The UAE’s economy is significantly influenced by the precious metals, gemstones, and jewelry industries. But it also serves as a draw for illegal activity and financial criminality. Jewelers must therefore guard against actions that finance terrorism and money laundering.
In this article, we emphasize the elements that make the jewelry sector susceptible to acts of money laundering. The laws that control AML compliance in the UAE will be listed. We will also outline the standards jewelers must meet to abide by AML laws.
Factors causing the jewelry industry to be more vulnerable leading to crime
The jewelry sector is susceptible to being taken advantage of by criminals due to several traits. Jewelers cannot successfully fight money laundering unless they know these elements and have had proper AML training.
- The products of the jewelry sector have a high intrinsic value, which could rise with time.
- The valuable metals, diamonds, and jewelry pieces are simple to move physically from one location to another.
- There are two ways that money launderers might use jewelers. First of all, they can exploit it as a means of producing illicit funds. Additionally, they can use it to conceal the sources of illicit activity’s income.
- Jewelry can be used directly as money by those who launder money. They can also indirectly use it by swapping its worth for other financial items.
- Since laboratory procedures are needed for jewelry transactions, tracking the movement of jewelry objects and precious metals is challenging.
- In this sector, there are many small and medium-sized businesses. Their understanding of AML/CFT hazards and necessary due diligence is generally low. As a result, their defense against money laundering and terrorism financing schemes weakens.
- In some areas, buying and selling precious metals and stones is a common cultural activity. This makes it challenging to distinguish between legal and illegal transactions.
- The varying regulatory environments impact global transactions in various nations. While some nations have tight regulations, others have few or no limitations. Additionally, some authorities do not prioritize overseeing and regulating each transaction.
The jewelry sector is a desirable place to engage in money laundering because of all the aforementioned factors. To stop these acts, the UAE government introduced the necessary rules. These rules correspond to the international AML/CFT rules.
AML regulation for jewelers in UAE
The primary AML regulation in UAE is Decree-Law No.2018 on Anti-Money Laundering and Combating the Financing of Terrorism and Illegal Organizations. The Cabinet Decision No. 10 of 2019 implies that dealers in precious metals and stones are subject to AML law.
The Cabinet Decision lists Designated Non-Financial Businesses and Professions (DNFBPs). These DNFBPs, including precious stones, metal dealers, and jewelers, are subject to AML policy. AML laws if they participate in transactions worth at least AED55,000. A transaction in this context can be a single transaction or a collection of connected transactions.
AML compliance requirements for jewelers in UAE
Jewelers must write out their anti-money laundering policy and create an AML Policy Manual outlining the steps and safeguards to prevent money laundering.
The jewelers must put the required precautions to manage and reduce the ML/FT risks. Establishing robust and efficient internal policies, controls, and procedures is one of the crucial strategies. When the need arises, you must evaluate the efficacy of these policies and make the necessary updates. The policy manual must include:
- Customer due diligence (CDD, EDD, SDD), including its evaluation and update and reliance on third parties. Identification and assessment of ML/FT risks.
- Monitoring of customers and transactions as well as reporting questionable activity.
- AML/CFT governance, including senior management duties, compliance staffing and training, and the independent auditing of risk mitigation measures.
- Fulfilling requirements for record-keeping.
Devising an efficient Governance Structure
For your company to comply with AML/CFT regulations, you must create a governance structure. You must choose a qualified compliance officer for this position. He or she must undergo training to manage AML/CFT program management, ML/FT reporting, and team training and development.
You must inform your staff about AML/CFT regulations, rules, and standards. You must create a training handbook and distribute it to the appropriate team members. To ensure the appropriate knowledge development, you must also evaluate the success of these training sessions.
A reliable audit conducted independently is regularly used to evaluate a governance structure. The risk profile of the goods and services, the clients, and the target markets will all be examined during this auditing process.
These are the different actions jewelers must take to adhere to AML requirements. They can protect themselves with these precautions against shady commercial dealings or transactions. As a result, they can better reduce the dangers associated with financing terrorism and money laundering.
They can also enlist the assistance of AML consultants in the UAE to plan and carry out any of these actions. A professional anti-money laundering consultant will be more qualified to assist jewelers with the appropriate, pertinent countermeasures. The consultant will ensure that actions are taken in the fight against money laundering and terrorism funding that are industry-specific.
How Can AM Audit Help
At AM Audit, we have experts handling AML Compliance Services. Our team can assist you with fulfilling all the requirements for AML and CFT in the UAE. Besides providing AML compliance services that extend beyond national boundaries, we also make sure you comply with global AML regulations.
We can help you with:
- Create firm-specific AML policies, procedures, internal controls, and best practices to run your business smoothly
- Set up an AML compliance department for your firm that can handle all AML-related activities.
- AML software selection that meets your business needs and ensures compliance.
- Filing and submitting annual AML/CFT risk assessments with the UAE government.
- Providing training for your employees on KYC, screening, risk profiling, CDD, EDD, and filing of STRs.