Report Reveals UAE as Key Hub for Money Laundering from Africa

The British Financial Times reported that the UAE is a favored destination for smuggling large quantities of gold from African countries to launder money tainted with the blood of innocent victims.

According to the European Microscope’s analysis of Middle Eastern issues, the newspaper emphasized accusations against the UAE, stating it is the primary beneficiary of gold worth tens of billions of dollars smuggled from Africa annually, highlighting rising concerns about the illicit trade in precious metals in the region.

In a comprehensive study, Suicide estimated that about 435 tons of gold worth about $31 billion were exported undeclared from Africa in 2022. This figure represents a doubling of illicit volumes over a decade, equating to about 40 percent of the continent’s production and 12 percent of global mined supplies.

The NGO report stated that the UAE, with Dubai as its prominent regional trading hub known for its gold market, was responsible for 93 percent of undeclared African gold exports. The largest importers of this gold were Switzerland and India.

With gold prices hitting record highs earlier this year, these figures will increase scrutiny on illegal mining in conflict areas such as the eastern Democratic Republic of the Congo and Sudan, as well as the role of the UAE’s precious metals industry.

Mark Umel, a co-author of the report, suggested that the Financial Action Task Force, the global organization addressing money laundering, should reevaluate its decision to remove the UAE from its “grey list” in February.

 “You should not be removed from the list when you have 400 tons coming into your country illegally,” he added. “This is a significant amount of money leaving Africa linked to money laundering, conflicts and human rights issues that does not benefit the people who are mining the gold and trying to provide for their families.”

Last year, Emirates Gold, one of the largest refiners in the country, was suspended from accessing the gold markets in Dubai and London due to requirements for anti-money laundering and responsible sourcing standards.

The refiner stated at the time that the suspension was unrelated to its compliance processes, asserting that it has consistently followed responsible sourcing and anti-money laundering practices.

An Emirati official acknowledged the existence of “concerns about gold smuggling into Dubai,” but noted that the country had “introduced comprehensive new regulations for gold and precious metals to effectively address these risks.”

Gold extraction by “artisanal” miners has been a long-standing issue for the gold sector but has become more acute after prices of the metal rose.

Gold hit a record $2,400 per troy ounce in April as emerging market central banks led by China snapped up bullion to diversify their reserves away from the US dollar.

 The report said that among African countries, Mali, Zimbabwe, and Ivory Coast had the largest amounts of undeclared gold production.

To improve due diligence in gold sourcing, the UAE introduced new regulations for gold refineries in 2023, which include screening and site visits to artisanal mines. However, Abu Dhabi has raised concerns about whether this approach to accepting artisanal and small-scale mining negatively affects the individuals working the land.

Last year, the Democratic Republic of Congo granted Primera, an Abu Dhabi-based gold trader, a 25-year monopoly on the trade and export of small-scale “artisanal” gold supplies, in a move aimed at combating the smuggling trade.

The Central African country is fighting rebels in its eastern border regions, where a mining belt contains huge amounts of gold.

Congolese analysts and officials say armed groups including the March 23 militia control supply chains to Rwanda and Uganda.

The US Treasury said most of the DRC’s gold was smuggled to neighboring Rwanda and Uganda, where it was refined and exported mainly to the UAE.

Kigali has consistently denied Congo’s accusations that Rwanda profits from the unauthorized export of minerals, which Congo claims costs it $1 billion annually. Rwanda asserts that its mining sector is “fully regulated and monitored” with “mandatory traceability.”

“In November 2022, Rwandan President Paul Kagame remarked, ‘The Congolese accuse us of stealing… their gold.’ He further noted that much of the exported gold doesn’t remain in Rwanda but instead goes to destinations like Dubai, Brussels, and Tel Aviv. Kagame questioned, ‘They accuse us of taking Congolese minerals—what about where it ends up?'”

The report added that the UAE was the main destination for the vast majority of artisanal gold extracted in 18 African countries included in the European Union’s list of countries affected by conflict and countries at high risk.

Nonetheless, the UAE official emphasized that all gold refineries in the country must adhere to due diligence regulations for responsibly sourcing gold. These regulations align with the OECD’s guidelines for ensuring responsible mineral supply chains from conflict-affected and high-risk areas.

Earlier this year, the United States levied sanctions against Al-Fakher Advanced Business, a holding company identified by the Treasury Department for exporting gold to the paramilitary Rapid Support Forces. These forces are engaged in a brutal civil conflict against the Sudanese army.