Money laundering cases started with cash-intensive businesses. However, over some time, the world authorities have come across several precious metals money laundering cases.
This has led to the creation and development of AML/CFT laws in several countries to reduce money laundering crimes in the jewelry industry.
The UAE is no exception. With the introduction of UAE’s anti-money laundering laws, it is crucial jewelers must know about them. Proper knowledge and compliance with these laws will help them avoid penalties and other legal issues.
AML laws
Under the Cabinet Decision No. 10 of 2019 concerning the Implementing Regulation of Decree-Law No. 20 of 2018 on Anti-Money Laundering and Combating the Financing of Terrorism and Illegal Organizations, AML/CFT obligations are applicable to transactions of dealers in precious metals and stones (DPMS). This decision considers the DPMS as a non-financial business. If the value of the transaction is more than AED55,000.0, the AML/CFT rules apply under the AML/CFT regulatory framework of the UAE.
Accordingly, they published the ‘Guidelines for designated non-financial businesses and professions and ‘Supplemental guidance for dealers in precious metals and stones for a better understanding of the rules. The guidelines and the supplemental guidance together serve as a list of obligations. So that the dealers in precious metals must follow to identify, evaluate, and mitigate the risks of money laundering.
Requirements to Comply with anti-money laundering laws in the UAE
UAE’s anti-money laundering laws and regulations apply to people involved in the extraction, import/export, exchange, loan or lease arrangements, possession, and sale and purchase of precious stones.
It also metals, pearls, semi-precious gemstones, high-value industrial metals, and similar products. According to these laws and guidelines, the dealers of gems, jewelry, and precious stones must employ the following practices:
Adopt a risk-based approach to identify and assess money laundering and terrorist financing risks
Dealers of gems, jewelry, and precious stones must implement a risk-based approach to identify the risks that which their business is exposed. Companies must be wary of customer risks, product/service/transaction risks, geographic risks, channel risks, and other operational risks.
These risks may occur at the production stage, extraction process, trading, purification and preparation for sale, and wholesale or retail trading. Once the risks are identified, jewelers need to assess the risks to understand their intensity, prioritization, and categorization.
Create policies, procedures, and controls to mitigate the risks
Once the dealers assess the risks, the next step is to protect their business from such risks by lessening their impact or eliminating them completely. They must enlist these policies and frameworks for their internal operations and get them approved by the senior management.
These risk mitigation strategies must be shared with every employee so that people are aware of the policies in place and make efforts to reduce risk exposure.
Employ customer due diligence measures for creating, monitoring, and updating customer profiles
The first key strategy for effective risk mitigation is customer due diligence. Companies must conduct customers’ and business associates’ screening and relevant background checks to ensure dealing with only the non-criminal people.
Another key tactic is that the dealers must gather information about the real beneficial owner of the transaction to identify any hidden, secretive source of funds, transaction, or activity. These will help the dealers to identify the transactions having associations with illicit companies or politically exposed persons.
Identifying, reporting, and handling suspicious transactions
In addition to identifying the money laundering transactions, assessing them, and mitigating them, it is also essential for the dealers to report such suspicious transactions, individuals, and companies to the relevant authorities in UAE. This will enable the authorities to keep a check on their activities and take necessary legal action, if and when required.
Develop a suitable governance framework for AML/CFT
You must create a strong governance structure to enable smooth execution of the money laundering risk mitigation strategies and measures that can protect the integrity of your business.
For this, you must employ a Compliance Officer, conduct a screening of your employees, train them for the application of AML policies, and ensure regular independent audits of your business.
In case of some doubtful transaction, dealers must monitor the activities of their customers and business partners to protect themselves from any exposure to money laundering.
Maintaining adequate records of all of the steps taken by the business for AML/CFT
If the dealers take all these steps, they can protect their business from the risks of criminal, terrorist financing, and money laundering activities.
One more important step is to keep records of all the financial transactions, customer and business associates’ information, and AML/CFT tactics implemented in the business.
Such data records and statistics must be organized effectively, and made available to the relevant AML/CFT authorities in UAE when requested.
Conclusion
Dealers must remain committed to these anti-money laundering laws in the UAE and adopt measures to fight for their business integrity. Moreover, they should participate in the global fight against money laundering. Hiring professional AML consultants is a good option for businesses since they get access to consultants’ expertise. So that the businesses can focus on their core operations.
Why AML consulting for the jewelry business is essential?
Anti-money laundering laws in the UAE for the jewelry industry are recent. Still, money launderers have found new ways of laundering money, and different industries are being exposed to these risks. Therefore, it has become essential to provide consulting to these industries to secure their business from risky, criminal activities.
AML consultants help jewelers to develop policies and processes that adhere to UAE’s anti-money laundering laws while conducting rechecks and audits. Thus it helps them identify any risky transactions and create manuals for their day-to-day transactions.
Our strengths – AML Consulting
N R Doshi & Partners is a top-notch provider of AML consulting services in UAE and other countries of the world. We become your AML partners to protect your business from any sort of money laundering possibilities. Moreover, we evade the risks of criminal activities.
Our AML consulting services also include AML consultation, the setup of an in-house compliance department, and the creation of a customized manual. Additionally, we conduct AML training for employees, KYC and AML due diligence, auditing of AML/CFT compliance, and other assistance services.
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