Gold smuggling surges from Africa to UAE

Gold smuggling out of Africa, mainly to the United Arab Emirates (UAE), has surged over the last decade, with hundreds of tonnes of gold worth tens of billions of dollars illegally leaving the continent every year, according to a report published Thursday.

Analysis by Swissaid, an organization that focuses on development aid and advocacy, found that a total of 435 tonnes of gold, mostly mined by small-scale miners and worth more than $30 billion, was smuggled out of Africa in 2022.

Swissaid said the UAE was the leading destination for Africa’s smuggled gold and took in 405 tonnes in 2022. The organization said that over the previous decade, the UAE accepted over 2,500 tonnes of smuggled gold with a total value of over $115 billion.

Asked to comment on the findings, a UAE official said that the country had taken significant steps to address concerns about gold smuggling and implemented new regulations on gold and other precious metals.

The scale of the flow underscores how small-scale, or artisanal, mining has mushroomed into an industry involving millions of people, producing volumes of gold on a par with or even bigger than industrial mining.

In 2019, a Reuters investigation found that billions of dollars worth of gold were being smuggled out of Africa every year through the UAE, which served as a gateway to markets in Europe, the United States, and beyond.

Aside from the loss in tax revenues, experts and governments have warned that smuggling on this scale indicates a vast parallel illicit economy vulnerable to potential money laundering, terrorist finance and sanctions evasion.

Marc Ummel, the commodities lead at Swissaid and one of the report’s authors said the UAE contributes to gold laundering because large quantities of smuggled gold acquire a legal existence by transiting through the UAE.

“If we keep seeing over 400 tonnes of illegal gold entering the UAE every year, this is a clear sign that implementation of the regulations in the UAE is seriously lacking.”

Discrepancies

For its analysis, Swissaid compared total gold exports from all African countries with gold imports from non-African countries. The organization filled gaps in U.N. Comtrade data with individual country statistics and identified errors by comparing the data with figures reported by trade associations and speaking with governments and refineries.

These discrepancies between declared exports and declared imports do not exist for Switzerland and India, the other two major gold-importing countries for African gold.

The Swissaid report found that there were 12 countries in Africa involved in smuggling 20 tonnes or more per year.

In response to accusations that it was not doing enough to enforce regulations on the sector, a UAE Ministry of Economy spokesperson said the UAE cannot be held accountable for other government’s export records.

“Only our own, where we have sophisticated technologies and systems to track and verify the data.”

Artisanal mining

With the gold price having doubled since 2009, the number of people turning to artisanal mining has surged. Swissaid estimates that artisanal and small-scale gold mining in African countries produced between 443 and 596 tonnes of gold in 2022.

Of this, over 70% is not declared.

By comparison, industrial miners have produced around 500 tonnes of gold annually.

The report found that the majority of African gold imported into the UAE each year comes from informal artisanal and small-scale mining. These methods provide a livelihood to millions of Africans but often come at a high cost to local communities and to the environment.

“There’s a certain hypocrisy with some of the Swiss refineries,” said Ummel. “They don’t want to source African artisanal gold directly but at the same time import very high quantities of gold from the UAE, which is the main hub for African artisanal gold.”

According to the researchers, 80% and 85% of Africa’s artisanal gold in 2022 was exported to the UAE.

A UAE official said the country recognizes the importance of artisanal and small-scale gold mining to the sector and that its “inclusive approach” has allowed artisanal miners to realize more value for their extracted gold.