Dubai Bullion Bank
Dubai Bullion Bank Association (DBBA) is a non-profit organization formed in Dubai by the founding members from the professional financial industry to represent key stakeholders, which included bullion banks, exchanges, refineries, bullion merchants, secured logistics support companies and to develop Dubai as a Pacific Rim bullion hub. DBBA will play a pivotal role in the development of Dubai evolving into preeminent global financial hub for precious metals. The DBBA participates in a range of activities, including engagement with industry, authorities and other stakeholders, as well as research, marketing and advertising, but our focus is to stimulate primary and secondary financial markets and facilitating collaboration among our members. DBBA is a subsidiary/Associate of BBT (Bullion Bank Trust Dubai)
Responsible Gold Guidance
About: The DBBA is the international trade association that represents the market for gold, silver bullion, and other strategic metals established in Dubai. The clientele will consist of but not limited to bullion banks that hold gold, private sector investors, mining companies, producers, refiners, fabricators and emerging finance markets. The currently new acting DBBA are actively involved in mining as well as those providing services to the market such as consultants, supervisors and assayers. The membership encompasses current mining companies and related regions developing rare earth metals. DBBA has been working on joining with membership with World Gold Council and LBMA including Asian Bullion Market Association when DBBA is ready and willing to implement.
The DBBA Basic Delivery Listed
In the refining industry, the DBBA Basic Delivery includes refiners of gold, silver and other specialty exotic metals located in different locations. The List is recognized as good standard for the quality of gold and silver market bars including diamond and other precious jam stones. This recognition is based on the stringent criteria that applicants must satisfy before being listed by the DBBA. In addition to satisfying the DBBA’s technical standards, a refiner seeking DBBA accreditation must meet a number of non-technical criteria in relation to ownership, tangible net worth and operating history. The DBBA has informed all gold refiners on the list that in order to maintain their Basic Delivery status, they will have to demonstrate that their refined output is conflict-free. To allow them to do this, the DBBA has developed a Responsible Gold Guidance Scheme.
Responsible Gold Guidance
The DBBA will require that, from 1st January 20… all DBBA Good Delivery Gold Refiners comply with the DBBA Responsible Gold Guidance. Listed refiners have been sent a draft of the guidance in 20xx and during the final quarter of the year they will be consulted before the final version is issued. The final version will also take account of the rules to be announced gold supply chains. The DBBA Guidance is based on anti-money laundering principles as well as the five steps framework for risk-based due diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas. The DBBA guidance is intended to provide a flexible framework for carrying out due diligence in this area and thus to minimize the cost of compliance for refiners, whilst ensuring that their feedstock and thus their output remains conflict-free.
Access
All refiners producing DBBA good delivery gold bars (“Refiners”) must comply with this DBBA Responsible Gold Guidance in order to remain on the DBBA Basic Delivery.
Refinery
Majority Refinery full control at the Central Location under the BBT environment.
Definition Existing Gold Stocks
Gold investment products (ingots, bars, coins and grain in sealed containers) held in bullion bank vaults, central bank vaults, exchanges and refineries with a verifiable date prior to 1st January 20xx, which will not require source/mine documentation.
Recycled Gold
Human right abuse
Genocide, ethnic cleansing or widespread instances of (a) sexual abuse of men, women and children (b) torture, (c) enslavement, (d) trafficking of persons, (e) multiple unlawful killings or (f) the worst forms of child labor.
Gold that has been previously refined. This term traditionally encompasses anything that is gold-bearing and has not directly from a mine in its first gold life cycle. In practical terms, recyclable material includes end-user, post-consumer products, scrap and waste metals and materials arising during refining and product manufacturing, and investment gold and gold-bearing products. This category may also include fully-refined gold that has been fabricated into, good delivery bars, medallions and coins that have previously been sold by a refinery to a manufacturer, bank or consumer market, and that may thereafter need to be returned to a refinery to reclaim their financial value.
Contribution to conflict
Contribution to armed aggression between two or more parties, which leads to human rights abuses. The parties in the conflict may include government, militia, organized criminals or terrorist groups.
Money laundering
Money laundering is the practice of disguising the origins of illegally obtained money. Ultimately, it is the process by which the proceeds of crime are made to appear legitimate. The money involved can be generated by any number of criminal acts, including drug dealing, corruption and other types of fraud.
Terrorist financing
Terrorist financing includes the financing of terrorist acts, and of terrorists and terrorist organizations.
AML-CFT
Anti-money laundering – combating the financing of terrorism.
Politically exposed person
Individual who is or has been entrusted with prominent public functions, for example Head of State or of government, senior politician, senior government, judicial or military official, senior executive of state owned corporations, important political party official, or individual who is closely related to such person.
Verifiable Date
Verified through inspection of physical date stamps on products or through inventory lists Requirements applicable to Refiner’s existing stocks with a subsequent date, or without a verifiable date, are the same as for other gold-bearing material; a refiner must provide the same level of source/mine documentation.
STEP 1 – Establish strong company management systems under BBT and DBBA
1. Adopt a company policy regarding due diligence for supply chain of gold.
Refiners should adopt a gold supply chain policy which is consistent with the Model Policy set forth by Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict Affected and High-Risk Areas.
The policy should cover at least the following topics:
• Scope
• Organization and responsibilities
• Criteria for high-risk gold supply chain
• Supply chain due diligence, inclusive of the Know Your Customer process
• Monitoring of transactions
• Maintaining records
• Training
2. Set up an internal management structure to support supply chain due diligence
Refiners’ internal management system should collect and maintain documentation regarding the sources of Mined Gold, Recycled Gold, Existing Gold Stocks or any other feedstock, in order to ensure that they have not financed conflict, have not participated in abuse of human rights or money laundering nor financed terrorism at any point in the supply chain. The general outline of a best practice for such a structure is as follows: Assign authority and responsibility to Senior Management with the necessary competence, knowledge and experience to oversee the supply chain due diligence process;
Ensure availability of resources necessary to support the operation and monitoring of these processes;
• Put in place an organizational structure and communication processes that will ensure critical information, including the company policy, reaches relevant employees and supplier
• Ensure internal accountability with respect to the implementation of the supply chain due diligence process
3. Establish a strong internal system of due diligence, controls and transparency over gold supply chains, including traceability and identification of other supply chain actors
Supply chain traceability system
Refiners should introduce a supply chain traceability system that collects and maintains supply chain information for each lot refined.
Maintaining records
Refiners should maintain adequate records of the supply chain documentation, as requested on step 2, Section 2 (assess risks in light of the standards of their supply chain due diligence system) in order to MBMA demonstrate that appropriate and ongoing due diligence has been followed. These records are required to be maintained for at least 5 years following the end of the Refiner’s fiscal year.
Gold Supply Chain Officer
Refiners should nominate a Compliance Officer who reports to Senior Management. The Compliance Officer is responsible for all matters regarding the gold supply chain. In particular, he reviews the gold supply chain due diligence and assesses if the due diligence is adequate and requests additional documentation or information if necessary.
He ensures that appropriate measures are executed in case of high-risk supply chains or transactions. He is also responsible for the training of the employees with respect to the responsible supply chain, to prepare and update the gold supply chain policy and to give proper information to the Senior Management in order for them to perform their duties.
STEP 2 – Identify and assess risk in the supply chain under supervision by BBT and DBBA.
1. Identify risks in the gold supply chain
For both Mined Gold and Recycled Gold, Refiners should identify in accordance with Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, the following risks associated with the supply chain from the point of origin to the Refinery regarding:
• Serious abuses associated with the extraction, transport or trade of gold
• Direct or indirect support to non-state armed groups
• Public or private security forces
• Bribery and fraudulent misrepresentation of the origin of gold
• Money laundering
• Payment of taxes, fees and royalties due to governments.
• Money laundering risk and terrorist financing risk
• Contribution to conflict risk
• Human right abuse risk
2. Monitoring of transaction
The Refinery should conduct appropriate scrutiny and monitoring of transactions undertaken through the course of the relationship so as to ensure that the transactions are consistent with the refiner’s knowledge of the supply chain and risk profile. Monitoring of transactions should be undertaken by applying a risk-based approach.
In this context, the Refinery should receive and document the following information for each lot received:
For Mined Gold:
• Identification of each company in the supply chain
• Bar list with weights and assay results
• Export form
• Import form
• Shipping/transportation documents (Waybill, airway bill, pro-forma invoice)
For Recycled Gold:
• Description of the merchandise
• Packing list with weights and assay results
• Export form
• Import form
• Shipping/transportation documents (Waybill, airway bill, pro-forma invoice)
Refiners should verify that the documents are consistent with each other and with its knowledge of the supply chain. The background of transactions, which are not consistent, should be examined and the findings established in writing.
3. Report risk assessment to designated Senior Management
Senior Management retains the ultimate control and responsibility for the gold supply chain. Senior Management will carefully select and supervise the Compliance Officer and gives him the necessary means to perform his duty.
Senior Management should approve each new supply chain assessed as high risk and should revisit each year the decision to whether to continue with these business relationships or not.
STEP 3 – Design and implement a management strategy to respond to identified risks
1. Devise a strategy for risk management of an identified risk by either (i) mitigation of the risk while continuing trade; (ii) mitigation of the risk while suspending trade or (iii) disengagement from the risk
If the result of the gold supply chain due diligence concludes that there is money laundering, terrorist financing, contribution to conflict, human right abuses, or if the possibility of the same is deemed too high, the Refinery should stop immediately to refine gold from this provenance. The Refinery should suspend refining gold from this provenance until it can obtain additional information/data confirming or refuting the preliminary assessment.
Where the result of the due diligence is not fully satisfactory but the assessed company in the supply chain is using reasonable and good faith effort, refiners can continue to refine gold coming from this source provided that it adopts an improvement strategy stating clear performance objectives within a reasonable timeframe.
2. Where a management strategy of risk mitigation is undertaken, it should include measurable steps to be taken and achieved, monitoring of performance, periodic reassessment of risk, and regular reporting to designated senior management
The improvement strategy described in section 1 above should state clear performance objectives, including qualitative and/or quantitative indicators in order to measure improvement. A reasonable deadline should be communicated. The advancement of the plan should be reviewed regularly and the results communicated to Senior Management. On the deadline, an assessment should be performed in order to determine if the measures have been properly taken. Senior Management should be informed of the results and decide whether to continue dealing with this supply chain.
STEP 4 – Arrange for an independent third-party audit of the supply chain due diligence Auditor Requirements
Refiners should have their gold supply chain management systems and practices audited by independent and competent third parties, who may include governments.
Audit Procedures
The audit process will be conducted in accordance with the requirements of the international non-financial assurance standards ISO 19011:2002, ISEA 3000 or SSEA 100 standards.
Audit report
The audit report should include an attestation that:
The Auditors possess the professional qualifications required:
The Auditors are independent of the management, staff or shareholders of the audited refinery:
The Auditors have carried out their audit in accordance with a national or international non-financial assurance standards ISO 19011:2002, ISEA 3000 or SSEA 100 standards:
The Auditors assessment on the compliance with the DBBA responsible gold guidelines.
In addition, Auditors should make recommendations in the audit report for the refiner to improve their gold supply chain practice.
Dubai Bullion Bank
