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US sanctions Hong Kong, UAE firms for dealing with Russian gold

Small toy figure and gold imitation are seen in front of the Polyus logo in this illustration

By Polina Devitt

LONDON (Reuters) - The United States imposed sanctions on Wednesday on several Hong Kong firms, including VPower Finance Security, for aiding trade in gold produced by an already sanctioned Russian miner, the U.S. Department of the Treasury said.

In a new sanctions list, Washington sought to raise the pressure on Moscow over its war against Ukraine and targeted Russia's access to support from third countries. The Treasury said foreign firms helping Russia's war economy now "face greater risk of sanctions".

Wednesday's list included a trans-national network "laundering gold for a designated Russian gold producer", it said in a statement.

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The producer was Polyus, the statement added. Washington sanctioned Polyus, the largest gold miner in Russia and the world's number four, in 2023.

According to the statement, a Polyus employee and his Hong Kong-based associate engaged in a scheme "whereby payments from the sale of Russian-origin gold were converted into fiat currency and cryptocurrencies through numerous UAE and Hong Kong-based front companies".

The scheme, the Treasury said, used Hong Kong-based firms Holden International Trading Limited and Taube Precious HK Limited to route payments and UAE-based Red Coast Metals Trading DMCC to obfuscate payments from the sale of Russian-origin gold.

Additionally, the scheme involved Hong Kong-based VPower Finance Security Hong Kong Limited to transport the Russian-origin gold, it added.

Polyus declined to comment. VPower did not reply to a Reuters' request for comment. Holden, Taube and Red Coast could not be reached for comment.

An industry body, the London Bullion Market Association (LBMA), said in a statement that it had revoked the LBMA membership of VPower Finance Security with immediate effect.

Russia is the world's second-largest gold miner after China. It produced 321.8 metric tons in 2023, or 8.8% of global output from mines, according to consultancy Metals Focus.

Moscow stopped disclosing its export and import data in detail shortly after its full-scale invasion of Ukraine in 2022, but part of its supplies is still visible through data from countries buying Russian products.

According to data provider Trade Data Monitor (TDM), Hong Kong was the largest importer of gold from Russia as of 2023. The data does not track the UAE's gold imports from Russia.

(Reporting by Polina Devitt; Editing by Tomasz Janowski and Mark Potter)