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Gold Market Integrity: Advancing Global Standards

By Sakhila M. Mirza, Executive Board Director and General Counsel, London Bullion Market Association (LBMA)

Published on January 12, 2021

Responsible Sourcing is a business-critical function in which all supply chain actors are accountable for advancing sustainable business practices.

Over the last decade, the global gold market has made significant efforts to address supply chain risks. Several parties within the market have made improvements based on lessons learnt, yet Responsible Sourcing standards can still be improved. In particular, LBMA has identified three strategic priorities, as explained below, that require particular focus to mitigate threats to the industry: (a) the responsible sourcing of recycled gold; (b) the elimination of cash transactions; and (c) the provision of support for responsible artisanal and small-scale mining (ASM).

In November 2020, LBMA wrote to major International Bullion Centres (IBCs) with recommendations that would help to advance global standards for responsible sourcing. LBMA defined IBCs as jurisdictions considered either a transit or trading hub for recycled gold, and jurisdictions that operate important market infrastructure for bullion trading activities.

Therefore, alongside Singapore, LBMA identified the following jurisdictions as IBCs: China; Hong Kong SAR; India; Japan; Russia; South Africa, Switzerland, Turkey; United Arab Emirates; United Kingdom; and United States.

Threats to industry

Not all IBCs operate to the same Responsible Sourcing standards and inconsistencies could have a significant impact on the international market, should they remain unaddressed.

Responsible Sourcing vulnerabilities can, and will, continue to cause industry fractures and loss of trust across the supply chain, regulatory bodies and the general public. It is therefore important to understand the provenance in order to safeguard that trust. However, doing so can come at a cost, with some supply chain actors disengaging from high-risk sources. In other cases, there is also potential for the provenance to become doubtful, especially in relation to recycled gold.

This means the following key areas require urgent action from IBCs to mitigate threats to the industry:

  • Recycled gold

    In 2018, 55% of gold processed by LBMA Good Delivery refiners was recycled compared to about 44% large-scale mining (LSM). LBMA recognises the importance of recycling for companies in addressing environmental concerns. However, recycled gold’s traceability can be problematic as its provenance can be lost from one supplier to the next with due diligence standards diverging between counterparties.

  • Cash transactions

    Although several regulatory regimes prohibit the use of cash for high-value transactions, it remains the primary method of payment in many parts of the world. It is therefore vital that jurisdictions have robust anti-money laundering regulations with enforceable oversight powers. This would also help to reduce the risks of smuggling for hand-carried bullion.

  • Sourcing from ASM

    In 2018, just 1% of LBMA Good Delivery refiners’ production was sourced from ASM. LBMA recognises the importance of engaging and maintaining relationships with ASM suppliers. This sector provides a livelihood for over 40.5 million people across the world, therefore formalising this sector, as opposed to disengagement, would help ASM gold enter supply chains legitimately.

International Bullion Centre Recommendations

To instil trust in the market, LBMA has published recommendations that support the Organisation for Economic Co-operation and Development (OECD) Due Diligence Guidance framework and also recognises key findings from the Financial Action Task Force (FATF).

Responsible Sourcing is fundamental to all parties within the supply chain, who can all benefit from the assurance that bullion traded throughout the IBCs is responsibly sourced and aligned to international requirements. The breadth of the activities undertaken within IBCs and the involvement of international counterparties mean IBCs can be vulnerable to responsible sourcing risks.

To help address vulnerabilities to risk, LBMA is keen to work with IBCs to implement or demonstrate consistency with the recommendations. Each recommendation represents the overarching objective of integrity, trust and confidence.

  1. Effective scrutiny and verification of local and regional supply chains.
  2. Effective regulation of local and regional supply chains.
  3. Effective enforcement powers.
  4. Effective co-operation with local, regional and international organisations.
  5. Develop ASM specific guidance to support and further legitimise responsible ASM supply.
  6. All five recommendations are supplemented by a number of requirements to assist IBCs’ practical interpretation of the measures set out above.

About LBMA

LBMA is uniquely positioned to collaborate with IBCs. This is partially due to the LBMA Good Delivery List (GDL). LBMA sets the requirements to which refiners must adhere in order to qualify as a GDL refiner and sell gold to the Loco London market – the largest financial marketplace for precious metals.

The GDL is also relied upon by most major international markets, licensed and recognised by exchanges, central banks and traders worldwide. LBMA is also the vice chair of the OECD Multi-Stakeholder Group, focused on the development of the OECD Due Diligence Guidance and the supporting Gold Annex. All of this means that LBMA is well placed to collaborate and engage with IBCs, to advance standards that ultimately aim to address the integrity of the precious metals market.

LBMA Responsible Sourcing Programme

A fundamental aspect of the GDL is that Good Delivery bullion can be trusted to be responsibly sourced. This chain of integrity is vital across the bullion market and has been the foundation for the continuous development of the Responsible Sourcing Programme (RSP). LBMA’s RSP was set up in 2012 to consolidate, strengthen, and formalise existing standards of refiners’ due diligence. The programme is based on the OECD Guidance, that provides detailed recommendations to help companies define their sourcing standards, as well as sets the five-step due diligence framework.

LBMA makes these OECD requirements mandatory for all GDL refiners who must be audited annually against the OECD Guidance by approved independent auditors. The refiners are then required to report the audit findings publicly.

Unlike any other industry programmes, the RSP is a commercial necessity for any major refiner and LBMA can ultimately remove a refiner from the GDL if the standards are not met. Compliance with the stringent RSP standards is, therefore, essential.

Wider Ecosystem

Global effort amongst all the value chain actors, national authorities, as well as law enforcement agencies, is required to help address the threats. Industry Programmes, whilst necessary, have limitations in their legal authority, scope, applicability and enforcement resources. That is why it is important to collaborate with the various actors in the IBCs that make up the Responsible Sourcing ecosystem.

Industry due diligence programmes: These programmes seek to raise standards throughout the supply chain (mining, refining or retailing level) and can be enforced if any non-conformances are identified.

National authorities: Through regulatory change and law enforcement, national authorities provide the ultimate sanctions across the supply chain.

Downstream actors: Banks, electronics and jewellery companies can continue to collaborate with their suppliers to ensure that material is sourced and processed responsibly from beginning to end.

Other stakeholders: By identifying and escalating unique issues through investigative research, other stakeholders provide important support and feedback throughout the supply chain.


It is fundamental that the wider ecosystem operates as one. This will help to mitigate threats to the industry while implement standards consistently throughout global supply chains. It will also mitigate the risk of re-routing supply to IBCs that might have different requirements.

A global effort is required to continue addressing the outstanding challenges and risks. LBMA is committed to working with all legitimate stakeholders but needs full engagement and co-operation as its own standards can only reach so far.


For more information on the LBMA Responsible Sourcing Programme visit our website at

In her role as General Counsel of LBMA and also as Executive Director of the LBMA Board, SAKHILA MIRZA works closely with the CEO on the strategic direction of the LBMA. Her role involves addressing all the legal and regulatory matters, the Responsible Sourcing Programme, market development initiatives, and lobbying efforts on behalf of members.