According to David Tate, CEO of the World Gold Council (WGC), the volume of illicit gold flows already exceeds $120 billion a year. “This is a crisis for the international community,” he said, noting the link between illegal gold mining and armed conflicts and shadow financial transactions.
Gold remains one of the most convenient assets for the illicit market. After refining, gold bars become chemically identical regardless of the metal’s origin, which makes it possible to conceal the source of the raw material and launder it through complex supply chains.
As the FT notes, the precious metal has been used to supply parties to conflicts in Sudan and the Democratic Republic of the Congo. Rising prices have only increased the appeal of this market for criminal groups and armed factions.
About 20% of the world’s gold is mined through artisanal methods
London remains one of the world’s largest centers for gold trading. More than $220 billion worth of gold passes through the British capital’s over-the-counter market every day. Standards for this market are set by the London Bullion Market Association (LBMA), which requires that certified bars come only from refineries that meet the Good Delivery standard.
However, current control mechanisms do not fully prevent the flow of contraband gold. According to the FT, about 20% of the world’s gold is mined by artisanal miners or small-scale operations. Yet only 1% of the gold entering the market under the Good Delivery standard comes from such sources.
This gap indicates that most of the gold from the small-scale mining sector passes through informal and opaque supply channels, where it is virtually impossible to trace the metal’s origin.
According to industry participants, further increases in gold prices could lead to an even greater rise in the illegal trade of the precious metal and complicate efforts to combat the financing of crime.
