May 25, 2021

International Bullion Centre Recommendations

Building leverage to eliminate gold laundering

As the independent authority for precious metals, LBMA has developed recommendations for International Bullion Centres (IBCs) to adopt to support global responsible gold supply chains. The scope of the IBC recommendations focuses on the following strategic priorities:

  1. the responsible sourcing of recycled gold;
  2. the elimination of cash transactions; and
  3. the provision of support for responsible Artisanal and Small-scale mining (ASM).

Background

LBMA’s inaugural Responsible Sourcing Report – released in September 2020 – included country of origin data for the first time. This data, compiled from Good Delivery refiners’ responsible sourcing audits performed in 2019 for 2018 production, revealed that 55% of the material was recycled, 44% was mined and 1% was from ASM.

You can also find out more in the International Bullion Centres Recommendations Webinar, which invited panellists to discuss the IBC recommendations in greater depth and – most importantly – how the industry can provide support to ensure the integrity and transparency of the global market. Guest speakers include Tyler Gillard (Head of Due Diligence, OECD), Joanne Lebert (Executive Director, IMPACT), Sasha Lezhnev (Deputy Director of Policy, The Sentry), and Philip Olden (Independent Consultant).

LBMA Recommendations

In November 2020, LBMA wrote to 12 major IBCs* with recommendations to encourage consistency in responsible sourcing standards across these major trading hubs. Each recommendation supports LBMA’s overarching objectives of integrity, trust and confidence:

  • Effective scrutiny and verification of local and regional supply chains;
  • Effective regulation of local and regional supply chains;
  • Effective enforcement powers;
  • Effective co-operation with local, regional and international organisations;
  • Develop ASM-specific guidance to support and further legitimise responsible ASM supply.

Read the detailed IBC Recommendations

Defining an International Bullion Centre

The 12 IBCs operate important market infrastructure for bullion trading activities. This includes trading exchanges; storage facilities; processing, recycling and refining facilities; international and domestic logistics facilities; domestic consumption; and regulatory oversight. The breadth of the activities undertaken within these IBCs and the involvement of international counterparties mean these centres can be vulnerable to responsible sourcing risks. Responsible sourcing vulnerabilities in IBCs can and will cause a negative impact for the financial institutions, refiners, investors, mints, jewellery and electronic companies who rely on the integrity of the bullion market.

Responsible Sourcing Ecosystem

Although LBMA administers the Good Delivery system, ultimately the responsibility to ensure bullion is ethically sourced is shared across the industry. This means the Responsible Sourcing Programme is part of a wider ecosystem which, together, ensures coverage in parts of the supply chain that other components simply cannot reach. This means collaboration, intelligence-sharing and consultation are crucial to ensuring the highest standards of responsible sourcing across the industry.

LBMA Urges Action

LBMA calls on all the IBCs and other major trading hubs to review the recommendations and develop and adopt an action plan that addresses any identified shortcomings and ensures its implementation. These inconsistencies in standards could have a significant impact on the international market should they remain unaddressed.

For more information, please watch our webinars linked below, or contact Ask@lbma.org.uk

Find Out More

  • Ruth Crowell participated in a panel discussion, 'AML, Corporate Governance and Responsible Sourcing,' at the IPMI 44th Annual Conference, 16-17 November 2020. Watch the video of Ruth's speech here.
  • You can download Ruth Crowell's presentation to the OECD, on 17 November, 2020.
  • In the Future of Responsible Sourcing Webinar, the LBMA Responsible Sourcing team outlines its strategy for the future of Responsible Sourcing, including recommendations for Bullion Centres and Country of Origin data. Guest speakers include Dr Mark Pieth (Professor of Criminal Law and Criminology at The University of Basel).
  • You can find more webinars on the LBMA webinar page where you can find videos on LBMA's Responsible Sourcing Programme and various other initiatives.

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