On June 27, 2023, the US Departments of State, the Treasury, Labor, Commerce, and Homeland Security, and the United States Agency for International Development issued a joint advisory — the Africa Gold Advisory (“Advisory“) — that (i) highlights the opportunities and specific risks raised by the gold trade across sub-Saharan Africa and (ii) encourages industry participants to adopt and apply strengthened due diligence practices to guard against such risks. The Advisory states that it was issued in light of increasing awareness of the exploitation by illicit actors, including the Wagner Group, of the gold sector in Africa.
Below we summarize certain key parts of the Advisory:
- Part I summarizes the opportunities in the gold sector in sub-Saharan Africa, emphasizing the potential of artisanal and small-scale gold mining.
- Part II identifies the risks associated with the gold sector in sub-Saharan Africa, including upstream risks connected to gold extraction (e.g., risks of corruption, contribution to conflict, smuggling, human rights and labor abuses, and environmental harm) as well as downstream concerning conducts associated with the transport, refining, and sale of gold (e.g., misuse of recycled gold labeling, money laundering, and terrorist financing).
- Part III discusses potential sanctions the United States may impose to address risks associated with the gold supply chain, including the designation of individuals or entities operating in the gold sector to the list of Specially Designated Nationals and Blocked Persons (“SDN List”) maintained by the US Treasury Department’s Office of Foreign Assets Control, an import ban on certain Russian products (including gold), and visa restrictions on individuals connected to human right violations or corruptions in the gold sector. Part III also includes a case study regarding US and EU sanctions on the Wagner Group and its affiliated entities operating in the gold sector.
- Part IV sets forth due diligence guidance and best practices, with a special focus on the Organization for Economic Co-operation and Development’s Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas adopted in 2011 (“OECD Guidance“). In particular, Part IV discusses gold-focused OECD Guidance, due diligence requirements and resources for Anti-Money Laundering compliance, and industry frameworks that may be used to facilitate due diligence in the gold sector.
- In addition to the above-mentioned four parts, the Advisory also includes two annexes. Annex I identifies gold-related actors designated to the SDN List in the past five years. Annex II describes gold-related programs supported by the US government and related efforts supported by other leading donors and development organizations.
Although the Advisory is explanatory only and does not have the force of law, it informs industry participants and attempts to help industry participants evaluate and manage potential risk exposures when dealing in the gold sector in Africa. Individuals and entities engaged in the gold sector across Africa should be aware of the risks identified in the Advisory and consider enhanced due diligence and mitigation measures to manage such risks.