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Colombia: Recent regulation changed nature of companies buying gold; involvement of armed actors remains a concern, according to OECD report

“Due Diligence in Colombia’s Gold Supply Chain. Where does Colombian gold go?” - January 2018

 The landscape of companies purchasing gold from Colombia has changed in the past five years, as a result of new regulations introduced by the Colombian authorities…In 2012, four large-scale refiners (Metalor, Johnson Matthey, Argor-Heraeus and Republic Metals) accounted for close to 93% of the official purchases of Colombian gold. Following the introduction of a new regulatory framework for gold traders and increased public attention to the issue of illegal mining and its links to criminal organisations and non-state armed groups (OECD, 2016), the share of purchases from these traditional buyers dropped to 64% in 2015 and to 25% in 2016 while Colombian gold export reached 31 tonnes in 2015 and 42 tonnes in 2016…According to gold brokers consulted, this drop can also be explained by their interest in higher volumes than the ones currently produced in Colombia…

A new generation of buyers has emerged, and new investors and capital entered the Colombian market as a result of this change in regulation. A review of 2016 export data shows that 10% are now brokers (Sun Valley and FC Stone), close to 12% are refiners based in Florida (e.g. Universal Precious Metals, Auramet International, WPN Miami Inc.), and 35% are US subsidiaries of established refiners in Turkey, India and the UK (Asahi Refining, IGR and NTR)… Moreover, although Colombian law enforcement agencies are making important efforts to fight money laundering (e.g. The national financial intelligence unit -UIAF, the Police’s criminal investigations division -DIJIN, and the border police unit -POLFA), too little attention is paid to gold smuggling from Colombia…Ensuring that gold purchased comes from a legal supplier does not eliminate the risk that they provide direct or indirect support to non-state armed groups or have links to serious abustion of suppliers has also changed…