World Gold Council warns: Gold smuggling constitutes a "crisis," with the scale of illegal flows exceeding $120 billion!
David Tait, CEO of the World Gold Council, stated that global gold smuggling is evolving into a “crisis,” involving issues such as conflict, sanctions evasion, and illicit financial flows. He noted that the volume of illegally circulated gold currently “far exceeds $120 billion” annually, with the main sources being artisanal and small-scale mining.
The expansion of this issue is closely related to gold price trends. Over the past two years, gold prices have nearly doubled. Although there has been a recent pullback, the overall high levels have significantly stimulated the growth of illegal activities, intensifying violent conflicts in places like Sudan and the Congo (DRC).
Once refined, gold has completely identical chemical properties, making it difficult to trace its origin. This trait makes gold a favored tool for money laundering and criminal networks.
Ruth Crowell, CEO of the London Bullion Market Association (LBMA), pointed out that the rise in gold prices has made curbing illegal circulation “more urgent.” At the Sustainability and Responsible Sourcing Summit jointly held by LBMA and the World Gold Council, she said: “If you’re trying to move illegal funds globally, with the sharp rise in gold prices, it becomes even easier.”
In response to the issue of gold smuggling, governments such as the United States, United Kingdom, and United Arab Emirates are assessing measures, including the use of metal detection equipment at airport entry points and strengthening gold source regulatory rules.
In the United States, a bipartisan bill has been submitted to Congress, proposing that the State Department develop a comprehensive strategy to combat illegal gold mining and launch a special investigation into issues related to Venezuela.
In the United Kingdom, Deputy Prime Minister David Lammy stated on June 18 that the UK plans to step up efforts against gold smuggling, including holding an international summit on illegal financial flows and advancing related work through the Joint Money Laundering Intelligence Taskforce. He noted: “Gold is being used for criminal transactions, and we are also seeing growing links between gold and cryptocurrencies to further conceal illicit activities.”
As one of the world's major gold trading centers, London’s over-the-counter market clears more than $220 billion daily, with standards set by the LBMA. Certified gold bars must come from refineries meeting “Good Delivery” standards and are subject to regular audits and source compliance requirements.
However, the current system has limited effectiveness in curbing the flow of illegal gold. Although about one-fifth of global gold production comes from artisanal and small-scale mining, this source accounts for only 1% of LBMA-certified “Good Delivery” gold, meaning the vast majority ends up in informal supply chains.
Dominic Raab, Global Head of Affairs at Appian Capital Advisory, said that the G7 needs to step up its response. He stated: “If the G7 can take action... and complement it with legislative progress, there is a chance to reverse the situation.” He also believes that the UK should refer to the US and promote similar gold regulation legislation.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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