Page 25 - Bullion World Issue 7 November 2021

Bullion World | Issue 07 | November 2021

o Advancing standards – the Financial Action Task Force transactions, and
defining best practice (FATF). 3. the provision of support for
Key initiative: Responsible Gold Artisanal and Small-scale
Guidance version 9 Given the reliance by the mining (ASM).
o Transparency – improving international market on the GDL,
disclosure and reporting LBMA is well placed to collaborate In order to address these strategic
Key initiative: Disclosure and engage with IBCs, to advance priorities as a global industry, IBCs
Guidance standards that ultimately aim should implement the following five
o Audit programme – to address the integrity of the key recommendations:
enhancing credibility precious metals market. The 1. Effective scrutiny and
Key initiative: Auditor training breadth of the activities undertaken verification of local and regional
and engagement within IBCs and the involvement supply chains IBCs must have
o Artisanal and Small-scale of international counterparties visibility of local and regional
Mining (ASM) – engaging mean IBCs can be vulnerable to supply chains, in particular on
responsibly responsible sourcing risks. recycled bullion to ensure its
Key initiative: Supporting legitimacy.
initiatives and leading dialogue In November 2020, LBMA 2. Effective regulation of local and
wrote to 12 major IBCs* with regional supply chains IBCs
These five key areas are important recommendations to encourage must implement stringent rules
to help build long-term trust and consistency in responsible governing local and regional
credibility in the industry globally. sourcing standards across bullion activities.
While the Programme has achieved these major trading hubs. Each 3. Effective enforcement powers
significant milestones over the last recommendation supports LBMA’s IBCs must be appropriately
nine years, the LBMA recognises overarching objectives of integrity, empowered in order to apply
that much remains to be done, trust and confidence. any regulations.
particularly in the following areas. 4. Effective co-operation with
The IBCs operate important local, regional and international
1. Value chain accountability: market infrastructure for bullion organisations.
International Bullion Centre trading activities. This includes 5. Develop ASM specific guidance
Recommendations — Building trading exchanges; storage to support and further
leverage to eliminate gold facilities; processing, recycling legitimate ASM supply.
laundering and refining facilities; international
and domestic logistics facilities; LBMA believes these
A global effort among all the value domestic consumption; and recommendations must be
chain actors, national authorities, regulatory oversight. The breadth implemented and enforced to
and law and enforcement agencies of the activities undertaken within ensure a globally responsible
is required to continue addressing these IBCs and the involvement of supply chain. If an IBC fails to meet
the outstanding challenges and international counterparties mean the recommendations, GDL refiners
risks. these centres can be vulnerable and other parties throughout the
to responsible sourcing risks. supply chain could be discouraged
There are limitations to any audit Responsible sourcing vulnerabilities from engaging with that Centre.
programme. While LBMA can in IBCs can and will cause a While LBMA encourages
effectively remove a refiner from the negative impact for the financial responsible engagement, the
Good Delivery List for Responsible institutions, refiners, investors, failure of IBCs to adopt these
Sourcing failures, unauthorised mints, jewellery and electronic recommendations may bring the
material may still potentially find its companies who rely on the integrity legitimate global supply chain into
way into the Good Delivery system. of the bullion market. disrepute.
To address these limitations, LBMA
published the International Bullion The IBC recommendations focus Over the course of 2021, LBMA
Centres (IBC) Recommendations on three strategic priorities: undertook bilateral outreach with
that support the OECD Due 1. the responsible sourcing of all the IBCs. An initiative of this
Diligence Guidance framework and recycled gold, magnitude requires extensive
also responds to key findings from 2. the elimination of cash collaboration between many actors

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