Since Western sanctions over Ukraine have disrupted Russia's more established export routes, Russian customs records reveal that the United Arab Emirates has emerged as a significant trading hub for Russian gold.
Records detailing almost 1,000 gold shipments in the year following the start of the Ukraine War reveal that the Gulf state imported 75.7 tonnes of Russian gold worth $4.3 billion, up from just 1.3 tonnes in 2021.
The following two top importers, with around 20 tonnes each, were China and Turkey between February 24, 2022 and March 3, 2023.
In the customs figures for this time period, the two countries, along with the UAE, accounted for 99.8% of the Russian gold exports. Russian gold, which had historically been delivered to London, a center for gold trade and storage, was no longer handled by major international banks, logistics firms, and precious metal refiners in the days following the outbreak of the Ukraine crisis.
The London Bullion Market Association outlawed Russian bars beginning on March 7, 2022, and by the end of August, imports of Russian bullion had been prohibited by Britain, the European Union, Switzerland, the United States, Canada, and Japan.
The export records reveal, however, that Russian gold miners rapidly discovered new markets in countries like the UAE, Turkey, and China that had not slapped sanctions on Moscow. There is a chance that Russian gold may be melted down, recast, and then make its way back into markets in the United States and Europe while having its origin concealed, according to Louis Marechal, a gold sourcing expert at the Organization for Economic Co-operation and Development.
"If the Russian gold comes in, is recast by a local refiner, sourced by a local bank or trader and then sold on into the market, there you have a risk," he said. "This is why carrying out due diligence is instrumental to end buyers wishing to ensure they respect sanctions regimes."
According to the Gold Bullion Committee of the UAE government, the country has clear and effective procedures in place to combat illicit goods, money laundering, and sanctioned organizations. "The UAE will continue to trade openly and honestly, with its international partners, in compliance with all current international norms as set down by the United Nations," it declared.
Washington has threatened countries, such as the UAE and Turkey, that they risk losing access to G7 markets if they conduct business with firms that are subject to U.S. sanctions in an effort to further isolate Russia.
The information examined by Reuters does not indicate that those countries have broken any American sanctions. Requests for response were not answered by the U.S. Treasury, whose Office of Foreign Assets Control administers sanctions.
Although analyst Metals Focus believes Russia produced 325 tonnes of gold in 2022, the shipments in the customs data, provided to Reuters by a commercial supplier, show exports of 116.3 tonnes between Feb. 24, 2022 and March 3, this year.
The remaining gold that was discovered in Russia most likely remained there or was exported in deals that were not recorded. The data's coverage of Russia's total gold exports could not be ascertained by Reuters.
Hong Kong received the majority of the Russian gold supplies to China. According to China's Ministry of Foreign Affairs, cooperation with Russia "shall be free from disruption or coercion from any third party". Requests for comment from the Turkish finance ministry were not answered. Requests for comment regarding gold shipments were not met with any response from the Russian government, customs agency, or central bank.
Since London is not dependent on Russia, the movement in Russian exports away from that city is not perceived as a serious setback. According to British trade data, Russian gold, for instance, made up 29% of London's imports in 2021 but only 2% in 2018. A strong gold business has existed in the UAE for a long time.
Between 2016 and 2021, according to trade data, it bought roughly 750 tonnes of pure gold annually, so the shipments listed in the Russian documents would only make up about 10% of its total imports. Bullion and jewelry exports from the UAE are significant.
Russian enterprises have been given an incentive to trade by selling bullion there at a discount of roughly 1% to global benchmark prices, according to the manager of one company that exported significant quantities of Russian gold to the UAE. The manager, who spoke on the condition of anonymity, claimed that most of the gold his company transported to the UAE was going to be refined and then recast.
Four of Russia's top gold miners were contacted by Reuters for comment. Norilsk Nickel and Nordgold declined to comment while Polyus and Polymetal did not respond at all.
The eventual buyer, who may be a refiner, jeweler, or investor, is frequently absent from the customs records, which typically only list the shippers or traders involved in the transactions.
According to statistics, Temis Luxury Middle East, a Dubai subsidiary of French logistics company Temis Luxury, handled the largest amount of Russian gold transferred to the UAE between April 2022 and March 3. This consignment weighed 15.6 tonnes and was valued at $863 million. The United Arab Emirates' laws and regulations governing freight forwarders are fully complied with by Temis Luxury Group, according to Broca Houy, head of compliance at the company.
He said that Temis exclusively took transport orders from operators not subject to American sanctions and did not purchase Russian gold. When questioned about the shipments, the French finance ministry stated that while it would not comment on specific situations, it was steadfast in its commitment to the imposition of penalties.
According to Tan Albayrak, a sanctions lawyer at Reed Smith in London, European corporations whose subsidiaries were involved in shipments of Russian gold to the UAE, Turkey, or Hong Kong would not necessarily have breached any laws because European sanctions do not normally extend to overseas subsidiaries.
The logistics company Transguard, a division of Emirates Group, the airline-to-hotels business owned by the wealth fund of the Gulf state, was the second-largest handler of Russian bullion in the UAE, handling shipments totaling 14.6 tonnes worth $820 million. Emirates claimed to have followed all applicable regulations, not purchased any Russian gold, and to have stopped carrying it as of late.
"Due to recent regulatory developments, Transguard is no longer providing logistics services pertaining to shipments of gold to or from Russia," the statement read.
The majority of Russian gold shipments to Hong Kong were handled by the Chinese logistics firm Vpower Finance Security Hong Kong Ltd. According to the data, it was involved in the importation of 20.5 tonnes of gold worth $1.2 billion between May 2022 and March 3. Requests for comment from Vpower Finance Security did not receive a response.
By fLEXI tEAM