(Bloomberg) -- Switzerland told its gold refineries to closely audit imports arriving from the United Arab Emirates, fearing reputational damage from trading in illicit bullion.
In a letter dated Oct. 11 seen by Bloomberg, the State Secretariat for Economic Affairs said refineries should ensure sufficient steps are taken to identify the true country of origin for all gold coming from the UAE. He pointed to the high volume of imports coming from the state -- set to account for 10% of Switzerland’s total in 2021.
Erwin Bollinger, head of the bilateral economic relations division, also told the refineries that Swiss President Guy Parmelin will visit the UAE later this month.
The state secretariat in Bern, Switzerland, didn’t respond to requests for comment.
Concerns about Dubai’s role in the illicit bullion trade have grown in recent years after reports that regulatory loopholes allow gold linked to conflict and money laundering to trade there. The city is the destination for 95% of the gold originating from east and central Africa, according to United Nations data, and that region is considered high risk due to the presence of armed groups.
That heightens fears such gold may be making its way into Western markets, potentially via Switzerland, the world’s refining hub. Some refiners, including Metalor Technologies SA, don’t accept gold from Dubai because of the difficulty in pinpointing its origin.
The London Bullion Market Association last year threatened to blacklist countries that didn’t meet its standards on responsible sourcing, a move targeted at Dubai, according to a person familiar with the matter.
The Dubai Multi Commodities Centre and the UAE Ministry of Economy didn’t respond to emails and phone calls outside business hours. The UAE embassy in London didn’t respond to phone calls and emails requesting comment.
©2021 Bloomberg L.P.