AFC CHALLENGES
high-risk , for example , those who are from areas affected by conflict . This can include audits and on-site visits .
According to OECD ’ s guidance with regard to illegal taxation or extortion , companies should ensure that their suppliers disclose payments made to public or private security forces and alert central government authorities in cases of suspicion of illegal behavior . They also can support the formalization efforts undertaken by governments and their partners . The OECD further recommends that companies use official banking channels and avoid cash transactions ― or ensure that verifiable documentation exists for unavoidable cash purchases . 17
Another prominent initiative in the sector is the Extractive Industries Transparency Initiative , 18 which requires participating countries to disclose information on all revenue collection and spending linked to the extractives sector and asks companies to be transparent about payments made to governments . These transparency measures can help prevent and mitigate financial crime risks .
Conclusion
The gold sector is in many ways less regulated and is vulnerable to tax evasion and attractive to those engaged in corruption and money laundering . While governments should focus on strong legislation , monitoring and enforcement as well as formalization efforts , companies must implement due diligence measures and ensure they know the origin of the gold they buy . It is crucial for AFC professionals to be aware of and understand the specific challenges linked to gold supply chains . Not only do illicit financial flows linked to the gold sector lead to revenue losses in the producing countries , but they can also contribute to organized crime and terrorist financing . In addition , they have real consequences for people whose livelihood depends on the gold sector .
Victoria Gronwald , associate , Levin Sources , Ph . D . candidate , London School of Economics and Political Science , v . gronwald @ lse . ac . uk
1
“ Money laundering / terrorist financing risks and vulnerabilities associated with gold ,” FATF and APG , July 2015 , https :// www . fatf-gafi . org / content / dam / rapports / ML-TFrisks-vulnerabilities-associated-with-gold . pdf ; “ Follow the Money . Financial Flows Linked to Artisanal and Small-Scale Gold Mining : A Tool for Intervention ,” Global Initiative Against Transnational Organized Crime , Deutsche Gesellschaft für Internationale Zusammenarbeit GmbH and Estelle Levin Ltd , March 2017 , http :// www . levinsources . com / assets / pages / Illicit-Financial-Flows-Artisanal-Gold-Mining . pdf
2
“ Artisanal and Small-scale Gold Mining ,” World Gold Council , https :// www . gold . org / esg / artisanal-and-small-scale-gold-mining
3
Stefan Mbiyavanga , “ Applying the Swiss Anti-Money Laundering Act to gold refineries ,” Basel Institute on Governance , December 2019 , https :// www . baselgovernance . org / sites / default / files / 2019-12 / working _ paper _ 31 _ gold _ en . pdf
4
For references to Dubai and Switzerland : Sasha Lezhnev and Megha Swamy , “ Understanding Money Laundering Risks in the Conflict Gold Trade From East and Central Africa to Dubai and Onward ,” The Sentry , November 2020 , https :// thesentry . org / wp-content / uploads / 2020 / 11 / ConflictGoldAdvisory-TheSentry-Nov2020 . pdf ;
5
Angela Jorns and Estelle Levin-Nally , “ Are they all illegal ? A more nuanced view to guide LSM engagement with ASM ,” Levin Sources , April 23 , 2020 , https :// www . levinsources . com / knowledge-centre / insights / illegal-nuanced-guide-lsmengagement-asm
6
Clémence Naré , Alec Crawford , Victoria Gronwald , et al ., “ Illicit Financial Flows and Conflict in Artisanal and Small-Scale Gold Mining : Burkina Faso , Mali , and Niger ,” IGF / IISD , September 2022 , https :// www . iisd . org / system / files / 2022-09 / illicit-financialflows-conflict-artisanal-small-scale-gold-mining . pdf
7
Ibid .
8
“ Réduire les flux illicites de mercure et d ’ or en Afrique de l ’ Ouest : Options pour une approche régionale ,” United Nations Industrial Development Organization ( UNIDO ), 2018 , https :// www . unido . org / sites / default / files / files / 2019-02 / UNIDO % 20ECOWAS % 20 french . pdf ; Yves Bertran Alvarez , Baptiste Coué and Patrick Schein , “ Supply chains of artisanal gold in West Africa : A study of the supply chain in two gold-producing regions of Burkina Faso and Senegal ,” Alliance for Responsible Mining , 2016 , https :// www . responsiblemines . org / wp-content / uploads / 2018 / 04 / Publication-supply-chainsartisanal-gold-west-africa _ -ENGL _ -baja . pdf
9
Ibid .; Clémence Naré , Alec Crawford , Victoria Gronwald , et al ., “ Illicit Financial Flows and Conflict in Artisanal and Small-Scale Gold Mining : Burkina Faso , Mali , and Niger ,” IGF / IISD , September 2022 , https :// www . iisd . org / system / files / 2022-09 / illicit-financialflows-conflict-artisanal-small-scale-gold-mining . pdf
10
Ibid .
11
“ Special report on The ICGLR Regional Initiative against the Illegal Exploitation of Natural Resources ( RINR ) and other Certification Mechanisms in the Great Lakes Region : Lessons Learned and Best Practices ,” United Nations Economic Commission for Africa ( UNECA ), 2013 , https :// repository . uneca . org / bitstream / handle / 10855 / 22274 / b10725258 . pdf ? sequence = 1 & isAllowed = y ; Marcena Hunter , Mukasiri Sibanda , Ken Opala , et al ., “ Illicit Gold Markets in East and Southern Africa ,” Global Initiative Against Transnational Organized Crime , May 2021 , https :// globalinitiative . net / wp-content / uploads / 2021 / 05 / Illicit-gold-markets-in-East-and-Southern-Africa-GITOC- . pdf
12
“ Money laundering / terrorist financing risks and vulnerabilities associated with gold ,” FATF and APG , July 2015 , https :// www . fatf-gafi . org / content / dam / rapports / ML-TFrisks-vulnerabilities-associated-with-gold . pdf
13
Clémence Naré , Alec Crawford , Victoria Gronwald , et al ., “ Illicit Financial Flows and Conflict in Artisanal and Small-Scale Gold Mining : Burkina Faso , Mali , and Niger ,” IGF / IISD , September 2022 , https :// www . iisd . org / system / files / 2022-09 / illicit-financialflows-conflict-artisanal-small-scale-gold-mining . pdf
14
Gavin Hilson , “‘ The ‘ Zambia Model ’: A blueprint for formalizing artisanal and small-scale mining in sub-Saharan Africa ?” Resources Policy , p . 68 , 2020 , https :// www . planetgold . org / sites / default / files / Hilson .% 20G .% 202020 .% 20The % 20Zambia % 20Model _% 20A % 20 blueprint % 20for % 20formalization % 20for % 20ASM . pdf
15
Clémence Naré , Alec Crawford , Victoria Gronwald , et al ., “ Illicit Financial Flows and Conflict in Artisanal and Small-Scale Gold Mining : Burkina Faso , Mali , and Niger ,” IGF / IISD , September 2022 , https :// www . iisd . org / system / files / 2022-09 / illicit-financialflows-conflict-artisanal-small-scale-gold-mining . pdf
16
“ OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas ,” OECD , 2016 , https :// www . oecd . org / daf / inv / mne / OECD-Due-Diligence-Guidance-Minerals-Edition3 . pdf
17
Ibid .
18
Extractive Industries Transparency Initiative ( EITI ) homepage , EITI . org , https :// eiti . org /
26 acamstoday . org