The UAE has replaced the UK as the top destination for bullion from the sanctioned country
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The United Arab Emirates has become a key destination for Russian gold since Western governments closed their markets as part of Ukraine-related sanctions on Moscow, Reuters reports.
According to the outlet, citing customs records, the Gulf state imported 75.7 tons of Russian gold worth $4.3 billion between February 24, 2022 and March 3, 2023. The figure represents an exponential rise from just 1.3 tons during 2021.
China and Türkiye were the next biggest destinations, importing about 20 tons each during that period, data showed. Along with the UAE, the three countries accounted for 99.8% of Russian gold exports in the customs data for this period, Reuters noted.
The G7, EU and Switzerland banned Russian gold imports last summer in an effort to damage the country’s $20 billion gold industry. Prior to the sanctions, London was the top destination for Russian gold.
Western sanctions have blocked Russian gold from their own markets and banned merchants from dealing with it. But companies in other countries are not prohibited from trading the precious metal as there are no secondary sanctions.
The export records cited by Reuters show that Russian gold producers quickly found new markets in countries that had not imposed restrictions on Moscow.
A gold sourcing expert at the Organization for Economic Co-operation and Development, Louis Marechal, told the outlet there was a risk that Russian gold could find its way back into US and European markets with its origin masked.
“If the Russian gold comes in, is recast by a local refiner, sourced by a local bank or trader and then sold on into the market, there you have a risk,” he cautioned. “This is why carrying out due diligence is instrumental to end buyers wishing to ensure they respect sanctions regimes.”
The UAE’s Gold Bullion Committee stated it was trading “openly and honestly, with its international partners, in compliance with all current international norms as set down by the United Nations.”
According to the manager of a company that shipped large amounts of Russian gold to the UAE, Russian firms had been selling bullion there at a discount of about 1% on global benchmark prices.
The unnamed manager told Reuters that most of the gold shipped by his firm to the UAE was destined for refineries, where it would be melted down and recast.