Page 8 - Bullion World Issue 1 May 2021

Bullion World | Issue 01 | May 2021

This article summarises the main threats RECYCLED GOLD
to the gold supply chain, outlines the In 2018, 55% of gold processed by “ In 2018, just 1% of
Recommendations sent to IBCs, and LBMA Good Delivery refiners was LBMA Good Delivery
considers why international collaboration recycled compared to about 44% refiners’ production
is necessary. Large-Scale Mining (LSM). LBMA was sourced from
recognises the importance of recycling ASM. LBMA recognises
2: THREATS TO THE for companies in addressing environ- the importance
INDUSTRY mental concerns. However, recycled of engaging
Not all IBCs operate to the same gold’s traceability can be problematic and maintaining
Responsible Sourcing standards and as its provenance can be lost from one
inconsistencies could have a significant supplier to the next with due diligence relationships with ASM
impact on the international market, standards diverging between counter- suppliers. ”
should they remain unaddressed. parties.

CASH TRANSACTIONS
Responsible Sourcing vulnerabilities
can, and will, continue to cause industry Although several regulatory regimes pro- requirements. The breadth of the
fractures and loss of trust across the hibit the use of cash for high-value trans- activities undertaken within IBCs and
supply chain, regulatory bodies and the actions, it remains the primary method the involvement of international counter-
general public. It is therefore important of payment in many parts of the world. parties mean IBCs can be vulnerable to
to understand the provenance in order It is therefore vital that jurisdictions have responsible sourcing risks.
to safeguard that trust. However, doing robust anti-money laundering regulations
so can come at a cost, with some supply with enforceable oversight powers. This To help address vulnerabilities to risk,
chain actors disengaging from high-risk would also help to reduce the risks of LBMA is keen to work with IBCs to im-
sources. In other cases, there is also smuggling for hand-carried bullion. plement or demonstrate consistency with
potential for the provenance to become the Recommendations. Each Recom-
doubtful, especially in relation to recycled Sourcing from ASM mendation represents the overarching
gold. In 2018, just 1% of LBMA Good Delivery objective of integrity, trust and confi-
refiners’ production was sourced from dence.
ASM. LBMA recognises the importance
This means the following key areas re-
quire urgent action from IBCs to mitigate of engaging and maintaining relation- 1. Effective scrutiny and verification of
threats to the industry: ships with ASM suppliers. This sector local and regional supply chains;
provides a livelihood for over 40.5 million 2. Effective regulation of local and
people across the regional supply chains;
“ In 2018, 55% of gold world therefore for- 3. Effective enforcement powers;
malising this sector, as
Effective co-operation with local,
4.
processed by LBMA Good opposed to disen- regional and international
Delivery refiners was recycled gagement, will help organisations;
compared to about 44% ASM gold enter supply 5. Develop ASM specific guidance
chains legitimately.
” responsible ASM supply.
Large-Scale Mining (LSM). to support and further legitimise

3: INTERNATIONAL All five Recommendations are supple-
BULLION CENTRE mented by a number of requirements to
assist IBCs’ practical interpretation of the
RECOMMENDATIONS measures set out above.
In order to instil trust in the market, LBMA
has published Recommendations that
support the Organisation for Economic
Co-operation and Development (OECD)
Due Diligence Guidance framework and
also recognises key findings from the
1 OECD Due Diligence Guidance
Financial Action Task Force (FATF).
for Responsible Supply Chains of
Minerals from Conflict-Affected and
Responsible Sourcing is fundamental to all High-Risk Areas, version 3, April
parties within the supply chain, who can 2016 (OECD)
all benefit from the assurance that bullion
traded throughout the IBCs is responsi-
bly sourced and aligned to international

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