Turkey to end cash gold sales as it rolls out nationwide tracking system to curb smuggling

Summary:

Turkey will introduce a nationwide precious metals tracking system from April that will require all gold sold in the country to be banderol-certified and fully traceable, effectively ending cash transactions in the gold trade. Authorities say the measure aims to combat widespread gold smuggling and counterfeit products that have surged under import restrictions.

Turkey will phase out cash-based gold transactions starting in April as part of a new regulatory framework designed to combat gold smuggling, counterfeit products and unregistered trade, industry representatives said.

The Turkish Mint (Darphane), which operates under the Ministry of Treasury and Finance, will launch the Precious Metals Tracking System (KMTS), requiring all gold products sold in Turkey to carry an official banderol and serial number.

Under the new system, gold sales by jewellers will only be permitted via bank transfer, debit or credit card, with payments routed through the banking system. Cash transactions will no longer be allowed.

All gold to be traceable, regardless of size

Speaking at the Jewellery Antalya trade fair, Turkish Jewellery Exporters’ Association Chairman Burak Yakın said the system would apply to all gold products, from one gram to one kilogram.

“The Mint will issue the banderol, and gold will only be produced with that authorisation,” Yakın said. “With the serial number on each product, we will know where the gold came from and which company imported it. This will apply to one gram of gold as well as one kilo.”

He added that when individuals sell gold to jewellers, invoices will be issued and payments deposited directly into bank accounts, ensuring full traceability.

Cash era ends for jewellers

Once KMTS becomes operational, jewellers will be prohibited from accepting cash in gold sales. All transactions will be recorded digitally, with the aim of preventing informal trade and eliminating counterfeit gold from circulation.

Banks will also require official documentation for gold-backed transactions, including cases where customers use gold savings to purchase property. Without proof of origin, such transactions will be rejected.

Measure targets widespread gold smuggling

The reform comes amid growing concern in the jewellery sector over rampant gold smuggling, which industry representatives say has surged due to import quotas.

Exporters estimate that illegal gold inflows are running at up to three times the volume of official imports. According to sector figures, if Turkey officially imports around 8 tonnes of gold per month, an additional 20–25 tonnes may be entering the country illegally.

“People literally bring gold in by wearing it around their necks and then sell it here,” exporters said, citing examples of smuggling routes through neighbouring countries such as Bulgaria.

Import quotas strain domestic production

Industry officials warn that the gold import quota has severely damaged domestic manufacturing. Jewellery Exporters’ Association Vice Chairman Ayhan Güner said nearly half of the workshops in Kuyumcukent, Istanbul’s main jewellery manufacturing hub, have shut down.

“Small producers cannot access gold, while intermediaries are making an extra $30 million a month from price differentials,” Güner said. “If this continues, half of Kuyumcukent is effectively bankrupt. Large firms may survive, but small workshops won’t.”

Güner said export competitiveness has deteriorated sharply due to price distortions, forcing Turkish firms to lose orders to rivals abroad.

Gulf buyers pull back, jobs lost

Sector representatives also said Gulf-based wholesale buyers have largely withdrawn from Turkey due to rising costs linked to gold price differentials.

“These customers came from Dubai and the wider Gulf and boosted production here,” Güner said. “Now they’ve left. They’re moving to places like Uzbekistan, Dubai and Egypt.”

He warned that the damage may take years to reverse, noting that employment in the sector has fallen by at least 40% and that valuable know-how is being lost.

Another board member said registered manufacturers were being penalised despite full compliance. “If there’s a problem, inspect us,” he said. “I employ 150 people, all registered. The employment loss is real and severe.”

Authorities aim to restore control

Officials say the KMTS system is intended to restore transparency, protect legitimate producers and reassert state control over the gold market, which plays a critical role in Turkey’s economy and household savings.

The government has not yet announced whether import quotas will be revised, but industry representatives argue that tracking alone will not be sufficient unless supply constraints are also addressed.

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