Dealers In Precious Metals And Stones Report

DPMS Report (DPMSR) for Dealers in Precious Metals and Stones (DPMS) on the goAML portal in UAE

Introduction of DPMS Report (DPMSR) on goAML portal:

On 2nd June 2021, the Ministry of Economy (MOE) has issued Circular no. 8/AML/2021 addressed to the Dealers in Precious Metals and Stone (DPMS) citing the minimum KYC information they need to obtain while undertaking certain cash transactions

Why DPMSR was made mandatory on goAML for Dealers in Precious Metals and Stones (DPMS)?

Recent studies have concluded that the nature of precious metals and precious stones (PMS), and the characteristics of the markets in their trade, make them inherently highly vulnerable to misuse or exploitation by criminals for the purpose of money laundering and the financing of terrorism. DPMS are likewise vulnerable to ML/FT risks.

Among the reasons noted for this vulnerability are the facts that:

PMS represent high intrinsic value in a relatively compact form, tend to maintain (or even increase) value over time, and can be easily transported physically in many forms;
PMS can be used both as means to generate criminal proceeds (i.e. through various predicate offences), as well as vehicles to launder them;
PMS can be used for illicit purposes, including ML/FT, in a variety of ways, either directly (through physical exchange, as a form of currency) or indirectly (through exchange of value via various formal and informal financial systems, as well as via international trade and the financial products and services related to it);
There are large, well-established, decentralised, and often cash-based markets for certain types of precious metals and stones (particularly for gold and diamonds, but for other PMS as well), often allowing them to be traded or exchanged with relative anonymity;
The difficulty in tracing specific items, and the global nature of the markets for PMS, make it easier for criminals to exploit cross-border, multi-jurisdictional situations in order to obscure the paper and money trails, while at the same time rendering it more difficult for national law enforcement authorities to detect and investigate cases;
The scale and diversity of small and mid-sized participants in the markets for precious metals and precious stones, and the generally low level of awareness and education among them in regard to the ML/FT risks, due-diligence requirements, and the red-flag indicators associated with their trade, increase the vulnerability of DPMS to exploitation by criminals and terrorists.

When is/ for which all transactions DPMSR required to be reported by DMPS? What is the minimum threshold to report a transaction under DPMSR?

A). Transactions with Individuals (B2C)

Transactions to be reported in DPMSR:

a) All cash transactions with individuals (residents/visitors) equal or exceeding AED 55,000 need to be reported in DPMSR. Obtain and verify identification documents (ID or Passport) which needs to be reported in DPMSR

Transactions NOT to be reported in DPMSR:

a) Credit card, cheque or local bank transfers with individuals equal or exceeding AED 55,000 need NOT be reported. However, if there is any suspicion arises, it has to be reported under STR (Suspicious Transaction Reporting under GoAML)

b) Old gold exchange (old gold/ jewellery exchanged for new jewellery): If there is no cash transaction (equal or exceeding AED 55,000), such transactions need Not to be reported

B). Transactions with businesses/entities (B2B)

Transactions to be reported in DPMSR:

a) All cash transactions equal or exceeding AED 55,000

b) All international wire transfers exceeding AED 55,000

c) All transfers done through exchange houses exceeding AED 55,000

Transactions that are settlement in USD:

d) Both entities having accounts with different banks operating in UAE (it is considered that settlement is taking place through international wire transfer as it involves USD)

e) Settlement between two Free Zone (registered in UAE) companies in USD whereby their respective accounts are with different banks operating in UAE as USD settlement will be through international (cross border) wire transfer

f) Settlement between Free Zone & onshore companies (registered in UAE) under same scenarios as above

“There is no segregation of free zone entities and mainland entities when it comes to GoAML reporting. All dealers in precious metals and stones are required to register the DPMSR report in GoAML if the transaction meets/exceeds the defined thresholds”

Transactions NOT to be reported in DPMSR:

All transactions/Settlements via cheque or local bank (wire) transfersSettlement: – in AED
Both entities having accounts with the same bank operating in UAE
Both entities having accounts with different banks operating in UAE Settlement: – in USD
Both entities having accounts with the same bank operating in UAE
Settlement between 2 FZ Co (registered in UAE) companies in either AED or USD whereby both having accounts with same bank operating in UAE
Settlement between 2 onshore companies (registered in UAE) in USD having accounts with same bank operating in UAE.
Trade between related parties whereas one is registered on mainland and other incorporation FZ but having accounts with same bank operating in UAE in AED & USD
Barter transactions – Gold to Gold trading: wholesalers settling with gold bullion against jewellery (“Making charges” is not considered a reportable transaction if there is no buying or selling of precious metals and stones involved)
Margin calls, Loans with banks
Intra-company transfers and Intra-company sale/ purchase
If transactions are conducted through LC (Letter or Credit by banks)
Transactions with international commercial banks
Wire transfer from a mainland company to a company in Free zone (part of the group company, therefore intra company) for the supplies – No reporting is required if it’s within the same group
If the payment is made from an account outside the UAE jurisdiction to an account outside the UAE jurisdiction (without being routed through the UAE)

Notes:

All reporting are required to be done at the time of receiving or paying the funds
Reporting to be done within 2 weeks of occurring the qualifying transactions.

What all are required to be collected as part of Minimum KYC information for DPMSR purpose?

For such transaction, the DPMS must obtain the following identification documents from the customer for DPMSR purpose:

For resident individuals, you need to obtain Emirates ID or Passport.
For non-resident individuals, you need to obtain ID or Passport.
For entities or companies, you need to obtain copy of the trade license, and Emirates ID or passport of the person representing the entity or the company.

How Spectrum Auditing can help you?

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Reach us to have a frills free life in your journey in UAE. We at Spectrum will assist you in taking care of all the procedures involved in the goAML process. Call us today for any kind of assistance at +971 4 2699329 or email us at [email protected] to get all your queries addressed. Spectrum is your partner in your success.