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

Exclusive: Gold market authority threatens to blacklist UAE and other centres

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

FILE PHOTO: An worker exhibits a buyer gold jewelry in a store on the Gold Souq in Dubai, United Arab Emirates March 24, 2018. REUTERS/Christopher Pike

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 similar 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 making an attempt to sort out the unlawful or unethical manufacturing and buying and selling of gold has raised the prospect of reducing off the bullion business in a significant monetary centre.

“Our purpose is to work collectively with these key markets to advance world 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 informed Reuters when requested in regards to the letter.

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

The letter is addressed to China, Hong Kong, India, Japan, Russia, Singapore, South Africa, Switzerland, Turkey, UAE, the UK and america, 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 mentioned. “Except they form up, the LBMA by early subsequent 12 months will say refiners can’t supply from Dubai.”

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


The UAE is without doubt one of the world’s largest gold hubs and exports bullion price billions of {dollars} to refiners accredited by the LBMA every year. The Monetary Motion Process Drive (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 troublesome circumstances. As soon as the gold has reached the UAE, it could actually then enter the worldwide market.

Money transactions are additionally frequent within the UAE and the FATF mentioned 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 mentioned in response to questions from Reuters.

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

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

The UAE overseas ministry mentioned 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 mentioned the international locations it’s sending the letter to have been chosen as a result of they course of massive quantities of recycled gold, a selected cash laundering danger as a result of the origin of gold bars and scrap jewelry could be simple to obscure.

The letter states the LBMA’s strategic targets 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 not allow GDL Refiners to supply materials which has originated from or handed by the Worldwide Bullion Centre,” the letter mentioned.

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 similar 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 most recent 12 months for which information is offered.

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 corporations 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 influence battle gold merchants and refiners,” mentioned 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; Enhancing by Veronica Brown and David Clarke

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