The decision of the United Arab Emirates (UAE) government to introduce fresh regulations for responsible sourcing of gold is expected to have a positive impact on the import of the metal into India.
Sources said the UAE’s Ministry of Economy had decided to implement stronger rules to prevent money laundering and to combat financing of terrorism. The new measures have been adopted anticipating that gold smuggling would lead to a parallel economy and could be used to finance terrorist activities, with global economies opening up after the COVID-19 pandemic.
The regulations consist of a set of policies to mitigate risks in the process of importing gold from conflict-affected and high-risk areas. The UAE has been supporting the activities of the Financial Action Task Force, an intergovernmental organisation to develop policies to combat money laundering and terrorism financing, according to the the Emirates New Agency.
However, Indian law-enforcing agencies are unsure whether the new policy would curtail the smuggling of gold via Indian airports. Yet, some regulation in the UAE, considered to be a key hub for smuggling syndicates, would curb illegal activities, sources said. The Comprehensive Economic Partnership Agreement signed between India and the UAE had failed to bring down gold smuggling.
After Switzerland
India imported gold mainly from Switzerland, the UAE, and South Africa. The global purchase of imported gold was $55.8 billion in 2021. The country ranked second after Switzerland in the list of five biggest importers of gold last year.
Incidentally, the Calicut international airport remains the second gateway, behind Chennai, for gold smuggling in the country. The Customs department had seized 200.04 kg of gold last fiscal. Over 200 kg of gold were seized at the airport this year till August 31. This is apart from the seizures carried outside the airport, especially by the State police in Malappuram district.
From Jan. 1, 2023
The new policy in UAE states that controlled companies and establishments would have to implement the requirements of the regulation during an audit period starting from January 1, 2023. Besides, they will have to do a third-party review after a year. These reports will have to be submitted to the Ministry of Economy within 90 days of the completion of the review cycle.
