The United Arab Emirates has become a trading hub for Russian gold

Reuters reported that Russian customs records indicate that the United Arab Emirates has become a key trading hub for Russian gold since Western sanctions cut off the country's traditional export routes due to its military invasion of Ukraine. These records, containing details of nearly 1,000 gold shipments in the year since the start of the Ukraine war, show that the Gulf nation imported 75.5 tons of Russian gold worth $4.3 billion; this amount was about 1.3 tons in 2021. China and Turkey were the next largest destinations, each importing about 20 tons between February 24, 2022, and March 3, 2023. Including the UAE, these three countries accounted for a total of 99.8% of Russia's gold exports in customs data for this period. In the days following the start of the Ukraine conflict, many multinational banks, logistics providers, and precious metals refineries stopped dealing with Russian gold, which was typically sent to London, the center for gold trading and storage. The London Bullion Market Association banned the entry of Russian-made bars from March 7, 2022, and by the end of August, the UK, EU, Switzerland, the US, Canada, and Japan all banned imports of bars from Russia. However, export records indicate that Russian gold producers quickly found new markets in countries like the UAE, Turkey, and China, which did not sanction Moscow. Louis Marshall, a gold supply expert at the OECD, says, 'There is a risk that Russian gold will be melted down, re-cast, and then returned to markets in the US and Europe, concealing its origin.' The UAE Gold Bullion Committee states that the country operates with strong and transparent processes against illegal goods, money laundering, and sanctioned entities. The UAE's statement reads, 'The country will continue to engage in free and honest trade with its international partners while adhering to all current international norms set by the United Nations.' In an effort to further isolate Russia, Washington has warned various countries, including the UAE and Turkey, that they may lose access to G7 markets if they trade with US-sanctioned entities. Data reviewed by Reuters does not indicate that these countries have violated US sanctions. The US Treasury, whose Office of Foreign Assets Control enforces sanctions, did not respond to requests for comment on this matter. The customs data provided to Reuters by a trade provider shows 116.3 tons of exports between February 24, 2022, and March 3 of this year. Meanwhile, a consultant at Metal Focus estimates that Russia produced about 325 tons of gold in 2022. The remaining mined gold in Russia likely either remains in the country or has been exported in transactions not recorded. Reuters could not determine what portion of total Russian gold exports is covered by the data. Most of Russia's gold shipments to China have been sent to Hong Kong. The Chinese Foreign Ministry states, 'This country's cooperation with Russia is free from disruption or coercion by any third party.' The Turkish Ministry of Finance did not respond to requests for comment on this matter. The Russian government, customs officials, and the country's central bank also did not respond to requests for comment on gold exports. The redirection of Russian gold exports from London is not considered a significant blow, as this trading center is not dependent on Russia. For example, British trade data shows that in 2021, Russian gold accounted for 29% of London's imports, but this figure was only 2% in 2018. Meanwhile, the UAE has long had a thriving gold industry. Trade data shows that the country imported an average of about 750 tons of pure gold per year between 2016 and 2021, meaning that the shipments recorded from Russia account for only about 10% of its imports. Thus, the UAE is a major exporter of bullion and jewelry. A manager from one of the companies that sends large amounts of Russian gold to the UAE told Reuters that Russian companies sell bars there at about a 1% discount to global benchmark prices, providing an incentive for trade. This manager, who requested anonymity, stated that most of the gold his company sends to the UAE is melted down and re-cast there. Reuters contacted four major Russian gold mining companies, but they declined to comment on this matter. In many cases, customs records only show the sender or traders involved in the transactions, not the final buyer, who could be a refiner, jeweler, or investor. Records indicate that the largest seller of Russian gold exported to the UAE has been 'Temis Luxury Middle East,' a subsidiary of the French company 'Temis Luxury' in Dubai, which has participated in the transfer of a shipment weighing 15.6 tons worth $863 million from April 2022 to March 3. One of the managers at Temis Luxury states, 'This company fully complies with the laws and regulations of the UAE for the transportation of goods. It does not buy Russian gold and only accepts transport orders from operators not subject to US sanctions.' The French Ministry of Finance, in response to a query about these shipments, stated that it does not comment on specific cases but is very committed to enforcing sanctions. Tan Albayrak, a sanctions expert at Reed Smith in London, says, 'European sanctions generally do not apply to foreign subsidiaries, so European companies whose subsidiaries were involved in transporting Russian gold to the UAE, Turkey, or Hong Kong are not necessarily violating any laws.' The second-largest carrier of Russian bars in the UAE, participating in shipments of 14.6 tons worth $820 million, is the logistics company 'Transguard,' part of the Emirates Group, which is owned by the UAE sovereign wealth fund. The UAE has stated that it has not purchased Russian gold, has acted within the law, and has now also stopped its transport. The statement reads, 'Due to recent regulatory developments, Transguard no longer provides logistics services related to gold shipments to or from Russia.' In Hong Kong, most of the Russian gold shipments were carried out by a Chinese logistics company. Records show that this country imported 20.5 tons of gold worth $1.2 billion between May 2022 and March 3. This company also did not respond to Reuters' request for comment.