AML/CFT - Sparklers International DMCC | Dubai Diamonds Wholesale | GIA Certified Diamonds


Introduction & Law References

1) Article 44.11 of Cabinet Decision No. (10) of 2019 Concerning the Implementing Regulation of Decree Law No. (20) of 2018 On AML and CFT and Illegal Organizations charges Supervisory Authorities with “Providing Financial Institution with guidelines and feedback to enhance the effectiveness of the implementation of the Crime-combatting measures.”

2) Cabinet Decision No. (10) of 2019 Concerning the Implementing Regulation of Decree Law No. (20) of 2018 On AML and CFT and Illegal organizations (the “AML-CFT Decision”) identifies dealers in precious metals and precious stones (DPMS) as Designated Non-Financial Business and Professions (DNFBPs) when they engage in carrying out any single monetary transaction, or several transactions which appear to be interrelated, whose value is equal to or greater than the amount as specified by the Government of UAE, and subjects them to specific AML/CFT obligations under the AML/CFT legislative and regulatory framework of the United Arab Emirates.

Sparklers International DMCC’s principles to adhere to the AML-CFT Regulations of United Arab Emirates

Sparklers International DMCC is a company registered in U.A.E. and trading in Precious Stones and Jewellery Products. As such, we are covered under the U.A.E. Federal Decree Law No. 20 on AML and CFT and Illegal Organizations (the “AML Law”). Under this law, we are obligated to establish a set of policies and procedures to ensure that we do not participate or facilitate ML and/or the FT. Sparklers International DMCC is strictly committed to adhere to the policies, rules, regulations and guidance provided by the Government of UAE (Ministry of Economy, Financial Intelligence Unit/ Central Bank). Sparklers International DMCC has appointed a Compliance Officer to take care of the Company’s compliance with the directives / circulars of the local regulators / other authorities. Sparklers International DMCC continue to train our staff on the vulnerability of our sector and regulations on the AML and CFT & unlawful activities with a specific emphasis on the KYC (Know Your Customer) and due diligence principle. Our staff are also encouraged to participate in the various seminars organized by the various authorities and local bodies such as Dubai Gold & Jewellery Group.

We commit to rejecting or immediately suspending and discounting engagement with suppliers or customers where we identify a reasonable risk that they are sourcing (or are linked) to parties committing any of the crimes described above.

We will not tolerate any direct or indirect support to non-state armed groups or their affiliated who:
a) Illegally control mine sites, transportation routes, or other points in the supply chains
b) Illegally tax or extort money or minerals at points in the supply chain, such as mining sites, or points where minerals are traded or exported.

We commit to reject or immediately suspend and discontinue engagement with suppliers or customers where we identify a reasonable risk that they are providing direct or indirect support to non-state armed groups as described above.

Procedures & Controls

Sparklers International DMCC has set forth a variety of procedures and controls in accordance with Article 44.11 of Cabinet Decision No. (10) of 2019 Concerning the Implementing Regulation of Decree Law No. (20) of 2018 On AML and CFT and Illegal Organizations charges Supervisory Authorities, Minimum Statutory Obligations of Supervised Institutions stated in the Guidelines for Designated Non-Financial Businesses and Professions, Supplemental Guidance for Dealers in Precious Metals and Stones and various notification and circulars issued by the supervising Authority (Ministry of Economy) for DPMS.

Know Your Customer (KYC)

Identification Documentation collection (ID) Verification (VR) and Know Your Customer (KYC) are the initial stages of mandatory procedures followed by Sparklers International DMCC before the establishment of any business relationship can take place. It helps to attain background data on a potential customer’s business, source of funds and precious metal products, and various other relevant activities. For regular customers, data is updated periodically as and when required, with a minimum threshold of updating the information every year.

Identification Documentation collection (ID) Verification (VR) and Know Your Customer (KYC)

a. ID Collection, Verification and KYC together are the first key step in the ‘Procedures and controls’ and are to be conducted prior to entering into any transactions with the customers. It enables us to obtain basic background information about our customers, their business, source of funds, source of precious metals/stones products and their reasonable expected level of activity.
b. The carrying out of ID, VR, AND KYC procedures are mandatory to onboard any client to transact with our company.

KYC procedure steps for customer/supplier as an individual entity:

The ID, VR and KYC process must, in order to be valid, cover the following details regarding each individual customer/supplier:
• Full Customer Name (from valid Emirates ID/Passport)
• Nationality (from valid Emirates ID/Passport)
• Physical Address (Residential & Business/ In-Home Country & U.A.E)
• Contact Details (Phone & Email, if available)
• Beneficial Owner of funds/precious metals products supplied (UBO Information)

KYC procedure steps for customer/supplier who is a corporate trader/refineries/mining company:

The aforementioned ID, VR, and KYC process is carried out mandatorily, further the following details regarding the corporate customer/supplier:

• Company Registration Documents (Trade License Copy & VAT Certificate)
• List of shareholders, directors, managers, authorized personnel, beneficial owners (as may be applicable)
• Physical Address & Contact Details (Ejari/Title Deed & Utility Bills)
• Source of funds used for purchasing the precious metals from us and related declaration (as applicable)
• Source of gold sold to us and related declaration (as applicable)

KYC Information Updating

In case of a regular customer, reasonable steps must be taken to ensure that ID, VR and KYC information is updated as and when required. As a minimum standard, KYC information must be updated every year.

Due Diligence Process

KYC process is to be carried out after obtaining the above-mentioned information about customers/suppliers. The existing law in the U.A.E. forbids us to deal with shell companies.

A ‘shell company’ shall mean an institution that has no physical presence in any country and which merely exists on paper. Screening for Sanctions & PEP: An integral part of the due diligence process is the carrying out of customers/suppliers screening and relative risk assessment. Screening (in sanction lists, PEP) ensures that the customer is not listed on those official sanction lists issued by UN, Central Bank, EU, OFAC, UN, EU, UKHMT Governments and other law enforcement agencies. The sanction screening is integrated into the accounting and book keeping system.

Procedural Guidance

KYC- Due diligence has framed the following procedural guidance for KYC and it should be strictly followed by the staff while entering into any transaction with customers/suppliers.

Customers/Suppliers Account Opening & Transactions: After KYC process is completed and if found satisfactory, customers/suppliers account is opened for transaction purpose. Copy of all KYC documents must be obtained and be verified with the original before opening any new account. Due attention must be given to validity of the documents. Review of these documents must be made every year.

Transactions with customers/suppliers: Sparklers International DMCC has implemented a method of risk-based approach assessment that allows us to imperatively assess a company’s unique risk profile, identification & mitigation of gaps in controls and application of appropriate risk management processes. This includes the measurement of our AML/CFT policy and Sanctions List based on the customer, product, and geographic risks it faces. This also includes analyzing the potential risks of ML/TF.

After opening an account, Sparklers ensures all transactions are done through the following procedures:

• Copy of Identity Document (trade license, passport, residence ID, driving license etc.) must be obtained. The ID copy must be verified with original.
• Where the customer is represented by his representative then proper authority letter authorizing the representative to sign and act on his behalf should be obtained.
• The source of precious metals products should not be of unlawful origin or sanctioned countries.
• The dealers must ensure that account of customer/supplier related to transaction is in active status and all KYC is update.
• No transaction should be entered in case of providing insufficient details by the customer/supplier in filling the prescribed forms or failure to provide the required documents. If such a lapse is due to carelessness of customer/supplier then he should be properly advised to fulfill the requirement. However, if it is an apparent case of transfer for fraudulent purpose violating the Anti-Money Laundering Law then the Compliance Officer should be consulted immediately. The Compliance Officer will in turn assess the case and if he is convinced of ML/TF/unlawful activities then he in turn shall report to the Central Bank’s Anti-Money Laundering & Suspicious Cases Unit (AMLSCU) in the prescribed form. All such reporting should be kept secret from the customer/supplier. Normally AMLSCU provide their immediate guidance on such reporting and further action like freezing of funds, reporting to local police authority etc. to be taken accordingly.
• No transaction should be entered with or for the benefit of persons / entities / organizations / institutions blacklisted and advised by the various authorities vide their frequent circulars. The name of customer / beneficiary of all large transactions must be screened from the data base of blacklist persons / entities stored in our computer. Any transaction by or for the blacklisted entities should be treated as suspicious.

Reporting of Suspicious Transaction Reports (STR)

It is obligatory on all staff members to alert any suspicious activities or Information related to suspicious transaction to the Compliance Officer, who will assess the case and if he is convinced (with reasonable and adequate evidence) of ML/TF /unlawful activities; then he in turn shall report to the Ministry of Economy’s/Financial Intelligence Unit (FIU) Suspicious Transaction Reporting (STR) system undergo AML platform in the prescribed form. All such reporting should be kept in secret (without intimating the customer/supplier). Once STR is done on goAML, act according to the guidance by the FIU on such reporting and further take actions such as freezing of funds, reporting to local police authority etc. In doing so, it is important that:

• The reason for identifying the transaction as ‘suspicious in nature’ is fully explained; and
• No mention (tipping off) of the suspicion is made to the customer/supplier involved in the transaction (failure to observe this requirement may result in facilitating the party to evade prosecution); and provide any additional information as may be requested by the regulating authority.

Training & Awareness

Sparklers International DMCC is committed to implementing adequate staff/employee AML/CFT training and knowledge enhancement regarding the vulnerability of the sector, establishing effective internal controls, maintaining adequate records related to those covered transactions and alerting suspicious transactions. Sparklers International DMCC engages with AML-CFT training providers and often encourages staff to participate in the trainings conducted by Dubai Gold & Jewellery Group, DMCC, Dubai Economy and such local bodies.

Record Keeping

All transaction records, books of accounts and documents for Sparklers International DMCC are retained for a period of at least 5 years from the date of transaction.

Compliance Officer: Powers, responsibilities

Sparklers International DMCC ensures the appointment of a competent Compliance Officer with adept skills and abilities to oversee their day-to-day management and oversight of AML, CTF and Sanctions compliance obligations.

Our compliance officer is responsible for enforcing the following measures:

• The compliance officer is expected and empowered to act independently in carrying out the responsibilities vested in him
• Compliance officer should ensure that the entity follows a risk-based policy which is in line with guidelines by the Ministry of Economy; thus, he will be responsible for the below: Red flags – identifying potential risk in any transaction or entity Compliance officer is expected to monitor customers transaction volume and frequency of transactions by nationality and country (high risk countries)
• Compliance officer is expected to ensure that KYC of all customers/suppliers is doneand is updated time to time.
• Compliance officer to ensure that all transactions and functions of the company are complying with and in conformity with the directives / circulars issued by the authorities from time to time.
• Compliance officer to report to FIU about any suspicious transaction.
• Compliance officer to ensure that all staff members follow the guidelines issued by the Ministry of Economy, Central Bank/FIU any other competent authority time to time. Staff also must be provided suitable training (time to time) by Compliance officer for implementation of this policy and any issues related thereto.

Updating & Evaluation of Policy & Procedures

Sparklers International DMCC encourages to monitor the status and activity of the business relationship overtime. Similarly, the KYC, Due diligence policies are reviewed and updated from time to time (in line with the circulars and notifications issued by Ministry of Economy, Central Bank, FIU)