Background

The federal government issued June 28 an advisory that highlights the opportunities and risks associated with the gold trade across sub-Saharan Africa and encourages industry participants to adopt and apply strengthened due diligence practices to ensure that malign actors are unable to exploit and benefit from this sector. The advisory – jointly issued by the departments of the Treasury, State, Commerce, Homeland Security, and Labor and the U.S. Agency for International Development – is being issued in light of “increasingly concerning reporting” related to the role of illicit actors in the gold trade, including the Wagner Group.

Noting that the gold sector in sub-Saharan Africa produces approximately 25 percent of the world’s gold each year, the advisory encourages U.S. businesses to undertake responsible investment in all aspects of the sector: mining, trading, refining, manufacturing, and retail of end products. In particular, the advisory discusses the multi-faceted context related to artisanal and small-scale mining, reviewing the opportunities for development in the sector and the ways in which the U.S. government has provided support.

At the same time, the advisory warns that there are numerous risks directly and indirectly connected to the mining, refining, trading, and selling of gold and that without adequate due diligence and appropriate mitigating measures an industry participant may inadvertently contribute to one or more of these risks. These include conflict and terror financing, money laundering, corruption, sanctions evasion, human rights and labor rights abuses, and environmental degradation.

The advisory states that while there has been progress in recent decades toward addressing these risk, “malign actors continue to exploit vulnerabilities in the gold supply chain across sub-Saharan Africa.” As a result, the advisory states that industry participants (miners, traders, refiners, exporters, users, consumers, and financial institutions) should be prepared for increased U.S. government attention to the relationship between gold and the revenue streams of armed groups as well as the possibility that U.S. sanctions could be used to disrupt these groups’ operations.

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