Executives in the gold industry have raised alarms about a growing crisis involving the illicit trade of gold, which they say is contributing to armed conflict and organized crime globally. According to David Tait, chief executive of the World Gold Council, annual illicit gold flows now exceed $120 billion, primarily originating from artisanal and small-scale miners. He emphasized that illegal mining is frequently linked with violence, sanctions evasion, and illicit finance, describing the situation as a crisis for the international community.

The surge in illegal gold activity is closely tied to the nearly doubled gold prices over the past two years, which have increased the incentive for smuggling despite stricter sourcing regulations and reduced airport arrivals amid the pandemic. This trend has been linked to ongoing conflicts in regions such as Sudan and the Democratic Republic of Congo, where illicit gold mining helps finance armed groups.

Gold bars share chemical properties regardless of their origin, allowing criminals to obscure their source and making gold an attractive vehicle for money laundering. Ruth Crowell, chief executive of the London Bullion Market Association (LBMA), noted that the sharp rise in gold prices has intensified the urgency to curb illicit flows, highlighting the ease with which criminals can move illicit funds using gold.

London remains one of the world’s largest gold trading centers, handling over $220 billion daily in over-the-counter transactions regulated by the LBMA. Bars approved by the LBMA must come from “good delivery” refineries that undergo regular audits and meet sourcing standards. However, the effectiveness of these measures is limited: while artisanal miners produce about 20% of the world’s gold, only 1% of LBMA-approved gold is sourced from these areas, indicating that most artisanal gold enters informal and unregulated supply chains.

Governments are responding with proposed policies aimed at tackling these challenges. In the United States, a bipartisan bill in Congress would direct the State Department to develop a strategy against illicit gold mining and launch investigations into illegal mining activities in Venezuela. Similarly, the United Kingdom plans to intensify efforts to combat gold smuggling, including hosting a summit on illicit finance and leveraging the Joint Money Laundering Intelligence Taskforce. David Lammy, the UK’s deputy prime minister, warned of a growing link between gold and cryptocurrency in facilitating criminal transactions.

Former UK deputy prime minister Dominic Raab, now head of global affairs at Appian Capital Advisory, urged the G7 nations to strengthen their approach to the issue, arguing that coordinated legislative action could help stem the illicit trade. He advocated for the UK to adopt legislation similar to that proposed in the US to address the problem more effectively.

Despite increased awareness and some regulatory efforts, industry leaders agree that more robust international cooperation and enforcement are needed to confront the rising tide of illegal gold trade and its associated impacts on global security and crime.