The Programme is the leading independent audit programme for verifying the legitimacy of the gold and silver supply chain. The Programme follows the five-step framework for risk-based due diligence of the OECD Due Diligence Guidance.1

At its core, the Programme comprises the Responsible Gold Guidance (RGG), established in 2012, and the Responsible Silver Guidance (RSG), established in 2017.

Its original purpose was to set due diligence standards to help combat human rights abuses, contributions to conflict, money laundering and terrorism financing. Since the start of 2018, the Programme has also included environmental factors. Unlike other industry programmes, LBMA’s Responsible Sourcing standard is a commercial necessity for any major refiner, as it allows access to Loco London, the largest marketplace in the world for precious metals. Loss of LBMA accreditation would have serious commercial consequences for refiners. Since the Programme’s launch, three refiners have lost their accreditation due to failure to meet Responsible Sourcing requirements. This is the ultimate sanction. LBMA will impose this sanction if there have been failures that cannot be remediated or if attempts at remediation have been significantly poor. GDL refiners that are found to be applying the Programme in good faith, but have not met a satisfactory standard in some respects, will generally be given a reasonable opportunity to raise their standards to the required level. This level of enforcement ensures that all GDL refiners meet the Responsible Sourcing requirements given that GDL covers most of the market.

LBMA recognises that this audit process is only as effective as the auditors themselves. This is why the LBMA’s Approved Service Providers List records the individual audit entities accredited to perform Good Delivery audits.

To become accredited, auditors must complete an application, under which they provide LBMA with details of their relevant experience, skills, and their firm’s quality control and governance processes. Auditors are also required to demonstrate fulfilment of the requirements detailed in LBMA’s Responsible Sourcing: Third-Party Audit Guidance. This helps to ensure that only the most competent auditors familiar with the precious metals supply chain and the importance of Responsible Sourcing are mandated with performing an audit under the Programme. Their accreditation and performance are reviewed on an annual basis to ensure they continue to meet LBMA requirements.

The outcome of the audit is not the only resource with which LBMA measures a refiner’s compliance with the Programme.

Market intelligence is a fundamental resource that LBMA is able to draw on. Whistleblowing reports, media coverage and NGO research have all provided LBMA with valuable intelligence on refiners or their suppliers. LBMA welcomes stakeholders bringing concerns to its attention in order to enhance this work. LBMA will assess such information/evidence and make further enquiries, as required, or if warranted, launch a formal Incident Review Process. The IRP involves 11 steps to ensure a fair, accurate and reliable outcome. LBMA may publicly confirm if an IRP has been launched, provided it is new information and outside the annual audit cycle. For some non-conformances, the IRP can end with a refiner’s removal from the Good Delivery List. That could be severely damaging to a refiner’s business, through diminished market access, and is the most severe potential outcome.

1. OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict- Affected and High-Risk Areas (2010) and the requirements detailed in the OECD Gold Supplement (2012).