There are no gold mines under the sands of Dubai, nor are miners and children toiling in an attempt to win the precious metal, but there is the Dubai Gold Market and refineries that compete with the largest commercial transactions in the world, while the UAE is trying to consolidate its position as a major center for the yellow metal trade in the world.
With these words, the British Middle East Eye website launched a lengthy report on the gold trade in the UAE, indicating that Abu Dhabi is now required to “clean” its transaction history after numerous reports confirming its involvement in dirty deals in the gold trade.
In recent years, the UAE – and Dubai in particular – has cemented its position as one of the largest and fastest growing markets for the precious metal, with imports increasing by 58% annually to more than $ 27 billion in 2018, according to data collected by the Observatory for Economic Complexity) specialist in international trade.
With no local gold to benefit from – unlike neighboring Saudi Arabia, for example – the UAE – depending on the location – imports gold from anywhere it can, whether it is legitimate or through smuggling from conflict areas without asking any questions mentioned, or through organized crime networks. .
Gold has become so important to the Dubai economy that it is considered the most valuable foreign trade element in the emirate, after trade in smartphones, jewelry, petroleum products and diamonds, according to official statistics from the customs administration in the emirate.
And it comes at the forefront of the country’s exports after oil, as the value of its exports in 2019, for example, reached $ 17.7 billion, and its importance increased in light of the decline of Dubai’s oil reserves and the attempt of the UAE to diversify its economy.
Arrows of criticism
The British site believes that to preserve this profitable trade, the UAE finds itself forced to better monitor the sector, especially after a series of reports raised its involvement in dirty transactions, and after the Financial Action Task Force (FATF) directed it to combat money laundering and financing of terrorism. Siham criticized the sector for “insufficient oversight” of the sector, in a report published last April.
A report issued by the UK’s Home and Treasury Ministries in early December stated that the UAE is a “jurisdiction area vulnerable to money laundering by criminal networks because of the ease with which gold and money can be transferred into the country”.
The Sentry, a non-governmental organization specialized in tracking dirty money associated with war criminals in Africa, issued last November a report on the “gold struggle” in Dubai, which concluded that 95% of the gold officially exported from Central and East Africa, mostly extracted from Sudan, South Sudan, Central Africa and the Democratic Republic of the Congo, ends up in the emirate.
“A lot of gold in conflict zones is smuggled into neighboring countries and then exported to Dubai … It is a kind of blood diamond, there is a rush to extract gold in many places, and this means more children in mines and more,” said Sasha Lesnev, deputy policy director at the organization. From corruption and the involvement of criminal groups … Gold is very small and valuable, so it is easy to smuggle. “
On the other hand, the British website affirms that “blood gold”, as it can be called, does not flow to Dubai only from the countries of the African continent, as the emirate has turned into a major center for gold coming from several destinations due to the official “non-interference” policy.
David Sood, head of research and analysis at the IR Consilium in Washington, said: “Gold also comes from South America, and Dubai has become increasingly the center. Once gold enters the emirate, it becomes almost impossible to identify Its source and under what conditions it got there. “
In 2016, Reuters reported that the UAE announced gold imports from 25 African countries worth $ 7.4 billion, but none of these countries announced exports destined for Abu Dhabi, and the Gulf state announced $ 3.9 billion of gold in excess of the value of what Another 21 countries reported exports of the precious metal.
Middle East Eye believes that “political expediency” may have been what enabled Dubai – and the UAE’s “Kaloti Jewelery International Group” – to evade censorship despite allegations of money laundering. Combating Financial Crime (FinCEN) of the US Treasury Department that this group was classified as a suspicious company by US banks, due to suspicious banking transactions that amounted to 9.3 billion dollars between 2007 and 2015.
Earlier this year, the International Consortium of Investigative Journalists reported that a three-year investigation by the US Drug Enforcement Administration into the Kaloti group had been dropped due to political pressure not to harm US-UAE relations.
Lakshmi Kumar, director of policy at the Center for Global Financial Integrity (GFI) in Washington, says, “Many countries are blacklisted or grayed by the FATF (for insufficient anti-money laundering controls), but the actions of the UAE are marked Equally, or perhaps more than, the risks of money laundering, and it has not yet been included in any of these regulations. “
The site concludes by stressing that Washington has a clear incentive to protect the UAE, because it is an important military ally in the region and in the field of “combating terrorist financing,” noting that the agreement to normalize relations recently signed between Abu Dhabi and Tel Aviv will make it unlikely one day to see the UAE on any list. Black American, because that would conflict with Washington’s foreign policy priorities.