The worldwide campaign against terrorist funding and money laundering has been more intense in recent years, and regulatory agencies and governments throughout the world have been enforcing stringent regulations in a variety of industries. Under greater attention is the jewellery business in the United Arab Emirates (UAE), a prominent player in the worldwide gold and precious metals market. Anti-Money Laundering (AML) laws are now mandatory for jewelers to follow in order to prevent being used for illegal financial operations.
This article explores the AML compliance requirements for jewellers in the UAE, highlighting the regulatory framework, key obligations, and best practices to help businesses remain compliant while safeguarding the integrity of the industry.
The Importance of AML Compliance for Jewellers in the UAE
Jewellers, dealers in precious metals, and stones are considered Designated Non-Financial Businesses and Professions (DNFBPs) under UAE law. This classification puts them at a higher risk of being involved in money laundering and terrorist financing schemes due to the high-value, liquid, and portable nature of the assets they deal with.
In response to global regulatory trends and recommendations from the Financial Action Task Force (FATF), the UAE has introduced stringent AML requirements to mitigate these risks. As a regional and global hub for the trade of gold and diamonds, the UAE must ensure its jewellery industry complies with these regulations to maintain its international reputation and protect the financial system.
Overview of AML Regulatory Framework in the UAE
The UAE has built a robust legal framework to tackle money laundering and terrorist financing. The key regulations and guidelines for jewellers include:
1. Federal Decree-Law No. 20 of 2018 on Anti-Money Laundering and Combating the Financing of Terrorism and Illegal Organisations: This decree outlines the foundational AML requirements for various sectors, including DNFBPs like jewellers.
2. Cabinet Decision No. 10 of 2019: In addition to the Decree-Law, this judgment outlines specific responsibilities for companies, emphasizing procedures like customer due diligence (CDD), reporting suspicious transactions, and keeping accurate records.
3. Financial Intelligence Unit (FIU) and UAE Central Bank Guidelines: The FIU offers continuous advice to assist jewelers in comprehending how to incorporate efficient AML procedures into their business operations. Furthermore, the Central Bank of the United Arab Emirates supervises the adherence of companies, including DNFBPs.
Key AML Obligations for Jewellers in the UAE
The United Arab Emirates requires jewelers to comply with a number of anti-money laundering (AML) regulations, all of which are intended to stop their companies from being used for money laundering. The main criteria for compliance are listed below:
Customer Due Diligence (CDD)
Customer due diligence is one of the key elements of AML compliance. Jewelers are required to do CDD on clients who surpass a certain amount before doing business with them. This amount is typically AED 55,000, or around USD 15,000. However, transactions below this threshold can also need the usage of CDD if there are any suspicious conditions.
Among the essential elements of CDD are:
Identifying and Verifying the Customer’s Identity : This entails gathering and confirming formal documentation, such as business licenses for enterprises and passports or Emirates IDs for individuals.
Identifying the Beneficial Owner: Jewelers are required to identify and confirm the identity of the person who ultimately owns or controls the company, in the case of corporate customers or trusts.
Continuous Monitoring: In order to make sure that client transactions and relationships stay in line with the customer’s risk profile, jewelers must keep a close eye on them. This involves updating high-risk consumers’ CDD information on a regular basis.
Risk-Based Approach (RBA)
Jewellery retailers can customize their AML efforts using a risk-based approach according to the degree of risk involved in each customer or transaction. The RBA is intended to ensure more inspection when needed and to distribute resources efficiently.
As per the RBA, jewelers ought to:
Conduct Risk Assessments : The risks of money laundering and terrorist funding should be evaluated for every customer and transaction. It is important to consider elements like the customer’s location, the type of transaction, and the funding source.
Implement Enhanced Due Diligence (EDD): Jewelers are required to do enhanced due diligence, which entails additional inspection and verification procedures, for high-risk customers or transactions.
Suspicious Transaction Reporting (STR)
Jewelers have an obligation to be watchful in identifying and informing the Financial Intelligence Unit (FIU) of any questionable transactions. Any transaction that raises suspicions should be reported right away, including strange cash transactions, clients who refuse to produce identification, and irregular company activities.
Reporting suspicious transactions entails the following steps:
Internal Escalation : Workers are required to notify the company’s AML compliance officer of any questionable transactions.
Filing a Suspicious Transaction Report: The compliance officer must use the goAML platform or other authorized reporting methods to submit a STR to the FIU.
Record-Keeping Requirements
Jewelers have a minimum of five years to save internal reports connected to AML compliance, CDD documentation, and records of every transaction. In the event of an audit or regulatory inquiry, this guarantees that the pertinent data will be accessible.
Documents that need to be kept up to date are:
– Copies of identity documents for customers
– Transaction records, such as contracts, receipts, and invoices
– Internal reports pertaining to questionable conduct
– Risk evaluations and CDD records
Appointment of a Compliance Officer
Jewellers are required to designate a specific AML compliance officer to oversee the company’s compliance initiatives. This person will be in charge of making sure that CDD procedures are followed, keeping appropriate records, conducting internal audits, and reporting suspicious transactions to the FIU.
Employee Training Programs
An essential component of AML compliance is ensuring that staff members are trained on the most recent AML regulations, customer due diligence procedures, and how to spot suspicious activities. Regular training sessions will guarantee that all staff members are knowledgeable about AML risks and prepared to prevent them.
Challenges Facing Jewellers in AML Compliance
When putting AML compliance procedures into practice, jewelers have a number of difficulties despite the established statutory framework:
Complicated Customer Profiles: It can be challenging to conduct comprehensive CDD and identify beneficial owners when dealing with high-net-worth people or corporations with complicated ownership arrangements, as jewellery firms frequently do.
Cash-Intensive Transactions: A large number of clients favor cash transactions, which raises the possibility of money laundering. Extensive currency transactions necessitate increased caution and watchfulness.
Evolving Regulatory Environment: In order to prevent non-compliance, jewelers must be informed about the most recent standards as AML regulations are always changing.
Resource Limitations: Lesser-known jewellery companies might not have the funds or knowledge to put in place thorough AML procedures, which could result in compliance lapses.
Jewellery Industry Best Practices for AML Compliance
The following best practices should be used by jewelers in the UAE to guarantee compliance and shield their company from fines:
Create a Comprehensive AML Policy : This document should specify how the business will comply with AML regulations, including how CDD, risk assessments, and reporting suspicious activity are all handled.
Invest in AML Technology : Automated systems may help jewelers effectively comply with regulatory standards by streamlining CDD procedures, monitoring transactions in real-time, and generating risk assessments.
Update Risk Assessments Frequently : AML risks are dynamic and subject to shift in response to several circumstances, including market developments and client behavior. Jewelers should regularly evaluate their risks in order to modify their compliance strategies.
Engage Legal and Compliance Experts : Consulting with legal advisors or compliance experts may assist companies in navigating the intricate regulatory environment and guaranteeing that their anti-money laundering (AML) policies adhere to the highest standards.
Conclusion
The UAE has made it mandatory for jewelers to comply with AML regulations. The jewellery industry must put in place extensive compliance processes in order to avoid being used as a front for illegal financial activity, even with tight rules in place. Jewelers may shield their companies from legal repercussions and fight financial fraud on a worldwide scale by complying with client due diligence regulations, reporting suspicious transactions, and keeping thorough records.
Maintaining compliance is essential for your company’s long-term viability and reputation in the competitive and valuable jewellery market in the United Arab Emirates, not merely to avoid penalties.
If you’re a jeweller operating in the UAE, understanding AML requirements is crucial for your business. Contact us to ensure you remain compliant and competitive.