Understanding Vulnerabilities:

The jewellery industry’s unique characteristics create an environment susceptible to exploitation by criminals and money launderers:

Intrinsic Value and Portability: Jewellery products possess high intrinsic value and can be easily transported across borders, making them a convenient medium for illicit transactions.

Dual Use in Money Laundering: Criminals can exploit jewellery both as a source to generate illicit funds and as a means to legitimize the proceeds of criminal activities.

Difficult Traceability: The movement of jewellery items and precious metals can be challenging to track, hindering efforts to identify suspicious transactions.

Cash-Based Markets: Certain types of gems and precious metals are traded in cash-based markets, providing opportunities for anonymous transactions and facilitating money laundering.

Limited Financial System Involvement: A significant portion of jewellery transactions occurs outside the formal financial system, reducing transparency and oversight.

Global Transactions and Regulatory Variations: Cross-border and multi-jurisdictional jewellery transactions present opportunities for criminals to exploit varying regulatory regimes.

Lack of Awareness and Small-Medium Enterprises: Many small and medium-sized jewellers have limited knowledge of ML/FT risks and due diligence requirements, making them more vulnerable to financial crime.

Cultural Practices: Traditional buying and selling practices in certain regions create challenges in distinguishing legitimate transactions from illicit ones.

AML Regulation for Jewellers in the UAE:

In response to the industry’s vulnerabilities, the UAE government has enacted Decree-Law No. 20 of 2018 on Anti-Money Laundering and Combating the Financing of Terrorism and Illegal Organizations. Cabinet Decision No. 10 of 2019 further outlines the implementing regulations, subjecting dealers in precious metals and stones (DPMS), including jewellers, to stringent AML compliance requirements.

Key AML Compliance Requirements for Jewellers:

To ensure effective AML compliance, jewellers in the UAE must adhere to the following crucial requirements:

AML Policy Documentation: Jewellers must develop a comprehensive AML Policy Manual detailing robust procedures and controls to counter money laundering risks. The manual should encompass ML/FT risk assessment, customer due diligence (CDD) obligations, transaction monitoring, AML/CFT governance, and meticulous record-keeping practices.

Understanding ML/FT Risk Exposure: Adopting a risk-based approach, jewellers must conduct in-depth assessments to identify and evaluate potential ML/FT risks specific to their business operations. Staying abreast of evolving ML/FT trends and methods prevalent in the jewellery industry is vital.

Customer Due Diligence (CDD): Jewellers must implement meticulous CDD measures based on the risk categorization of transactions or business relationships. Enhanced due diligence must be applied to customers from high-risk countries or politically exposed persons (PEPs).

Reporting Suspicious Transactions: Jewellers must maintain heightened vigilance and promptly report any suspicion of illicit activities or money laundering to the Financial Intelligence Unit (FIU). Comprehensive records of transactions valued at AED55,000.0 or above must be diligently maintained.

Governance Structure: Establishing an effective governance structure is paramount, including the appointment of a capable and dedicated compliance officer. Regular AML/CFT training for all employees ensures awareness and adherence to AML regulations. Independent audits must be conducted periodically to assess AML/CFT risk profiles and ensure compliance.

Meticulous Record-Keeping: Jewellers must maintain detailed records of all financial transactions, customer due diligence, risk assessments, and reports of suspicious transactions for a minimum of five years. These records may be requested by relevant authorities for scrutiny and review.

Conclusion:

Compliance with AML regulations is of paramount importance for jewellers in the UAE to safeguard their businesses, protect the industry’s reputation, and contribute to the global fight against financial crime. By adopting robust AML policies, conducting thorough risk assessments, and diligently adhering to customer due diligence measures, jewellers can create a secure and transparent business environment. Seeking support from professional AML consultants, such as Bericht Audit & Advisory, further strengthens compliance efforts, ensuring adherence to international AML standards. With a collective commitment to AML compliance, jewellers in the UAE can fortify their businesses and play a pivotal role in combating money laundering and terrorism financing on a global scale.