Gold bars fraudulently stamped with the
logos of major refineries are being inserted into the global market to launder
smuggled or illegal gold, refining and banking executives tell Reuters. The
fakes are hard to detect, making them an ideal fund-runner for narcotics
dealers or warlords.
In the last three years, bars
worth at least $50 million stamped with
Swiss refinery logos, but not actually
produced by those facilities, have been identified by all four of Switzerland’s
leading gold refiners and found in the vaults of JPMorgan Chase & Co., one
of the major banks at the heart of the market in bullion, said senior
executives at gold refineries, banks and other industry sources.
Four of the executives said
at least 1,000 of the bars, of a standard size known as a kilobar for their
weight, have been found. That is a small share of output from the gold
industry, which produces roughly 2 million to 2.5 million such bars each year.
But the forgeries are sophisticated, so thousands more may have gone
undetected, according to the head of Switzerland’s biggest refinery.
“The latest fake bars ... are
highly professionally done,” said Michael Mesaric, the chief executive of
refinery Valcambi. He said maybe a couple of thousand have been found, but the
likelihood is that there are “way, way, way more still in circulation. And it
still exists, and it still works.”
Fake gold bars - blocks of
cheaper metal plated with gold - are relatively common in the gold industry and
often easy to detect.
The counterfeits in these
cases are subtler: The gold is real, and very high purity, with only the
markings faked. Fake-branded bars are a relatively new way to flout global
measures to block conflict minerals and prevent money-laundering. Such
forgeries pose a problem for international refiners, financiers and regulators
as they attempt to purge the world of illicit trade in bullion.
High gold prices have
triggered a boom in informal and illegal mining since the mid-2000s. Without
the stamp of a prestigious refinery, such gold would be forced into underground
networks, or priced at a discount. By pirating Swiss and other major brands,
metal that has been mined or processed in places that would not otherwise be
legal or acceptable in the West – for example in parts of Africa, Venezuela or
North Korea – can be injected into the market, channeling funds to criminals or
regimes that are sanctioned.
It is not clear who is making
the bars found so far, but executives and bankers told Reuters they think most
originate in China, the world’s largest gold producer and importer, and have
entered the market via dealers and trading houses in Hong Kong, Japan and
Thailand. Once accepted by a mainstream gold dealer in these places, they can
quickly spread into supply chains worldwide.
Word of the forged bars began to circulate quietly in gold industry circles
after the first half of 2017, when J.P. Morgan, one of five banks which
finalize trades in the $10 trillion-a-year London gold market, found that its
vaults contained at least two gold kilobars stamped with the same
identification number, 10 people familiar with the matter told Reuters. Reuters
couldn’t determine exactly where the vaults were.
J.P. Morgan declined to
directly address questions about the fraudulent bullion, or comment on any of
the details in this story. “It’s our standard practice to immediately alert the
appropriate authorities and refineries should we discover mismarked gold
kilobars during routine checks and procedures,” the bank said in a statement.
“Fortunately, we have yet to have an incident resulting in a loss to the firm
or a client.”
The Shanghai Gold Exchange,
which regulates China’s gold market, said in a statement it was not aware of
counterfeit bars being made in or transported through China. “The Shanghai Gold
Exchange has established a thorough delivery and storage system. The process
for gold (material) to enter the warehouse is strictly managed and in
compliance with the regulations,” it said.
When others who store and
trade such gold found forged bars, they returned them to the refiner concerned,
some of whom have operations in Asia. Bars returned to Switzerland have been
reported by refiners to the Swiss authorities who impounded them, refiners
said.
Swiss Customs said 655 forged
bars were reported in 2017 and 2018 to local prosecutors in Ticino, a region
bordering Italy that contains three of Switzerland’s four large refineries. “In
all cases the marking of the 1 kg bars were fake,” a Customs official said by
email, without commenting further.
The public prosecutor in
Ticino confirmed it had received three reports of gold bars with suspect serial
numbers, but said it could not disclose more information. The police in
Neuchatel, where Switzerland’s other large refinery is located, said neither it
nor local prosecutors there had received reports of any forged bars.
Switzerland’s Attorney General said its office was not concerned with the topic
at present.
Refinery executives said
forged bars had also been reported in other countries.
- Reuters
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