Responsible Sourcing Programme Third Party Assurance Guidance
Artisanal and Small-Scale Mining (ASM): Formal or informal mining operations with predominantly simplified forms of exploration, extraction, processing and transportation. ASM is normally not capital intensive and uses high labour-intensive technology. It can include men and women working on an individual basis as well as those working in family groups or as members of cooperatives or other types of legal associations and enterprises involving hundreds and even thousands of miners. Small, mechanised mines can be considered ASM.
AML-CFT: Anti-Money Laundering – Combating the Financing of Terrorism.
Auditor: For the purpose of this document, an auditor refers to , assurance providers, assessors or assessment team.
Assurance: The carrying out of assurance is referred to as an assurance engagement. This is defined by ISAE 3000 as follows:
- A process where a Practitioner evaluates or measures a subject matter that is the responsibility of another party against suitable criteria;
- Based on that evaluation, an independent Assurance Report is prepared that expresses a conclusion to provide the intended users with a degree of confidence about the subject matter.
Beneficial Owner: The natural person(s) who ultimately owns or controls a customer and/or the natural person on whose behalf a transaction is being conducted. It also includes those persons who exercise ultimate effective control (defined as 10% or more ownership for mined material and 25% for recycled) over a legal person or arrangement.
Conflict-Affected and High-Risk Areas (CAHRA): These areas are identified by the presence of armed conflict, widespread violence or other risks of harm to people. Armed conflict may take a variety of forms, such as a conflict of international or non-international character, which may involve two or more states, or may consist of wars of liberation, insurgencies, civil wars, etc. High-risk areas may include areas of political instability or repression, institutional weakness, insecurity, collapse of civil infrastructure and widespread violence. Such areas are often characterised by widespread human rights abuses and violations of national or international law.
Contribution to Conflict: Contribution to armed aggression between two or more parties which leads to human rights abuses. The parties in the conflict may include government, militia, organised criminals or terrorist groups.
Due Diligence: Research and analysis of a company or organisation done in preparation for a business transaction and throughout the relationship. Activities to be assessed, based on the Refiner’s appetite, should include those risks identified in the Annex II of the OECD Due Diligence Guidance, money laundering, as well as Environmental, Social and Governance responsibilities.
Environment: The totality of all the external conditions affecting the life, development and survival of an organism3.
ESG: Environmental, Social and Governance
Follow-Up Audit: A separate audit of the Refiner’s Corrective Action Plan relating to any high-risk non-compliances.
Gold-supplying counterparty or counterparties: A gold supplier that is directly engaged with a gold Refiner.
Grandfathered Stocks: Gold investment products (e.g., ingots, bars, coins and grain in sealed containers) held in bullion bank vaults, central bank vaults, exchanges and refineries, with a Verifiable Date prior to 1 January 2012, which will not require a determination of origin. This includes stocks held by a third party on behalf of the listed entities.
High-Risk: For the purpose of this Guidance, high-risk may apply to any or all parts of a Precious Metal supply chain and any actor in a Precious Metal supply chain that is at a higher risk of being associated with or contributing to armed conflict, widespread violence, systematic or widespread human rights abuses, money laundering or financing of terrorism.
Human Rights: For the purpose of this Guidance, human rights are those defined in the International Bill of Human Rights. The Bill includes the Universal Declaration of Human Rights (1948), the International Covenant on Economic, Social and Cultural Rights (1966), the International Covenant on Civil and Political Rights (1966), as well as its two Optional Protocols (on the complaints procedure and on the death penalty).4 Refiners should also consider the United Nations Guiding Principles on Business and Human Rights. The United Nations has gradually expanded human rights law to encompass specific standards for women, children, persons with disabilities, minorities and other vulnerable groups, who now possess rights that protect them from discrimination that had long been common in many societies.5
International Standard on Assurance Engagements (ISAE 3000) revised: This is the standard for assurance engagements other than audits or reviews of historical financial information, issued by the International Auditing Standards Board in December 2013. The standard stipulates that members of the engagement team are subject to the Code of Ethics for Professional Accountants issued by the International Ethics Standards Board for Accountants (IESBA Code) and the firm is subject to the International Standard on Quality Control 1 (ISQC 1).
ISAE 3000 Assurance Engagements Revised: International Standard in Assurance Engagements ISAE 3000 Assurance Engagements Other than Audits or Reviews of Historical Financial Information (ISAE 3000) is a commonly applied standard for non-financial reporting engagements. It is issued by the International Auditing and Assurance Standards Board (IAASB). Key characteristics include:
- Three-party relationship (between company management, auditor and intended users of the Assurance Report);
- Designed to enhance the confidence of intended users;
- Evaluates the subject matter against the suitable criteria;
- Risk assessment, and plan and perform assurance procedures to obtain sufficient appropriate evidence to form a conclusion;
- The output is an independent Assurance Report.
Know Your Customer or Counterparty (KYC): This is the process of a business identifying and verifying the identity of its counterparts and establishing the facts to have a clear understanding of the nature and background of the relationship.
Limited Assurance: A lower level of assurance where a negative form of expression is issued. The objective of a limited assurance engagement is to reach a conclusion that is meaningful and not misstated based on the work performed.
Mined Gold (also referred to as primary gold): Gold that originates from Large and/or Medium-Scale Mines (LSM) or Artisanal and Small-Scale Mines (ASM) and has never been previously refined. This term means any gold or gold-bearing material produced by or at a mine, in any form, shape and concentration, until it is fully refined (995 or greater), fabricated into a gold refinery product (e.g., bar or grain) and sold.
Money Laundering: Money laundering is the practice of disguising the origins of illegally obtained money. Ultimately, it is the process by which the proceeds of crime are made to appear legitimate. The money involved can be generated by any number of criminal acts, including drug dealing, corruption and other types of fraud. The methods by which money may be laundered are varied and can range in sophistication from simple to complex.
Mining By-product: Gold obtained from the mining of base metals, for example, from lead, zinc or copper ore, in which gold may be a trace constituent.
Objective Evidence: Verifiable information obtained from documents, records, observations and/or statements of facts.
Owned mines: A group of mines owned and operated by the same corporate group.
Origin of Recycled Gold: The point in the gold supply chain where the gold is returned to the refiner or other downstream intermediate processor or recycler.
Precious Metal Refining: Metallurgical operations that add value and produce fine Precious Metal with a concentration of 995 parts per thousand or higher from Precious Metal and Precious Metal-bearing materials, usually beginning with lower concentrations, including ancillary activities such as sampling, laboratory analysis and assay, etc.
Reasonable Assurance: A higher level of assurance where a positive form of expression is issued. The objective of a reasonable assurance engagement is to reach an opinion on whether the subject matter is materially free from misstatement.
Recycled Gold: This term traditionally encompasses anything that is gold-bearing and has not come directly from a mine in its first gold life cycle. In practical terms, it relates to gold sourced by an LBMA Refiner, or downstream intermediate processor, including end-user, post-consumer products, scrap and waste metals, and materials arising during refining and product manufacturing, and investment gold and gold-bearing products which are returned to a Refiner to begin a new life cycle. This category may also include fully refined gold that has been fabricated into grain, Good Delivery bars, medallions and coins that have previously been sold by a refinery to a manufacturer, bank or consumer market, and that may thereafter need to be returned to a refinery to reclaim their financial value or for transformation into other products (e.g., 1 kilo bars).
Subcategories of Recyclable Gold:
Unprocessed Recyclable Gold: Recyclable Gold still in its original form and/or fabrication scrap, before it has been returned for processing and refining (e.g., bullion bars, pieces of jewellery, ornaments, coins, machine turnings, etc.).
Melted Recyclable Gold: Recyclable Gold which has been melted as the first recycling process and cast into rudimentary bars or some other form with undefined dimensions and variable fineness.
Industrial By-product: A material produced while processing another material, not the primary intended product but nevertheless a separate useful material. For example, gold refining often creates low-value byproducts such as furnace flue dust, spent crucibles and floor sweepings.
Mixed Materials: Materials that include multiple sources (e.g., both mined and recycled minerals/metals). Mixing of materials is not common practice and should be deemed a red flag. Due diligence should be conducted on those sources of mixed gold in accordance with the full requirements of the Responsible Gold Guidance (RGG).
Supplier: This term refers to any individual or organisation that is a participant in the supply chain for the supply of gold and gold-bearing materials.
Terrorist financing: Includes the financing of terrorist acts, of terrorists and of terrorist organisations.
World Heritage Site: A landmark or area which is selected by the United Nations Educational, Scientific and Cultural Organization (UNESCO) as having a cultural, historical, scientific or other form of significance, and is legally protected by international treaties. The sites are judged important to the collective interests of humanity.
4 UN Office of the High Commissioner on Human Rights: http://www2.ohchr.org/english/...
5 They include the Convention on the Prevention and Punishment of the Crime of Genocide (1948), the International Convention on the Elimination of All Forms of Racial Discrimination (1965), the Convention on the Elimination of All Forms of Discrimination against Women (1979), the Convention on the Rights of the Child (1989) and the Convention on the Rights of Persons with Disabilities (2006), among others. UN Human Rights: https://www.un.org/en/global-i...