In one of the latest gold smuggling tricks, forged bars are entering secure vaults of major banks globally. And this illegal gold is funding terror. Full story DKODED.
At least, USD 50 million of fake-stamped pure but illegal gold entered the global market in the last three years. The dirty gold has made its way into banks like JP Morgan Chase & Co. Forgery through gold smuggling tricks of this scale has seldom or never been seen before.
USD 50 million of fake-stamped pure but illegal gold has entered the bank vaults worldwide in the last 3 years.
As per a Reuters report, illegal gold miners are using logos of major refineries to inject massive volumes. As a result, thousands of such gold bars are now parked safely and without trail in leading global banks.
Dirty gold bars are hard to detect. Furthermore, the racket is run by narcotics dealers and warlords. These gold bar suppliers fund terrorism, conflict, organised crimes, damage the environment and above all, threatening national securities. The number USD 50 million Swiss refinery logo stamped bars may be a shadow of the actual number.
Gold smuggling tricks that fool banking system
Fake branded bars is a one of the new gold smuggling tricks giving impetus to money laundering. Likewise, tt is posing problems for the financers, regulators and international refiners. According to an official quoted in the Reuters report, thousand such bars were found ($2 million to $2.5 million). Many of them have gone undetected.
JP Morgan Chase & Co. is one of five banks which finalize trades in the $10 trillion-a-year London gold market. It was the first to have found bars stamped with the same identification number in its vaults. It then immediately informed other entities. All four of the leading gold refiners of Switzerland confirmed this. Valcambi, PAMP, Argor Heraeus and Metalor confirmed the Gold smuggling tricks of fraudulently stamped bars. Many of the bars carried the same identification number.
Many of the fake-stamped gold bars carry the same identification number.
What fuels the illegal Gold smuggling tricks
Since the mid-2000s, demand and price of gold has been on a swift upward trajectory globally. Consequently, this has accelerated not just legal but illegal mining as well. This dirty gold then enters the market through legal transactions via smuggling tricks.
Forged stamps of prestigious refineries ensure that dealers trust the gold’s purity. Therefore, this ensures that the gold passes stringent tests even in western countries. As per Michael Mesaric, CEO of Valcambi refinery, Switzerland, “markings have spelling errors, flaws in logo images or print.”
Where is the dirty gold coming from?
The report cites officials who believe that the dirty gold originates in China. Moreover, China is also the largest producer of official gold. The gold enters the market through shipping route. Thereafter, it goes through dealers and trading houses mainly in Hong Kong, Japan and Thailand. Additionally, the fact that almost all exports of gold are banned in China spurs the forgery activities. As per J.P. Morgan Chase & Co., said that the people in the illegal gold bar industry have a highly specialized apparatus.
Furthermore, the illegal gold forgery racket that is funding terror is a well-organised production unit. As per Cameron Alexander, Chief Executive of GFMS Refinery, around 400-600 tonnes is smuggled from China to Hong Kong yearly. Shanghai Gold Exchange, that body that regulates gold market in China, denied any knowledge.
Around 400-600 tonnes is smuggled from mainland China to Hong Kong every year.
What makes detection difficult?
The globally accepted most reliable method to identify gold purity is the four nines (a kilobar should have 99.99% gold). The purity level of two such counterfeit bars tested by Swiss refinery came out to be 99.98% and 99.90%. Hence, this shows that the illegal gold refiners are matching the professional standards. Thus, this makes it an increasingly uphill task to check the flow of such dirty gold bars.
But refineries are starting to come up with ways to tackle the forgery crisis. Metalor has started putting spots of tamper-proof ink on its bars. Consequently, these spots are visible under particular light filters. Similarly, PAMP and Valcambi have begun a micro surface scan.
Refineries are making new equipment available to scan the bars and cross-check records of refineries to identify fraudulent identification numbers.
Ruth Crowell, chief executive officer of LBMA (London Bullion Market), proposed a global database containing information on every kilobar. Consequently, the database can be cross-checked to end gold smuggling tricks used for terror funding.