A strategic step to regulate the precious metals market in the Kingdom
In a significant regulatory step aimed at enhancing transparency and protecting the rights of all parties, the Saudi Ministry of Commerce has issued the executive regulations for the Precious Metals and Gemstones Law. The new regulations outline a set of clear obligations for traders, along with the establishment of fundamental consumer rights, thus ushering in a new era of reliability and professionalism in this vital sector.
General context and objectives of Vision 2030
This regulation comes as part of Saudi Arabia’s broader efforts to achieve the goals of Vision 2030, which seeks to diversify the national economy and enhance the investment environment. The gold and jewelry market is a traditional and fundamental sector of the Saudi economy, holding significant cultural and economic importance. By establishing clear regulatory frameworks, the government aims to combat unsound business practices, curb money laundering, and build a robust market based on global best practices, thereby increasing its attractiveness to both local and international investors.
8 key obligations for precious metals traders
The new regulations impose eight key obligations on all those involved in the sale and manufacture of precious metals and gemstones, to ensure full compliance with the new standards. These obligations include:
- Official licenses: It is necessary to obtain a commercial registration from the Ministry of Commerce to engage in sales activity, and to obtain an industrial license from the Ministry of Industry and Mineral Resources to engage in manufacturing activity.
- Organizing exhibitions: Obtaining prior authorization from the competent authority when holding any exhibitions to display handicrafts or precious stones.
- Display transparency: Allocate a clear and independent space within the shop to display used items, or those containing artificial diamonds or imitation stones, with an explanatory sign.
- Advertising regulations: Full compliance with the regulations for advertising precious metals, ensuring that the consumer is not misled and that accurate information is provided.
- Transaction documentation: Commitment to issuing regular and detailed invoices for every sale or purchase, with disclosure of all required data.
- Combating suspicious practices: Prohibiting purchases from any unidentified person, incapacitated person, or any party suspected of possessing the items illegally.
4 key rights to empower and protect the consumer
In addition to regulating the work of merchants, the regulations focused on empowering consumers and granting them clear rights that guarantee a safe and fair shopping experience. These rights include:
- Obtain a detailed invoice: The invoice should include the facility's details, an accurate description of the precious metal (type, purity, weight), as well as the exchange and return policy, and any guarantees provided.
- Product identification card: The consumer has the right to obtain a clear identification card for each item containing diamonds or precious stones, which details its specifications (weight, cut, color, clarity grade).
- Disclosure of additional weight: The trader is obligated to disclose any increase in the weight of the finished product resulting from materials other than precious metals or gemstones.
- Access to clear information: The consumer's right to access a clear advertisement that includes all details of the items offered, including type, weight, carat, purity standards, and final price.
Expected impact on the local and regional market
These new regulations are expected to have a significant positive impact on the market. Domestically, they will increase consumer confidence and reduce instances of commercial fraud, thereby enhancing market stability and growth. Regionally and internationally, this step will solidify the Kingdom's position as a trusted trading hub for precious metals and bring its market more in line with international standards, encouraging the attraction of quality investments in the mining sector and related processing industries.
