As per the customs records, the United Arab Emirates, China, and Turkey accounted for 99.8% of Russian gold exports for the mentioned period
The United Arab Emirates emerged as the largest marketplace for Russian gold after the Russia-Ukraine conflict. Russian Customs records showed that after the geopolitical conflict, the Western nations bombarded the Russian Federation with sanctions hampering their functional trade routes.
After the war started, Russian gold was boycotted by transport carriers, precious metal refineries, and international banks. Previously, they were transported to one of the largest metal trading and storage hubs, London.
On March 7, 2022, the London Bullion Market Association banned Russian gold bars from further production. The European Union, Switzerland, Britain, Canada, the United States, and Japan followed in their footsteps, and by late August, they also banned Russian bars.
As per the customs records, Russia has exported nearly a thousand gold shipments since the conflict began. Abu Dhabi imported gold like there’s no tomorrow; their gold imports rose from a meagre 1.3 tonnes in 2021 to a staggering 75.7 tonnes worth a total of $4.3 billion in 2022-23.
The next two buyers were China and Turkey, collectively importing 20 tonnes respectively from February 24, 2022, to March 3, 2023. As per the customs records, the United Arab Emirates, China, and Turkey accounted for 99.8% of Russian gold exports for the mentioned period.
The reports also showed that the alertness and quick speed of Russian gold producers to spot markets in friendly nations that haven’t imposed sanctions saved them from huge losses. Such markets tend to be China, United Arab Emirates, and Turkey.
The UAE is a global trading hub for bullion and jewelry. They imported 750 tonnes of pure gold on average between 2016 and 2021. The Russian imports would be just about 10 % of its total imports.
The Gold Bullion Committee of the UAE government said that they have worked with crystal clear processes against sanctioned entities, money laundering, and illicit goods. They will continue with their trade with utmost honesty with international stakeholders under international laws laid down by the United States.
Ironically similar banning of Russian products was exported by new markets at a discount and was repackaged, remodelled, or altered in some way or the other and sold back to those nations that had sanctioned it. Europe has been accused of importing crude products from India made from Russian imports.
Louis Marechal, a gold expert at the Organisation for Economic Cooperation and Development, warned that Russian bars to be melted and recast to be sold in US and Europe. He said that if the Russian gold finds its way back in a recast bar from a domestic refiner, backed by a domestic bank or trader, and further sold into the market, there lies the risk. To maintain the sanctions religiously, proper background checks must be done.
Luring Discounts
A manager, wishing to be anonymous, said that Russian firms have been selling their gold bars at a 1% discount from the global benchmark rate. His company shipped huge amounts of Russian gold into the UAE. He added that most of the UAE-bound shipments were unloaded for refineries, where they would be recast after melting down.
The customs reports showed that the largest transporter of Russian gold exported to the UAE was Temis Luxury Middle East. It is a Dubai subsidiary of a France-based logistics firm Temis Luxury. It transported gold worth $863 million of weightage 15.6 tonnes from April 2022 to March 3.
Broca Houy, the head of compliance at Temis Luxury Group, said that the company follows the UAE’s rules and regulations for the shipment transportation business. He added that they only took transportation orders from operators and were not purchasers of gold; this doesn’t come under the US sanctions.
Vpower Finance Security Hong Kong Ltd., a Chinese firm handling Russian gold transport in Hong Kong, had shipped imports worth $1.2 billion weighing 20.5 tonnes between May 2022 and March 3.
Tan Albayrak, a sanctions lawyer at a London-based law firm Reed Smith said that overseas subsidiaries are exempt from European sanctions, so subsidiaries of European firms engaged in the transportation of Russian gold to the UAE, Turkey, or Hong Kong haven’t breached any kind of law.
Transguard, the second biggest transporter of Russian gold in the UAE, sipped 14.6 tonnes of gold worth $820 million. They are a logistics arm of the Emirates Group, the airline-to-hotels company controlled by the UAE wealth fund. Emirates has commented that they have only transported back then with complete compliance to laws and regulations, without purchasing any Russian bullion.