The global gold market has become one of the world’s most significant money-laundering channels, with illicit flows estimated at tens of billions of dollars annually. Though gold trading is entirely legal commercial activity, its unique characteristics—high value density, universal acceptance, liquidity, and relative ease of transport—make it an ideal tool for criminals seeking to launder proceeds from narcotics trafficking, corruption, illegal mining, and other serious crimes.
The Scale of the Problem
The magnitude of gold-related money laundering is staggering. In Colombia and Peru, illegal gold mining now generates more revenue for organized crime than cocaine trafficking, despite these nations being the world’s largest cocaine producers. Peru accounts for nearly half of illegal gold trade in Latin America, with the United States importing approximately one billion dollars’ worth of Peruvian gold in 2023—an estimated eighty per cent deriving from illegal mining operations. Colombian gold exports to the U.S. totalled 1.4 billion dollars in 2023, with similar proportions suspected of illegal origin.
A 2025 United Nations Office on Drugs and Crime report found that “organized criminal groups have embedded themselves in gold supply chains to such an extent that they now constitute a serious global threat.”
The Laundering Mechanisms
Placement Stage
Criminals introduce illicit cash into the gold market through multiple channels. Gold-buying shops and pawnbrokers accept large cash payments with minimal due diligence, converting “dirty money” into a tangible, portable asset.
In a landmark British case, Fowler Oldfield, more than two hundred million pounds of illegal cash was delivered in bags, sacks, and even children’s toys to a jewelry wholesale business in Bradford, where it was deposited into bank accounts to purchase gold. Four men were convicted in March, 2025, of laundering more than two hundred million pounds (two hundred and fifty-five million dollars). The cash was counted using specialized machines and deposited into NatWest accounts to purchase gold in granule form (harder to trace than bars), which was then shipped to Dubai.
Structuring or “smurfing” techniques involve breaking large purchases into smaller transactions below reporting thresholds. In Dubai and other jurisdictions, dealers report suspicious patterns where clients make multiple purchases just below the fifteen-thousand-dollar threshold established by the Financial Action Task Force.
Layering Stage
Gold’s status as a financial commodity facilitates complex layering schemes. The most common method involves melting and recasting gold to erase its origin and provenance. Once gold bars are melted, serial numbers disappear, making it impossible to trace the metal back to its source.
In April, 2023, an Al Jazeera investigation revealed how gold smuggled from Zimbabwe reaches Dubai and is then exported to other major gold centers, such as Switzerland and London. These transfers are possible because gold is repeatedly melted and refined, a process that obscures all traces of its origin—making it particularly difficult for law enforcement to gather evidence against suspected smugglers. “Gold entering refineries becomes, after refining, practically new gold,” Amjad Rihan, a former Ernst & Young partner who was responsible for auditing Dubai-based Kaloti, one of the world’s largest gold refineries, told Al Jazeera.
Trade-based money laundering (T.B.M.L.) represents another sophisticated layering technique. Criminals manipulate invoices, over-valuing or under-valuing gold shipments to move value across borders. Fictitious shipments—where no actual gold changes hands but financial transactions are recorded—create paper trails for illicit funds. Free-trade zones, particularly in Dubai, provide regulatory gaps that facilitate these schemes owing to relaxed oversight and lack of transparency.
The use of shell companies and complex corporate structures conceals beneficial owners. Criminals establish front companies to purchase gold from legitimate refineries, mixing illegal and legal gold through falsified inventory records. In the Elemetal case, approximately two hundred and fifty million dollars in gold was purchased from a Bolivia-based company without any information about the gold’s source, which later proved to be smuggled from Peru.
Integration Stage
The final stage returns laundered proceeds to the financial system. Gold is sold multiple times across different markets until traceability vanishes. Alternatively, criminals use gold as collateral for loans, securing periodic payouts while maintaining ostensible legitimacy. Gold purchased with illicit funds can be exported to international markets—particularly Dubai, Switzerland, and Turkey—where it enters legitimate supply chains and is sold to banks, investors, and jewelers.
Regional Criminal Typologies
Latin America: Links to Illegal Mining
Latin American drug-trafficking organizations have systematically diversified into illegal gold mining, exploiting established smuggling routes and infrastructure. In Peru, illegal gold mining expanded from seven to nine Amazon regions between 2024 and 2025, with Madre de Dios remaining the epicenter—eleven thousand five hundred hectares deforested in a single year.
Colombian authorities disclosed that approximately eighty per cent of all gold sold in Colombia derives from informal or illegal operations. The Colombian government initiated a direct gold-purchase program from small producers in October, 2025, to combat this illicit trade, though critics warned it could facilitate money laundering if proper controls are not implemented.
In Venezuela, at least eighty-six per cent of gold is illegally produced and controlled by military elites, guerrilla groups, and transnational gangs. Approximately seventy per cent of production, worth more than 4.4 billion dollars in 2021, is smuggled internationally through shell companies and opaque supply chains, including to the United States.
Dubai and the U.A.E.: A Global Hub
Dubai has emerged as the dominant destination for illicit gold from Africa and other regions, with the U.A.E. reporting sixteen billion dollars in gold imports from Africa in 2016 alone. The combination of loosely regulated gold imports, free-trade zones, favorable tax policies, and permissive customs processes creates an ideal environment for gold laundering.
In November, 2023, the U.K.’s National Crime Agency issued a red alert, warning that Russia was using gold to evade sanctions imposed after the invasion of Ukraine. Gold exported from Russia is increasingly shipped to countries that do not impose sanctions on Russian gold. The gold can then be melted and reprocessed or refined, concealing its origin.
The U.A.E., however, has taken significant enforcement action. In August, 2024, authorities temporarily suspended thirty-two gold refineries (approximately five per cent of Dubai’s refineries) for three months after detecting two hundred and fifty-six A.M.L./C.F.T. violations, including inadequate customer due diligence, failure to report suspicious transactions, and failure to screen clients against terrorist lists. This represented a major crackdown following the U.A.E.’s removal from F.A.T.F.’s “gray list” earlier in 2024.
Africa: Conflict Gold and Smuggling Networks
More than three billion dollars in conflict gold annually flows from the Democratic Republic of the Congo, South Sudan, Sudan, and the Central African Republic to Dubai. Armed groups control mining operations, using profits to finance conflicts and human-rights abuses.
African gold is often smuggled through neighboring countries with falsified origin certificates. Uganda, which mines little gold, has become a major exporter, processing smuggled gold from the D.R.C. and other conflict zones through the African Gold Refinery.
Asia: China, Hong Kong, and India
China implemented rigorous A.M.L. regulations for precious-metals dealers effective August, 2025, requiring reporting of any single cash transaction or cumulative daily purchases totalling a hundred thousand yuan (thirteen thousand eight hundred and seventy dollars) or more.
Hong Kong conducted its largest smuggled-gold seizure in March, 2024, seizing a hundred and forty-six kilograms of gold worth eighty-four million H.K.D. disguised as air-compressor parts.
India grapples with significant gold smuggling and money laundering linked to hawala. In a high-profile 2025 case, actress Ranya Rao’s assets worth more than thirty-four crore rupees were seized after investigations revealed a transnational gold-smuggling operation involving Dubai, Uganda, and other jurisdictions, with payments made through hawala channels and false customs declarations.
The Hawala Connection
The hawala system—an informal value-transfer system operating outside traditional banking channels—is widely exploited in gold-related money-laundering schemes. In a 2025 Franco-Italian investigation, an organized criminal group used the hawala system to launder at least thirty million euros, purchasing gold bars to conceal illicit proceeds and frustrate tracing efforts.
Hawala facilitates gold smuggling by enabling cross-border payments without financial-institution oversight. Smugglers use hawala to settle payments for high-value goods, including gold, electronics, and narcotics, across borders while avoiding detection.
Major Cases and Enforcement Actions
Elemetal/NTR Metals (United States, 2018)
This case represents one of the most significant gold-related money-laundering prosecutions. Elemetal L.L.C., a Dallas-based refinery, pleaded guilty to failing to maintain an adequate A.M.L. program after three Miami employees conducted a 3.6-billion-dollar money-laundering conspiracy. The company:
- Received approximately a hundred and fourteen million dollars in gold directly from forty-three different entities in Peru without requesting identity information or verifying the source
- Purchased approximately two hundred and fifty million dollars in gold from a single Bolivia-based company without source information, which later proved to be smuggled from Peru
- Accepted gold from customers despite publicly available information indicating probable criminal origin
Elemetal forfeited fifteen million dollars and was placed on five-year probation, with a ban on purchasing precious metals from outside the United States.
Fowler Oldfield (Great Britain, 2025)
Four men were convicted in March, 2025, of laundering more than two hundred million pounds (two hundred and fifty-five million dollars) through Fowler Oldfield, a jewelry wholesaler in Bradford. From January, 2014, to September, 2016, couriers delivered cash in bags, sacks, fast-food containers, and children’s toys—sometimes hundreds of thousands of pounds at once.
NatWest Bank had previously pleaded guilty in December, 2021, to inadequate oversight of Fowler Oldfield, paying a then-record fine of two hundred and sixty-five million pounds. The bank failed to identify warning signs even as the business received an average of 1.7 million pounds daily before authorities intervened in September, 2016.
U.A.E. Gold-Refinery Suspension (2024)
In a major enforcement action, U.A.E. authorities suspended thirty-two gold refineries for three months in August, 2024, for A.M.L./C.F.T. violations. The Ministry of Economy conducted inspections detecting two hundred and fifty-six violations among suspended refineries, including:
- Failure to identify money-laundering risks
- Failure to report suspicious transactions to the financial-intelligence unit
- Failure to screen customers against terrorist lists
- Inadequate customer due diligence
Suspicious-activity reports from the gold sector rose dramatically from two hundred and twenty-three in 2021 to six thousand four hundred and thirty-two in 2023, reflecting increased reporting and enforcement.
Treasury Department Sanctions on Zimbabwe Network (2024)
On International Anti-Corruption Day in December, 2024, the U.S. Treasury Department imposed sanctions on twenty-eight individuals and businesses involved in a global gold-smuggling and money-laundering network based in Zimbabwe. The network bribed officials, concealed ownership through intermediaries, and created complex business structures to hide illicit activities.
Regulatory Framework and Compliance Obligations
F.A.T.F. Standards
The Financial Action Task Force establishes international standards for combatting money laundering in the precious-metals sector. Six F.A.T.F. Recommendations directly address Dealers in Precious Metals and Stones (D.P.M.S.):
- Recommendation 1: Risk assessment and risk-based approach
- Recommendation 22: Customer due diligence for transactions equal to or exceeding fifteen thousand dollars/euros
- Recommendation 23: Record-keeping requirements
- Recommendation 24: Reporting suspicious transactions to financial-intelligence units
- Recommendation 28: Regulation and monitoring of D.P.M.S. for compliance
- Recommendation 32: Cash-courier declarations (countries may include precious metals)
London Bullion Market Association
The L.B.M.A., established in 1987 by the Bank of England, maintains the Good Delivery List for gold and silver, serving as an international benchmark. L.B.M.A. Guidelines for Responsible Gold and Silver effectively make O.E.C.D. Due Diligence frameworks mandatory for all Good Delivery refineries. The guidelines encompass minimum standards for combatting money laundering, terrorist financing, and human-rights abuses, with required annual third-party audits.
The L.B.M.A. is implementing a Gold Bar Integrity Database by 2027 to establish unprecedented transparency through digital tracking of gold bars meeting Good Delivery standards.
Regional Regulations
United Arab Emirates: Following extensive reforms, the U.A.E. implemented comprehensive A.M.L./C.F.T. regulations for D.P.M.S. under Cabinet Decision 10/2019. Every dealer must conduct customer due diligence and report cash or wire transactions (single or linked) equal to or exceeding fifty-five thousand A.E.D. (approximately fifteen thousand dollars) to the U.A.E.’s financial-intelligence unit.
United States: The Bank Secrecy Act requires precious-metals dealers to establish A.M.L. programs under 31 U.S.C. § 5318(h) and 31 C.F.R. § 1027.210. Programs must be “reasonably designed” to prevent dealers from facilitating money laundering and terrorist financing.
European Union: E.U. directives require D.P.M.S. to implement customer due diligence, transaction monitoring, and suspicious-activity reporting.
China: Effective August 1, 2025, all dealers in spot trading of gold, silver, platinum, diamonds, and jade must report any single cash purchase or cumulative daily purchases by the same customer equal to or exceeding a hundred thousand yuan to the national A.M.L. analysis center within five business days.
Red Flags and Suspicious-Activity Indicators
A.M.L. compliance frameworks identify numerous red flags in gold transactions:
Transaction Patterns
- Large cash payments, particularly just below reporting thresholds
- Transactions structured to avoid detection (smurfing)
- Round-sum transactions without obvious business justification
- Frequency and volume inconsistent with customer profile
- Transactions involving third-party payments
Customer Behavior
- Customers questioning reporting thresholds or attempting to structure transactions
- Reluctance to provide identification or source-of-funds documentation
- Using multiple identities or frequent changes in business partners
- Transactions involving newly established companies with unclear business models
Geographic Indicators
- Transactions with high-risk jurisdictions (conflict zones, weak A.M.L. enforcement)
- Gold imports or exports to/from countries with minimal mining
- Using circuitous shipping routes without economic justification
- Transshipment through multiple jurisdictions
Documentation Problems
- Falsified or incomplete documentation
- Mismatched documentation between declared and actual origin
- Over-invoicing or under-invoicing to manipulate declared values
- Duplicate certificate numbers or potentially forged signatures
Physical and Operational Red Flags
- Gold with removed or scratched serial numbers
- Attempts to alter physical appearance or documentation
- Mixed gold sources without clear provenance
- Frequent private travel to illegal-mining hot spots
- Payments to private cargo and logistics companies in high-risk areas
A.M.L. Obligations in Poland
Under currently applicable regulations on anti-money laundering, A.M.L. obligations apply to:
Obligated institutions that transmit to the General Inspector information about completed purchase or sale transactions in foreign-exchange values exceeding fifteen thousand euros, or intermediation in conducting such transactions. This information includes the amount and currency of the transaction or the weight and purity of foreign-exchange gold or platinum that is the transaction’s subject.
Additionally, A.M.L. obligations burden all other entrepreneurs within the meaning of the Act of March 6, 2018—Entrepreneurs’ Law—to the extent they accept or make cash payments for goods valued at or exceeding ten thousand euros, regardless of whether the transaction is conducted as a single operation or several operations that appear to be connected.
Conclusions
Gold’s role in money laundering represents a multifaceted global challenge encompassing organized crime, terrorist financing, corruption, and humanitarian crises. The scale of illicit gold flows—tens of billions of dollars annually—finances armed conflicts, devastates the environment, exploits vulnerable populations, and undermines legitimate trade.
Recent enforcement actions demonstrate growing regulatory determination. The U.A.E.’s suspension of thirty-two refineries, U.S. Treasury Department sanctions on Zimbabwe and Russian networks, and the landmark Fowler Oldfield prosecution signal that authorities recognize gold laundering as a priority threat. The U.A.E.’s removal from F.A.T.F.’s gray list following comprehensive reforms suggests that sustained political will can drive significant change.
Nevertheless, significant vulnerabilities persist. The informal nature of artisanal mining, regulatory gaps in free-trade zones, inadequate beneficial-ownership transparency, and the technical sophistication of modern criminal networks—particularly linkages with cryptocurrencies—continue to enable large-scale laundering. The fact that illegal gold mining surpasses cocaine trafficking in profitability for Latin American organized-crime groups illustrates the problem’s magnitude.
Services of Kancelaria Prawna “Skarbiec” for Jewelers, Mints, Pawnbrokers, and Gold Dealers
Kancelaria Prawna “Skarbiec” offers comprehensive assistance for jewelers, mints, pawnbrokers, and others engaged in gold and jewelry trading in:
Preparation of anti-money-laundering procedures—development of compliance documentation tailored to precious-metals sector business specifics
Above-threshold transaction reporting—implementation of systems for identifying and reporting transactions exceeding the fifteen-thousand-euro threshold for foreign-exchange values or the ten-thousand-euro threshold for cash payments
Suspicious-transaction reporting—implementation of procedures for identifying gold-trade-specific red flags and reporting suspicious transactions to G.I.I.F.
Beneficial-owner identification—U.B.O. verification procedures for counterparties in the gold supply chain
Sanctions screening—counterparty controls against sanctions lists, with particular attention to individuals and entities from high-risk jurisdictions (conflict zones, sanctioned countries)
Gold-provenance due diligence—verification of metal origin and identification of risks related to illegal mining or conflict gold
L.B.M.A. Responsible Sourcing compliance—support in implementing responsible-sourcing requirements for refineries and dealers cooperating with the London market
Compliance audits—periodic reviews of implemented A.M.L. procedures’ effectiveness in light of changing regulations
Personnel training—conducting training on recognizing and reporting suspicious transactions in precious-metals trading
Defense against money-laundering charges—representation in administrative and criminal proceedings related to A.M.L. violations
