Government urges due diligence for gold importers

By | 2023-07-02T02:26:26+00:00 July 2nd, 2023|Imports|

The U.S. government has issued the Africa Gold Advisory, which highlights the opportunities and risks associated with the gold trade across sub-Saharan Africa, and encourages industry participants to apply and strengthen their due diligence practices to ensure that bad actors are unable to benefit from the sector, which remains essential to the livelihoods of millions of people across the region.

The advisory applies to all aspects of the sector, including mining, trading, refining, manufacturing, and retail. Without adequate due diligence and appropriate mitigating measures, industry participants may inadvertently contribute to conflict and terror financing, money laundering, sanctions evasion, human rights and labor rights abuses, and environmental degradation.

Gold mined with forced labor can be subject to customs enforcement actions. U.S. law prohibits the importation into the United States of goods mined, produced, or manufactured wholly or in part by forced labor, including convict labor, indentured labor under penal sanctions, and forced or indentured child labor.

U.S. Customs and Border Protection (CBP) may issue a Withhold Release Order (WRO) on goods entering the United States that it suspects are made with forced labor. WROs allow CBP to detain the goods in question at all U.S. ports of entry unless the importer can prove the absence of forced labor in its shipment’s supply chain.

In 2019, gold mined in artisanal small mines in the Democratic Republic of the Congo was subject to a WRO. CBP continues to vigilantly monitor U.S.-bound supply chains for products made with forced labor.

Additionally, the World Customs Organization has multiple initiatives and operations designe to help identify illicit gold more effectively. For example, Operation Tentacle strengthens custom organizations’ ability to collaboratively deny and disrupt the movement of illicit money through customs nodes by transnational criminal organizations and terrorist organizations.

The key recommendations discussed in this Advisory include:

  • Being aware of the risks associated with doing business with corrupt actors, including potentially facilitating money laundering, the violation of economic sanctions, or other financial crimes related to corruption
  • Conducting specific due diligence with respect to local communities to avoid commercial risks related to relevant red flags and reputational risks associated with contributing to conflict violence
  • Be aware of the risks associated with smuggling, including potentially facilitating the violation of economic sanctions, tax evasion, money laundering or other financial crimes related to smuggling;
  • Avoid commercial risks related to relevant red flags from responsible sourcing initiatives and reputational risks associated with contributing to these harms;
  • Conduct specific due diligence with respect to environmental concerns, including mercury, cyanide, and deforestation;
  • Conduct due diligence on the downstream purchases of recycled gold to determine whether recyclers may be introducing mined gold from sanctioned, conflict-affected, or other high-risk sources;
  • Familiarize yourself with the available anti-money laundering reports, and in particular the lists of red flags associated with gold trading and refining, and integrate them into compliance programs to avoid reputational and commercial risks related to doing business with those engaged in money laundering and terrorist financing, including violating sanctions, or prosecution for these financial crimes

Africa is a major source of global gold, generating at least 870 metric tons – a quarter of worldwide output – in 2021. The top five producers in 2021 were Ghana, South Africa, Burkina Faso, Mali, and Sudan, according to official industry figures

Read the full Africa Gold Advisory here.

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