs)

• High-net-worth individuals paying in cash

• Customers from high-risk jurisdictions

Product Risk

• Gold bars and bullion

• Investment jewellery

• Rare diamonds and gemstones

Geographic Risk

• Conflict regions

• Sanctioned countries

• Countries with weak AML regulations

Transaction Risk

• Large cash purchases

• Multiple linked transactions

• Unusual trade patterns

________________________________________

Common Money Laundering Typologies in Gold Trade

FATF reports highlight several typologies used by criminals in the gold and jewellery sector:

1. Trade-Based Money Laundering (TBML)

Manipulation of invoices, over-invoicing or under-invoicing gold shipments to move money across borders.

2. Cash Purchases

High-value jewellery purchases made using cash to convert illicit funds into assets.

3. Illegal Mining and Smuggling

Gold from illegal mining operations may enter legitimate supply chains through refiners or traders.

4. Refining and Melting

Illicit gold is melted and re-refined to conceal its origin.

5. Front Companies

Jewellery trading companies may be used to disguise illegal financial activities.

________________________________________

FATF Compliance Expectations

FATF expects countries to impose AML obligations on dealers in precious metals and stones. These include:

Customer Due Diligence (CDD)

• Verification of customer identity

• Identification of beneficial owners

• Risk profiling of clients

Suspicious Transaction Reporting

Suspicious activities must be reported to the Financial Intelligence Unit (FIU).

Record Keeping

Maintain transaction records for regulatory inspection.

Internal AML Programs

Businesses must implement:

• AML policies and procedures

• Compliance officer / MLRO appointment

• Staff training

• Risk assessment frameworks

Monitoring and Reporting

Systems should be implemented to detect unusual or suspicious transactions.

________________________________________

Regulatory Developments Around the World

Many countries have strengthened AML regulations for the precious metals industry following FATF recommendations.

For example:

• United Arab Emirates: Gold and jewellery dealers must register as DNFBPs and comply with AML regulations under Federal Decree-Law No. 20 of 2018 and its amendments.

• European Union: AML Directives regulate cash transactions involving precious metals.

• United States: Jewellery dealers must maintain AML programs under the Bank Secrecy Act.

These measures are aimed at improving transparency and preventing the misuse of the precious metals trade.

________________________________________

Importance for Businesses in Gold Trading Hubs

Major global trading hubs such as Dubai, Hong Kong, London, and Mumbai play a critical role in the global gold market.

Businesses operating in these markets must:

• Implement strong AML compliance systems

• Conduct proper customer due diligence

• Monitor high-risk transactions

• Train staff on AML red flags

• Cooperate with regulatory authorities

Failure to comply can lead to financial penalties, license suspension, reputational damage, and legal consequences.

________________________________________

Conclusion

The gold and jewellery sector remains a key focus area for FATF due to its vulnerability to money laundering and illicit financial activities. By implementing a risk-based approach, strong due diligence procedures, and effective monitoring systems, governments and businesses can protect the integrity of the precious metals trade.

For companies operating in this sector, AML compliance is not only a regulatory requirement but also a critical component of responsible and sustainable business operations.

________________________________________

About the Company

Sheikh Anwar Accounting & Auditing LLC is a professional advisory firm based in Dubai specializing in AML compliance, auditing, corporate tax, VAT advisory, and regulatory consulting services for businesses across the UAE.

Our team assists gold and jewellery traders, bullion dealers, and DNFBPs in implementing robust AML frameworks aligned with UAE regulations and FATF standards, including:

• AML Policy Development

• Enterprise Risk Assessments

• GoAML Registration & Reporting

• DNFBP Compliance Setup

• AML Training for Staff

• Regulatory Inspection Support

Contact Details

Sheikh Anwar Accounting & Auditing LLC

Dubai Creek Tower, M35

Dubai, United Arab Emirates

🌐 Website: www.sa-auditors.com

📧 Email: info@sa-auditors.com