【London, UK】Advocacy for Global Precious Metals Trading Hubs

Advocacy for Global Precious Metals Trading Hubs
Building Leverage to Eradicate Gold Money Laundering
The LBMA, an independent precious metals authority, has put forward a series of recommendations for International Bullion Centres (IBCs) to adopt, supporting the establishment of responsible gold supply chains globally. The scope of recommendations for IBCs focuses on the following priority strategies:
– Responsible sourcing of recycled gold;
– Eliminating cash transactions;
– Supporting responsible Artisanal and Small-scale Mining (ASM).

In September 2020, LBMA published its first Responsible Sourcing Report, which for the first time included country of origin data. Compiled from the Responsible Sourcing audits of Good Delivery Refiners for 2018 production in 2019, the data showed that 55% of material was recycled, 44% was mined, and 1% came from Artisanal and Small-scale Mining.

In November 2020, LBMA wrote to 12 major International Bullion Centres* with recommendations to promote alignment of responsible sourcing standards across these key hubs. Each LBMA recommendation is grounded in LBMA’s overarching goals of integrity, trust, and confidence:
– Effective vetting and verification of local and regional supply chains;
– Effective oversight of local and regional supply chains;
– Effective enforcement powers;
– Effective cooperation with local, regional, and international organizations;
– Developing guidance for ASM to support and further legitimize responsible ASM supply.

The 12 International Bullion Centres operate significant market infrastructure for gold and silver trading activities, including exchanges; storage facilities; processing, recycling, and refining facilities; international and domestic logistics facilities; domestic consumption; and regulatory regimes. The extensive business scope of these IBCs, involving various international counterparties, makes them highly vulnerable to responsible sourcing risks. Weaknesses in responsible sourcing at IBCs are likely to negatively impact financial institutions, refiners, investors, mints, jewelry, and electronics companies that rely on the integrity of the gold and silver markets.

While LBMA administers the Good Delivery system, the ultimate responsibility for ensuring gold and silver are sourced ethically lies with the entire industry. This means the Responsible Sourcing Programme is part of a broader ecosystem that collectively ensures coverage of parts of the supply chain that other components of the ecosystem cannot reach. Therefore, collaboration, intelligence sharing, and consultation are crucial to help ensure the highest standards of responsible sourcing are met across the industry.

LBMA calls on all International Bullion Centres and other major hubs to seriously consider these recommendations, and to develop and implement relevant action plans to address any identified gaps and ensure their resolution. If these inconsistencies in standards are not addressed, they could have significant implications for international markets.

* China, Hong Kong SAR China, India, Japan, Russia, Singapore, South Africa, Switzerland, Turkey, UAE, UK, USA.