The United States Department of State has issued an advisory on Africa’s Gold sector. This comes at the back of reported cases of growing influence of the Wagner Group and other illicit actors in the gold trade in Africa. The advisory identifies key opportunities and specific risks across the gold value chain across sub-Saharan Africa. It also advises industry players to eschew all forms of activities that encourage the involvement of malign actors so called; and also adopt and apply strong due diligence practices that would lead to positive outcomes to the millions of people whose livelihoods depend on the sector.
Summaries of key recommendations discussed in the Advisory are highlighted below:
- Individuals and entities engaged in the gold sector across the African continent in countries or sub-national regions where corruption may be a concern should be 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;
- Individuals and entities doing business with the gold sector in conflict-affected countries across sub-Saharan Africa should conduct 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;
- Individuals and entities engaged in the gold sector across the continent in countries or localities where corruption may be a concern should 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;
- Individuals and entities should conduct specific due diligence with respect to labor and human rights abuses to avoid commercial risks related to relevant red flags from responsible sourcing initiatives and reputational risks associated with contributing to these harms;
- Individuals and entities should conduct specific due diligence with respect to environmental concerns, including mercury, cyanide, and deforestation;
- Individuals and entities engaged in downstream purchases of recycled gold must ensure that they conduct due diligence on such purchases to determine whether recyclers may be introducing mined gold from sanctioned, conflict-affected, or other high-risk sources;
- Individuals and entities should review available anti-money laundering typology reports carefully, including several referenced in this Advisory, in particular the lists of red flags associated with gold trading and refining, in order to identify the specific ones potentially applicable to their business. The red flags in such typology reports should be integrated into compliance programs, as appropriate, in order 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; and
- Individuals and entities that conduct business with, materially assist, sponsor, or provide financial, material, or technological support for, or goods or services to, or in support of a sanctioned individual or entity may expose themselves to an array of consequences, such as potential designations, civil penalties, or other legal actions.
Read full text of the advisory here.
