Unique: Gold market authority threatens to blacklist UAE and different centres


By Peter Hobson

LONDON (Reuters) – The world’s most influential gold market authority is threatening to cease bullion from international locations together with the United Arab Emirates getting into the mainstream market in the event that they fail to satisfy regulatory requirements, a letter seen by Reuters confirmed.

Within the letter dated Nov. 6 addressed to international locations with massive gold markets, the London Bullion Market Affiliation (LBMA) laid out requirements they have to meet on points akin to cash laundering and the place they supply their gold – or be blacklisted.

The transfer by the LBMA is the primary time a market or state authority attempting to deal with the unlawful or unethical manufacturing and buying and selling of gold has raised the prospect of chopping off the bullion business in a serious monetary centre.

“Our objective is to work collectively with these key markets to advance international requirements, to not disengage from them. Nonetheless, we’re additionally dedicated to behave if there may be not significant and efficient enchancment,” LBMA Chief Govt Ruth Crowell advised Reuters when requested in regards to the letter.

The LBMA letter didn’t goal any centre specifically, however 4 folks concerned in drafting it advised Reuters the gold business in Dubai within the United Arab Emirates (UAE) was the primary focus.

The letter is addressed to China, Hong Kong, India, Japan, Russia, Singapore, South Africa, Switzerland, Turkey, UAE, the UK and the US, all of which the LBMA has recognized as main gold centres.

“The entire bullion centres initiative is due to critical points in Dubai,” one of many sources stated. “Until they form up, the LBMA by early subsequent 12 months will say refiners cannot supply from Dubai.”

The LBMA is a commerce group relatively than a state company nevertheless it holds sway over the market as a result of the big worldwide banks that dominate gold buying and selling usually solely cope with metallic from refineries the affiliation has accredited.


The UAE is among the world’s largest gold hubs and exports bullion price billions of {dollars} to refiners accredited by the LBMA annually. The Monetary Motion Job Power (FATF), an intergovernmental anti- cash laundering monitor, has criticised its controls, as have non-governmental organsations (NGOs).

A Reuters investigation final 12 months discovered gold price billions of {dollars} had been smuggled to Dubai from Africa, a lot of it mined by artisanal labourers who usually work in tough situations. As soon as the gold has reached the UAE, it may well then enter the worldwide market.

Money transactions are additionally frequent within the UAE and the FATF stated in April that the nation was not doing sufficient to forestall cash laundering.

“The UAE will definitely look into the questions and issues raised by the London Bullion Market Affiliation as soon as it’s in receipt of the letter,” the Gulf state’s Ministry of International Affairs and Worldwide Cooperation stated in response to questions from Reuters.

“The UAE acknowledges the significance of its bullion business and of growing more and more strong mechanisms to deal with the challenges led to by monetary crime,” it stated.

The Gulf state has tightened monetary rules to attempt to overcome a notion amongst some international traders that it’s a scorching spot for illicit cash. It handed an anti-money laundering and terrorism financing regulation in 2018 and has labored with its ally the US to sanction Islamist militant teams.

The UAE international ministry stated additional strengthening its regulatory framework was a crucial nationwide precedence.

The Dubai Multi Commodities Centre (DMCC), a authorities physique that units requirements for the gold business and accredits some refineries, declined to remark.


The LBMA stated the international locations it’s sending the letter to had been chosen as a result of they course of massive quantities of recycled gold, a specific cash laundering danger as a result of the origin of gold bars and scrap jewelry might be simple to obscure.

The letter states the LBMA’s strategic objectives are to make sure accountable sourcing of recycled gold, an finish to money transactions and help for artisanal and small-scale miners.

It asks recipients to declare their help for the LBMA’s requirements by Dec. 11 and share an motion plan for his or her implementation by the top of January, in the event that they haven’t been met.

“A scarcity of cooperation or unwillingness to publicly commit to those requirements and share a proposed timeline with the LBMA will imply LBMA could now not allow GDL Refiners to supply materials which has originated from or handed via the Worldwide Bullion Centre,” the letter stated.

GDL, or “good supply”, refiners are these accredited by the LBMA, whose guidelines prohibit dealing with gold from unethical sources.

Governments and the United Nations have beforehand imposed sanctions on international locations akin to Venezuela or on people and corporations in nations together with Democratic Republic of Congo, the place gold has been used to fund conflicts.

The UAE has greater than 10 gold refineries. None are licensed by the LBMA and most lack any accreditation of their gold sourcing insurance policies.

Nonetheless, LBMA figures present that refiners it certifies, primarily in Switzerland, imported 212 tonnes of gold from the Gulf state in 2018, the newest 12 months for which knowledge is accessible.

At present costs, that gold could be price $13 billion.

Refiners that take bullion from the UAE say they vet their suppliers fastidiously and that many Dubai firms are ethically run. Nonetheless, another refiners keep away from dealing with any materials from the Gulf state.

“This initiative has the leverage that would meaningfully impression battle gold merchants and refiners,” stated Sasha Lezhnev, deputy director of coverage at The Sentry, an NGO which printed a report on Dubai’s gold business on Tuesday.

(Reporting by Peter Hobson in London; Extra reporting by Maha El Dahan in Dubai; Modifying by Veronica Brown and David Clarke)

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