Fake gold bars – blocks of cheaper metal plated with gold – are relatively common in the gold industry and often easy to detect.
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.
Fake gold bars - blocks of cheaper metal plated with gold - are relatively common in the gold industry and often easy to detect. 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 finalise 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.
Story continuesSwiss 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.
An estimated 400 to 600 tonnes of gold are snuck every year across the border from mainland China to Hong Kong in car boots and delivery vans, most of it in kilobars, said Cameron Alexander, head of precious metals research at consultants GFMS Refinitiv, which conducts detailed studies of global gold flows. Hong Kong Customs said it had received no complaints in the past decade about kilobars with forged trademarks.
Governments in America and Europe are legislating to force banks and manufacturers of items such as jewellery and electronics to take more responsibility for their mineral suppliers. For example, a clause in the Dodd-Frank Act adopted by the United States obliges U.S. companies to disclose whether gold they use has come from countries in central Africa where it could have been mined to fund conflict.
J.P. Morgan supplies gold from major refiners for many of the world's biggest banks, jewellers and investors, and the discovery of the forged bars in its vaults triggered a full review of the gold it held, market sources said. One said this sweep unearthed around 50 fraudulently-branded bars. Another said it found several hundred. J.P. Morgan did not comment.
Reuters approached five large banks that trade gold in Asia, several of which have vaulting facilities. HSBC declined to comment in detail but a spokesman said it only bought bars directly from a small group of refiners accredited, like the Swiss, by the London Bullion Market Association . It said it had found no counterfeits. UBS did not comment on counterfeit bars, but said it only sells gold processed by LBMA-accredited refiners.
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