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Responsible Precious Metal Policy. From KYC to KYT. Corporate philosophy. Supply chain due diligence OBJECTIVES: Fighting serious abuses of human rights Avoiding contributing to conflict over its precious metals supply chain

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corporate philosophy
Corporate philosophy

Supply chain due diligence


  • Fighting serious abuses of human rights
  • Avoiding contributing to conflict over its precious metals supply chain
  • Complying with high standards of anti money laundering (AML) and combating terrorist financing (CFT) are central tenets of all operating procedures.
  • Spearheading implementation of responsible supply chain practices in the industry.
conflict gold dodd frank act section 1502
Conflict Gold – Dodd Frank ActSection 1502
  • Directs SEC to issue rules requiring listed companies to disclose their use of conflict minerals for gold and 3T (tantalum, tin and tungsten)
  • Companies are required to:
    • conduct reasonable “country of origin” inquiry to determine whether any of its minerals originated in the covered countries (DRC and adjoining countries) or are from scrap or recycled sources
    • Report publicly on the result of enquiries
    • When sourcing from DRC or adjoining countries, issuers must submit an audited «Conflict Minerals Report »
conflict gold dodd frank act section 15021
Conflict Gold – Dodd Frank ActSection 1502


  • While the legislation applies to US listed companies, it indirectly impacts any company beyond US borders which has directly or indirectly US listed customers
  • Entry into force: 1st January 2013
organization and industry answers to dodd frank act mks group contribution
Organization and Industry Answers to Dodd Frank Act & MKS Group contribution

OECD Supply ChainDue Diligence

All supply chain actors

WGC Conflict Free Gold Standard

LBMA Responsible Gold Guidance

RJC chain of custody standard

EICC Audit Protocol

DMCC Practical Guidance


All supply chain actors

Refiners – choke point

Harmonization between industry initiative

objective of each standard guidance
Objective of each standard/guidance





Dodd Frank Act


responsible precious metal policy guidance
Responsible Precious Metal Policy/Guidance
  • Must comply with:
    • Local AML-CFT laws
    • Responsible Precious Metals Group Policy and Guidance (includes LBMA and OECD due diligence requirements)
    • go beyond OECD and LBMA requirements

Start implementation right now !

  • Should be implemented by the end of 2013
  • Independent third party audit is a must
guidance establish strong company management system
Guidance: Establish Strong Company Management System
  • Country Manager retains the ultimate control and responsibility
  • Nomination of a designated Compliance Officer who reports to the Country Manager
  • Relationship manager is responsible for due diligence and monitoring
  • On-going training
  • Supply chain traceability system for each inbound and outbound shipment
  • Maintain records for 5 years
  • Strengthen company engagement with precious metal suppliers
  • Make and receive payments through official banking channels
  • Whistleblower mechanism:
guidance identify and assess risk
Guidance: Identify and assess risk
  • Perform due diligence on a risk based approach
    • Identify the counterparty and verifying its identity
    • Identify the beneficial owner(s)
    • World check
    • Collecting KYC information based on the risk level of the relationship
    • Collecting and assessing the counterparty’s AML-CFT policy and practice, if applicable

Basic KYC


For physical deliveries, identify the origin of precious metals

-- For physical deliveries of mined precious metals:

  • Mining license
  • Import/export license
  • Collecting and assessing mining practice
  • Mining capacity



guidance identify and assess risk1
Guidance: Identify and assess risk

Basic KYC

  • On-going due diligence

Perform due diligence on a risk based approach

For physical deliveries of mined precious metals from artisanal and small scale mining:

Assessment whether ASM can be considered involved in legitimate artisanal and small-scale mining

Whenever ASM precious metals don’t come from legitimate artisanal and small scale mining, supporting measures to build secure, transparent and verifiable precious metal supply chains from mine to market

High risk categories:

On-site visit

For physical deliveries of mined precious metals; KYC should be done for each company involved in the supply chain from the mine to refinery

For physical deliveries of recycled precious metals: KYC should be done for each company involved in the chain from the precious metals supplying counterparty to refinery


guidance identify and assess risk2
Guidance: Identify and assess risk
  • High risk categories
    • Origin from, transit via a conflict-affected area
    • Origin from a country with limited known gold reserve
    • Recycled gold comes from a country where conflict gold is known to transit
    • Countries with high risk of money laundering, crime, corruption
    • PEP (politically exposed person)
    • High risk business activity (arms, gaming, casino, antique and art, diamond merchants, sects)
    • Not active in precious metal business nor investor nor collector and enters into physical transactions
guidance identify and assess risk3
Guidance: Identify and assess risk
  • High risk countries
    • list based on:
      • Heidelberg Institute for International Conflict Research (
      • Dodd Frank Act covered countries
      • UN Report on DRC conflict gold transit countries
      • FATF high-risk and non-cooperative jurisdictions (
      • Sanction (UN, USA, UE)
      • Corruption perceptions index (
    • Two levels: High risk and sensitive countries
guidance identify and assess risk4
Guidance: Identify and assess risk
  • Monitoring of transaction: Strong KYT
    • The due diligence doesn’t stop at customer level;
    • For each transaction we need to ensure the origin of gold/precious metal is the same than the one assessed during due diligence;
    • For each new transaction type, a new due diligence should be conducted;
    • Conduct appropriate scrutiny and monitoring of transactions on a risk based approach;
    • Clarification of all complex, unusual transactions;
    • For each physical delivery, export form to be added with standard shipping documentation.
  • Report risk assessment to Country Manager
  • -- Approbation by Country Manager of all high risk client and yearly review
guidance identify and assess risk5
Guidance: Identify and assess risk
  • Design and implement strategy to respond to identify risk
  • Carry out independent third party audit
  • Public reporting on your policy
guidance implementation
Guidance Implementation
  • Status:
    • Refineries to implement for Gold & Silver Dore sourcing
    • Banks & Nominated Agencies to implement for bullion sourced from non-LBMA Good delivery Refiners.
  • Key challenges:
    • Full transparence of all actors of the chain to determine the origin
    • KYC on all actors of the supply chain for high risk categories
    • Awareness and commitment of other supply chain actors
  • PAMP SA – LBMA Responsible Gold Guidance audit:
    • Audit performed by EY in February 2013
    • Audit opinion issued in March 2013
new financial action task force fatf requirements
New Financial Action Task Force (FATF) requirements
  • New crime: tax crime
  • New requirement for risk based approach:
    • New measures for high risk
  • Transparency of company
    • An operational company can no longer be beneficial owner
    • Beneficial owner should be an individual (except for listed company)
    • Threshold to define
  • Same criteria for national PEP, foreign PEP, international organization PEP

Participation in industry-led effort to build responsible & conflict-free gold supply chains enables Indian industry to:

  • Manage reputation risk
  • Meet customer demands for ethical, conflict-free gold
  • Advance competiveness, gain access to new markets
  • Recognition for its responsible practices
  • Part of the leading companies drafting and implementing responsible practice in the industry

Indian firms play a major role in global supply chains of gold.

Contribute to global effort to cut the link between violence and the gold trade