How to Perform Customer Due Diligence for Cash Gold Transactions

This guide explains, in practical terms, how UAE bullion dealers should perform CDD for cash gold transactions, in line with local laws and supervisory expectations.

 

1. Identify When CDD Is Mandatory

Under UAE AML regulations, CDD must be performed before completing a cash gold transaction in situations including:

• One-off or occasional cash transactions

• Transactions that appear unusual or inconsistent

• Any transaction where suspicion arises, regardless of amount

Importantly, suspicion overrides transaction value. Even small cash purchases can trigger full CDD obligations.

 

2. Properly Identify the Customer

For individual customers, bullion dealers must obtain and verify:

• Full legal name

• Emirates ID (for UAE residents) or passport (for non-residents)

• Nationality

• Date of birth

Documents must be:

• Original (not copies unless certified)

• Valid and unexpired

• Retained in compliance with record-keeping rules

For corporate customers, required information includes:

• Trade license

• Memorandum / ownership structure

• Authorized signatory details

• Ultimate Beneficial Owner (UBO) information

 

3. Verify the Source of Funds

Cash transactions demand heightened scrutiny. Dealers must reasonably establish where the cash originates, not merely accept the cash itself.

Acceptable methods include:

• Customer declarations supported by documentation

• Salary slips, business income evidence, or bank withdrawal slips

• Clear explanation consistent with the customer’s profile

If the source of funds cannot be reasonably explained, the transaction should not proceed.

 

4. Understand the Purpose of the Transaction

CDD is not only about identity—it is about understanding intent.

Ask practical questions such as:

• Why is gold being purchased in cash?

• Is the purchase for investment, resale, or personal use?

• Is the quantity consistent with the customer’s background?

Vague or evasive answers are red flags and may trigger enhanced due diligence or reporting.

 

5. Screen the Customer

Before completing the transaction, bullion dealers must screen customers against:

• Sanctions lists

• Terrorist designations

• Politically Exposed Persons (PEPs)

If a customer is identified as a PEP or linked to a high-risk jurisdiction, Enhanced Due Diligence (EDD) is mandatory.

 

6. Apply Enhanced Due Diligence Where Required

EDD is required for:

• High-value cash transactions

• PEPs or their associates

• Customers from high-risk countries

• Unusual transaction patterns

EDD may include:

• Senior management approval

• Additional source-of-funds evidence

• Ongoing monitoring of repeat transactions

 

7. Record and Retain Information

UAE AML law requires bullion dealers to retain:

• Customer identification records

• Transaction details

• CDD and EDD documentation

Records must be kept for at least five years and be readily available for inspection by regulators.

 

8. Know When to Report

If suspicion arises at any stage:

• Do not proceed with the transaction

• File a Suspicious Transaction or Activity Report via goAML

• Do not inform the customer (no tipping-off)

Failure to report suspicion is itself a regulatory violation.

 

Final Thought

Cash gold transactions sit at the heart of AML risk in the precious metals sector. UAE regulators expect bullion dealers to go beyond basic ID checks and apply practical, risk-based due diligence at every stage.

Strong CDD protects not only your business, but also the integrity of the UAE’s gold market.