Money Laundering Risks for Precious Metals Dealers UAE
Dealers in precious metals and stones (DPMS) play an important role in the UAE business sector. UAE law (Cabinet Decision No. 10 of 2019) names them as DNFBP (Designated Non-Financial Businesses and Professions) when they handle money transactions worth AED 55,000 or more, or when several linked transactions total more than this amount. Mubarak Al Ketbi (MAK) Auditing helps DPMS understand and handle these risks.
Why Are Precious Metals Dealers at Risk?
Many studies show that DPMS are more exposed to money laundering and terrorism financing. This happens because gold, silver, diamonds, and other valuable metals have unique features:
- They’re easy to transport.
- They can store value for a long time.
- They’re accepted and recognized worldwide.
- They can be quickly turned into cash or other assets.
Criminals often use precious metals to move or hide illegal money. That’s why anti-money laundering (AML) officers must always look out for red flags. Dealers should know about the most common risks they face in this sector.
Main Money Laundering Risks for DPMS
1. Using Precious Metals as Currency Alternatives
Criminals use gold or diamonds instead of cash to make payments for illegal activities. Gold and stones are hard to trace and can be used to fund crime or terrorism. Smuggling gold or diamonds is common, because they are easy to hide and transport across borders.
2. Precious Metals as Crime Proceeds
Gold and other metals can hold value for a long time. Criminals can smuggle or store precious metals, wait until prices rise, then sell for profit. This turns illegal money into legal assets. DPMS must stay alert for such activities.
3. Laundering Illicit Precious Metals
The supply chain for precious metals can be complicated. Many middlemen make it easier for criminals to hide illegal money or smuggle goods. AML officers should know every stage where criminals can try to sneak in dirty money.
4. Smuggling Precious Metals through Trade
Criminals sometimes hide illegal gold as regular trade. Because gold is light and valuable, it’s easy to send small packages that are worth a lot of money. They might pretend to trade legal goods but really move smuggled metals. This tactic helps them dodge the law.
How Can Dealers Overcome Money Laundering Risks?
Dealers must follow strict rules to keep their business safe. Here are steps every DPMS in UAE should follow:
- Report Suspicious Transactions:
If you suspect a customer is involved in money laundering, treat it as a red flag and report it to authorities or the AML officer. - Keep Records:
Save every transaction, especially large or unusual ones. Good records help you show evidence if the law asks for proof. - Know Your Customer (KYC):
Always check who your customers are. Use customer due diligence to make sure you know who you’re dealing with and to keep relationships transparent. - Follow AML Compliance Rules:
Appoint a compliance officer, follow AML rules, and make sure your staff understands the law. - Train Your Team:
Employees must know the risks and be able to spot suspicious behavior. Regular training helps your staff do their job well. - Monitor Payment Methods:
Watch how clients pay. Check the source of funds and make sure no money comes from illegal activities.
Tips for DPMS to Stay AML-Compliant
Every DPMS can lower their risk with these best practices:
- Use secure systems to check customer identities.
- Train staff on AML and CFT compliance.
- Review transactions for patterns of suspicious activity.
- Regularly update compliance policies.
- Work with experts like Mubarak Al Ketbi (MAK) Auditing for professional support.
How Mubarak Al Ketbi (MAK) Auditing Can Help
Mubarak Al Ketbi (MAK) Auditing gives DPMS firms the expert advice they need to stay compliant with UAE law. Our team helps you set up a strong compliance system, trains your staff, and reviews your records to stop problems before they start. Remember, an ounce of prevention is worth a pound of cure—and MAK Auditing is always here to help you protect your business!
- For more information, visit our office:
Saraya Avenue Building – Office M-06, Block/A, Al Garhoud – Dubai – United Arab Emirates - Or contact/WhatsApp us: +971 50 276 2132
- Our compliance experts answer all your DPMS and AML questions.
