Policies Issued for Responsible Gold Sourcing: MOE in UAE
Gold trading is one of the most lucrative industries yet infused with fraudulent gaps and potential financial risks. Money laundering laws have recently applied for responsible gold sourcing that will control the increasing rate of money laundering cases. Read through to know more.
Money laundering is a sophisticated yet more common term for financial fraud. Increasing greed has made money laundering a usual thing. Anywhere and everywhere, money laundering cases have been a normal phenomenon. Regardless of how established a business or a field of work is, the risk of money laundering creeps in relentlessly.
Money laundering is becoming a pressing concern amidst the growing economy. The time during the pandemic has been tough for all business sectors. Time has been a huge challenge for most people and has intruded on their finances too.
Today is the time when people think to themselves, is there any field left where financial risks are limited?
Gold has been a profitable commodity since ancient times. Not just something to own, but to trade. We already know how gold money laundering is a huge threat to the economy today. Let us see why gold is used for money laundering.
Reasons Why Gold is Used for Money Laundering
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Liquidity:
Gold has one of the highest liquidity standards compared to other modes of investments like mutual funds, stocks, and bank FDs. The best part is that gold investment doesn’t require any financial institution. -
Easy OTC:
Gold is one such commodity that can be sold anywhere. It is not controlled by any exchange and can be dealt in anywhere Over the Counter (OTC). Added to this, finding buyers for gold is the easiest task ever. -
Tax:
Gold investments are not associated with the tax. Investing in gold means paying the sales tax and the VAT only, which is an attraction for money launderers.
It has been noticed that Money laundering cases have shown a sharp rise in the field of gold.
Let us understand how money laundering laws spread around to safeguard the area.
Here are the new policies for responsible sourcing of gold that will give you a broader idea of what measures are being taken.
Policies for Responsible Sourcing of Gold
Recently, MOE (Ministry of Economy) has published laws and regulations to carry out the responsible sourcing of gold. The money laundering law have definitely spread across to implement a stronger and more effective anti-money laundering system.
The whole idea behind widening the scope of anti-money laundering laws is to combat financing terrorism and reduce money laundering cases. The DPMS (Dealers in Precious Metals & Precious Stones sector) sector’s risk rating is inherently "high" and the Refinery sub segment is identified as the sub segment with the highest risk.The latest policies involve controls and measures for the precious metal dealers (including gold). These laws were developed and issued through practical implementation with due diligence guidelines. The OECD or Organization for Economic Cooperation and Development has issued some due diligence guidelines that are counted amongst the best global practices.
The policies are developed with the motive of obliging the gold refiners to stay in line and consider the coming risks of a financial breach. The new policies are as follows-
- The company is supposed to hire a compliance officer who stays accountable and answerable to the CEO of the company. They should have access to BOD. According to the new policies, the company is responsible for providing a training program for the participants in the due diligence process. The company is supposed to implement a transparent system, have control over the supply chain of gold, and should be information sharing.
- The risk should be identified and assessed while performing the supply chain due diligence. They are supposed to identify the potential risks and potential risk indicators while monitoring the activities followed by reporting to the higher authorities.
- A risk-monitoring plan identifies the risks, which is an important outcome of the management strategy.
- One of the most important policies that need to be implemented is to carry out independent third-party reviews. The reviews should clarify the refiner’s due diligence practices according to the annual audit and audit plan standards.
- The policy states that the company should submit the supply chain due diligence reports yearly to the MOE.
The Ministry claimed that the companies and accredited establishments should follow the policies from 1st January 2023. The policies were issued last July,2022 that cleared the air.
The Final Words
The money laundering cases in gold sourcing were spiraling to an extent where they needed a stronghold.
Many companies like Smart Infotech have developed AML software that can contribute to controlling money laundering cases. Right from screening the transactions to identifying the pulsating risks, the software works to prune the unusual activities. The software recognizes the risk parties and helps alert the authorities. This way, businesses, companies, and financial institutions stay aware of where the risk lies.