The UAE’s dynamic economy, especially the precious metals and stones sector, has become a focal point for global trade. However, the characteristics of these high-value items, including portability, ease of exchange, and global acceptability, make them attractive tools for money launderers and terrorist financiers. To mitigate these risks, the UAE has implemented a robust AML framework, with specific obligations for dealers in precious metals and stones (DPMS).
This comprehensive guide outlines the AML compliance requirements for such businesses in the UAE.
Understanding the AML Legislative Framework for Dealers in Precious Metals and Stones
The primary law governing AML compliance in the UAE is Federal Decree-Law No. 20 of 2018, which lays the foundation for AML, CFT, and countering proliferation financing. This decree is supported by Cabinet Decision No. 10 of 2019, which specifically addresses the obligations of regulated entities, including dealers in precious metals and stones (DPMS).
In addition, the UAE also mandates compliance with Targeted Financial Sanctions (TFS) under Cabinet Resolution No. 74 of 2020, which regulates measures against terrorism, terrorist financing, and the proliferation of weapons of mass destruction. This highlights the importance of a comprehensive AML program for DPMS businesses, focusing not only on money laundering but also on the broader financial crime risks associated with terrorism and sanctions violations.
Furthermore, AML compliance guidelines specific to DPMS are issued by several authorities, including:
- The UAE Ministry of Economy’s Supplemental Guidance for Dealers in Precious Metals and Stones
- The Central Bank of the UAE’s AML/CFT Guidelines for Designated Non-Financial Businesses and Professions
- The ADGM and DIFC AML and Sanctions Compliance Rulebook for businesses operating in the Abu Dhabi Global Market (ADGM) or Dubai International Financial Centre (DIFC).
These regulations and guidelines provide the necessary framework for businesses in this sector to assess and manage their risk exposure, ensuring timely detection and reporting of money laundering, terrorist financing, and related crimes.
Who is Required to Comply with AML Regulations?
Under the UAE’s AML laws, dealers in precious metals and stones (PMS) are considered Designated Non-Financial Businesses and Professions (DNFBPs) if they conduct single or multiple linked cash transactions of AED 55,000 or more.
This category includes a wide range of precious items such as:
- Precious Metals: Gold, silver, platinum, palladium
- Precious Stones: Diamonds (rough and polished), colored gemstones, pearls
- Other Items: Any product whose value is at least 50% derived from precious metals and stones.
If your business deals in high-value items such as these, you are subject to stringent AML compliance requirements to protect against potential misuse by criminals looking to launder illicit funds.
Key AML Compliance Obligations for Dealers in Precious Metals and Stones
Once classified as a DPMS, businesses must adhere to several key AML compliance obligations to ensure they are not inadvertently facilitating money laundering or terrorist financing. These include registration, appointment of a compliance officer, conducting risk assessments, implementing effective customer due diligence (CDD), ongoing monitoring, and reporting suspicious transactions.
1. goAML Registration
All DPMS entities must register with the UAE Financial Intelligence Unit’s goAML Portal. The registration process is a two-step procedure where the business must provide details about the appointed AML Compliance Officer, who will oversee the implementation of the AML program within the company. This registration ensures that your business is recognized by the authorities and is compliant with AML reporting and monitoring requirements.
2. Appointment of an AML Compliance Officer (MLRO)
Every DPMS must appoint an AML Compliance Officer (often referred to as a Money Laundering Reporting Officer or MLRO) to design, implement, and monitor the company’s AML policies and procedures. The AML Compliance Officer is responsible for ensuring the company adheres to all AML regulations and plays a crucial role in investigating suspicious activities and filing reports with the UAE’s Financial Intelligence Unit (FIU).
3. Enterprise-Wide Risk Assessment (EWRA)
A core part of the AML compliance framework for DPMS is conducting a comprehensive risk assessment to identify potential vulnerabilities related to money laundering, terrorist financing, and proliferation financing. This is known as the Enterprise-Wide Risk Assessment (EWRA). The risk assessment should cover various factors, including:
- Customer Types: Who are your customers (e.g., individuals, businesses)?
- Transaction Volumes and Types: What is the nature, volume, and complexity of transactions you handle?
- Geographies Involved: Where are your customers and suppliers located? Are they from high-risk or sanctioned regions?
- Business Relationships: What are the terms and volume of transactions with suppliers, customers, and business partners?
By evaluating these factors, DPMS can identify the specific risks they face and implement appropriate mitigation measures. This risk-based approach allows businesses to focus on high-risk areas while minimizing the impact of lower-risk transactions.
4. Customer Due Diligence (CDD) and Know Your Customer (KYC)
An essential part of AML compliance is establishing a robust Customer Due Diligence (CDD) process. This involves identifying and verifying customers before entering into business relationships. DPMS must collect key information about the customer, such as:
- Full name, address, and nationality (for individuals)
- Business registration details (for legal entities)
- Ownership structure, including the Ultimate Beneficial Owners (UBOs) if the customer is a company
The verification process typically involves collecting and checking official documents such as:
- Passport, Emirates ID, or Driving License (for individuals)
- Trade License or Certificate of Incorporation (for companies)
Once customer identification is completed, businesses must screen customers against sanctions lists, including the UN Consolidated List, the UAE Local Terrorist List, and the Politically Exposed Persons (PEP) database. If any matches are found, further steps need to be taken, such as enhanced due diligence (EDD) or reporting to the authorities.
5. Ongoing Monitoring of Transactions
AML compliance is not a one-time process; it requires continuous monitoring of both customer relationships and transactions. DPMS must regularly review customer information to ensure it remains up-to-date. This includes monitoring transactions to detect any suspicious activity or unusual patterns that may indicate money laundering or terrorist financing.
For high-risk customers, Enhanced Due Diligence (EDD) measures must be applied. This may include requesting additional documentation to verify the source of funds or wealth.
6. Reporting Suspicious Transactions and Activities
If a DPMS identifies suspicious transactions, such as unusually large cash payments or transactions that deviate from a customer’s typical profile, they must report these activities to the UAE’s Financial Intelligence Unit (FIU) via the goAML Portal. The types of reports to be filed include:
- Suspicious Activity Reports (SAR)
- Suspicious Transaction Reports (STR)
- Funds Freeze Reports (FFR) or Partial Name Match Reports (PNMR), in case of sanctions list matches
Reporting these suspicious activities helps to prevent the financial system from being exploited by criminals and ensures that the DPMS remains compliant with UAE AML laws.
7. Training and Awareness
AML training is an essential part of any compliance program. All staff, especially those involved in customer-facing roles, should receive regular training on recognizing and reporting suspicious activities. This training must cover:
- The basics of AML/CFT regulations
- Red flags specific to the precious metals and stones sector
- How to conduct Customer Due Diligence (CDD)
- The process for reporting suspicious activities
This ensures that employees are equipped to identify potential risks and respond accordingly.
8. Record Keeping
Lastly, DPMS must maintain detailed records of all AML-related documents, including customer identification records, transaction records, reports filed with the FIU, and compliance audits. These records should be kept for a minimum of five years, ensuring transparency and accountability in case of audits or investigations.
Why AML Compliance Matters for Your Precious Metals and Stones Business
The UAE has a strict regulatory framework to safeguard the financial system from money laundering and terrorist financing. By complying with these AML obligations, DPMS can protect their business from the risks associated with financial crimes, avoid hefty fines, and maintain their reputation in a competitive industry.
If you are looking for AML consulting companies in Dubai, AML compliance consultants, or AML consulting firms that specialize in helping precious metals and stones dealers navigate the complexities of the UAE’s AML laws, you’ve come to the right place. At Elevate Business Solutions, we offer tailored consulting services to ensure that your business stays compliant with local and international AML/CFT standards.
At Elevate Business Solutions, we specialize in helping precious metals and stones businesses navigate the complexities of AML compliance. Whether you need assistance with risk assessments, developing AML policies, staff training, or ongoing monitoring, our team of experts is here to guide you every step of the way.
Get in Touch Today!
Stay ahead of the regulatory curve and ensure your precious metals and stones business remains compliant with the UAE’s AML laws. Contact Elevate Accounting & Auditing today to learn how we can help you implement an effective AML compliance program tailored to your unique business needs.