Best Practice Guidelines

Key Factors for Consideration

Location:

Existing vaults are located within the M25 to allow quick and efficient movement of stocks. Your choice of location should consider the ability of police to provide support in an alarm situation in an appropriate timeframe.

Construction:

You will need to seek advice from specialist architects and constructors who will guide on construction materials, floor loading capacity, location of the water table, and bedrock materials of the site. Construction materials and building design are contributory factors in a multi-layered approach to security. There are certified construction designs that may assist with customer acceptance and insurance.

Operations:

Ongoing security measures will be of great importance. Therefore, you should also seek advice regarding these, unless you have the required expertise within your company. This will ensure that your premises are appropriately secured by the use of security technology and procedures, again as part of the multi-layered approach to security.

An operational vault will require the use of much specialised equipment in order to weigh, move and store the metals held there.

An appropriate IT system will be needed in order to record details of all of the bars received, held and released, to assign ownership of them, and to produce electronic and paper weight lists as required.

When your vault is operational, you should expect your customers to perform regular audits of the stock that you hold on their behalf. Some customers may also perform operational and facility audits to facilitate continued usage approvals. You should also validate holdings within your facility.

Insurance:

It is important that you acquire a suitable level of insurance to cover the metals and volumes that you hold. There are specialist insurers who offer policies of this nature, but they will require you to share detailed information with them about your business. Your choice of location may affect your insurance costs.

Staffing:

One of the most important aspects of operating a vault is the leadership of an effective vault manager, and it may be a challenge to appoint such an employee with the required skill set. It would be difficult to set up a vault without a manager who has practical experience of working in the precious metals industry, as that manager will assist in the training of new staff members in the highly specialised processes involved, such as weighing and checking that bars meet LBMA’s ‘Good Delivery’ standard, and will ensure that health and safety rules are adhered to. Most of your staff will need to be qualified to operate forklift trucks and all should have demonstrable proficiency in weighing bars using electronic and beam balance scales. It is vital to your vault security, and that of the wider market, that you engage a trustworthy workforce, and it is therefore necessary that all staff are vetted by the Disclosure and Barring Service (DBS) prior to appointment.

LBMA Authorised Weigher:

Your company can apply to LBMA for status as an ‘Approved Weigher’. This involves a competency assessment on checking the weights of bars entering London for the first time on behalf of the market. You will need to find a sponsor from the LPMCL Members for this process.

May 2024