Over the previous decade, UAE accepted over 2,500 tonne of smuggled gold. File
| Photo Credit: Reuters

Gold smuggling out of Africa, mainly to the United Arab Emirates, 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 on May 30

Analysis by Swissaid, an organisation 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 main destination for Africa’s smuggled gold and took in 405 tonnes in 2022. Over the previous decade, UAE accepted more than 2,500 tonnes of smuggled gold with a total value of over $115 billion, it said.

Asked to comment on the findings, a UAE official said 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 was being smuggled out of Africa every year through the UAE, which served a gateway to markets in Europe, the U.S. 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, commodities lead at Swissaid and one of the authors of the report, said the UAE contributes to gold laundering because large quantities of smuggled gold acquire a legal existence by transiting through the UAE.

Discrepancies

For its analysis, Swissaid compared total gold exports from all African countries with gold imports into non-African countries. The organisation filled gaps in UN 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.”

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, more than 70% is not declared. By comparison, industrial miners have produced around 500 tonnes of gold a year.

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 the environment.

“There’s a certain hypocrisy with some of the Swiss refineries,” said Mr. 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.”

New Delhi:

Smuggled gold seizures have increased nearly 43 per cent to 2,000 kilogramme during April-September, with most of the yellow metal entering India through the land borders of Myanmar, Nepal and Bangladesh.

Central Board of Indirect Taxes and Customs (CBIC) Chairman Sanjay Kumar Agarwal said in April-September period of last year, 1,400 kg of gold was seized, while during the full fiscal 2022-23, around 3,800 kg was seized.

“There is no change in duty structure of gold vis-a-vis last year. But smuggling may be dependent on the prevailing prices of gold in international and domestic markets.” Mr Agarwal told reporters in New Delhi.

Gold smuggling seizures this year from April till September 2023 is 2,000 kg vis-a-vis 1,400 kg in the same period last year.

“Gold has been smuggled mainly through land border Myanmar, Nepal and Bangladesh,” Mr Agarwal said.

The trend of gold smuggling into the country is dependent upon the prices prevailing in domestic market and international market. It cannot be solely linked with the customs duty prevailing on gold, the CBIC chief said.

The department is making concerted efforts to curb gold smuggling whether it is through land borders or through airports or any other routes, Mr Agarwal said.

To deter the smuggling of gold, Customs field formations and the Directorate of Revenue Intelligence (DRI) keep constant vigil and take operational measures, such as passenger profiling, risk-based interdiction and targeting of cargo consignments, non-intrusive inspection, rummaging of aircraft and coordination with other agencies.

As per a DRI report for 2021-22, gold smuggling in India is fuelled by the huge demand for gold, combined with import duty on licit import of gold.

The basic Customs Duty rate on gold is 12.5 per cent. Along with the Agricultural Infrastructural Development Cess (AIDC) of 2.5 per cent and IGST rate of 3 per cent applicable to the imports of gold, the overall tax rate works out to 18.45 per cent.

India is a negligible producer of gold and the huge demand for gold in the country is met through imports. India imports gold dore bar as well as refined gold.
 

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)