UK Warns of Russian Gold Threat to Sanctions and Global Finance

In a significant development, Britain's National Crime Agency (NCA) issued a crucial alert to financial institutions, high-value dealers, and legal entities, revealing Russia's use of gold as a means to circumvent UK sanctions. According to the NCA, gold has emerged as a substantial source of income for Russia's war effort, ranking second only to oil and gas, with a value of £12.6 billion to the Russian economy in 2021.

The NCA's warning comes on the heels of the UK Foreign Office imposing sanctions on several individuals and entities associated with Russia's gold sector. Among the 29 sanctioned entities are two of Russia's largest gold producers and a UAE network suspected of channeling over $300 million in gold revenues to Russia.

Given the UK's pivotal role in the global gold market, the NCA highlighted deliberate efforts to launder sanctioned gold, masking its origin to infiltrate supply chains and be sold in the UK and worldwide. The agency emphasized that gold exported from Russia since July 21, 2022, is increasingly being routed to countries not applying sanctions on Russian gold. Once melted down or refined, the origin of the gold becomes indiscernible, making it challenging to trace through examination, as hallmarks are lost in the process. This deceptive practice allows new Russian gold to be sold to unsuspecting countries unaware of its true origin.

Adrian Searle, Director of the National Economic Crime Centre at the NCA, emphasized the threat posed by sanctions evaders to UK national security. He stated, "Sanctions evaders undermine UK national security, working against our foreign policy objectives which promote international peace and security, and the rule of law." Searle highlighted the importance of the UK financial sector and international partners implementing robust controls to identify and disrupt sanctions evasion.

London's precious metals market, which sets the global standard for gold quality, plays a pivotal role in overseeing the trade and enhancing record-keeping to ensure the integrity of the supply chain. The London Bullion Market Association (LBMA), responsible for accrediting gold refineries globally, defines the standards for 'London Good Delivery' (LGD) gold, considered the de facto global standard. LBMA-accredited refineries contribute to 85-92% of the annual global mined gold production.

The NCA's alert was specifically directed towards the regulated sector, encompassing banks, high-value dealers, and legal professionals. The collaboration with these entities aims to prevent sanctioned individuals or their representatives from exploiting gold to evade UK sanctions. The alert underscores the joint efforts required to safeguard the integrity of the global gold market and prevent illicit financial activities that pose a threat to national security.

By fLEXI tEAM