London’s gold market association has warned countries that are centres for trading the yellow metal that they risk being blacklisted as suppliers unless they ensure gold entering the market is responsibly sourced.
The London Bullion Market Association wrote to countries including the United Arab Emirates, the US, UK and Switzerland saying there was a risk unethical gold was entering global markets.
“Not all international bullion centres are currently operating to the same responsible sourcing standards,” said the letter, seen by the Financial Times. “These inconsistencies in standards could have a significant impact on the international market should they remain unaddressed.”
The LBMA is an industry-backed body that regulates London’s gold market by accrediting refineries from around the world through its Good Delivery List. These refiners are audited every year.
In its letter, the LBMA said “to instil trust in the market going forward” it would only allow its refiners to source gold and silver from countries that have met due diligence standards written by the OECD, which are viewed as key benchmarks in the natural resources industry.
“The ultimate stick is that we could say to these jurisdictions that they are no longer considered credible and therefore not responsible sources of gold”, Ruth Crowell, chief executive of the LBMA, told the Financial Times.
The LBMA recommended that countries focus on the responsible sourcing of recycled gold, the elimination of cash transactions, and the provision of support for responsible artisanal and small-scale mining.
The letter was first reported on Thursday by Reuters. It comes after concerns that the 23 per cent rally in gold prices this year is leading to a rise in supplies of gold from illegal sources.
The rise in gold prices has driven “a new artisanal gold mining and refining rush in conflict-affected and high-risk areas” in eastern and central Africa, a report by investigative group The Sentry said this week. Most of this gold is traded through Dubai in the United Arab Emirates, it said.
“Action by the LBMA is important if its responsible gold standards are to have any meaning,” Anneke Van Woudenberg, of the London-based NGO Raid, said. “If the public and the markets are to have faith that the gold certified by the LBMA is not tainted by human rights abuses or money laundering, then it will need to flex its muscles and suspend those not playing by the rules.”
The LBMA wrote to China, Hong Kong, India, Japan, Russia, Singapore, South Africa, Switzerland, Turkey, the UAE, the UK and the US. It said other gold trading centres would be added to the list.
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