Illegal Mining & Mineral Trafficking

Criminals derive illicit proceeds by extracting and selling minerals without proper authorization, forming the predicate offense that generates capital for laundering.

Criminals exploit the inherent fungibility and ease of commingling precious metals by blending illicitly mined ore with lawfully sourced stock. By merging the two, they obscure the illegal origin of the minerals and introduce proceeds into the legitimate market, making this the central vulnerability targeted by the technique.

Criminals exploit regions with weak enforcement or corruption to operate unauthorized mines and fabricate or omit required documentation. These lax regulatory environments enable them to conceal true production volumes and bypass standard licensing or permitting controls.

Aggregates negative media coverage, legal disputes, and official court documents involving individuals or entities. This information uncovers evidence of prior involvement in illegal mining, metal trafficking, or related corruption.

Details cross-border shipments, declared commodities, shipping routes, and customs filings. This data enables the detection of misdeclared or undocumented mineral exports, which are common in illegal mining schemes.

Provides risk profiles of regions and jurisdictions, highlighting areas with weak oversight or prevalent illegal mining. This helps flag the movement of precious metals through high-risk routes or smelting points.

Documents an entity’s financial statements, business performance, and tax filings, revealing discrepancies between declared production volumes and actual revenues. This helps detect undeclared or underreported income linked to illicit mineral sales.

Maintains validated court orders, official permits, and compliance filings, enabling confirmation of legitimate mining rights. This data source helps pinpoint entities operating without proper authorization or under fraudulent documentation.

Authenticates and detects alterations in official permits, licenses, and geological surveys. This is critical for identifying falsified paperwork often used to legitimize illegally extracted minerals.

Captures operational details such as workforce size, machinery, and production capacity. Discrepancies in reported small-scale activity versus large trade volumes may indicate the integration of illicitly mined minerals into official output.

Consists of shipping logs, bills of lading, invoices, and certificates of origin, allowing for the verification of declared mineral shipments. This cross-check helps detect inconsistencies in reported volume, origin, or value that may indicate illegal mining activities.

Captures transaction-level details of precious metals trades, including the parties involved, quantities, trade dates, and pricing. Institutions use this data to detect suspiciously large or repeated trades that exceed typical production capacity or market norms, indicating potential illegal mining proceeds.

Provides official registration details, beneficial ownership structures, and licensing information for entities. This data helps identify unlicensed or suspicious corporate vehicles used to conceal illegal mining operations and launder proceeds.

Conduct in-depth verification of the client’s mining or export licenses with official bodies, cross-check declared production volumes against known capacity or official records, and confirm beneficial owners. If legitimate licensing or capacity cannot be verified, apply heightened scrutiny or restrict services. By confirming the authenticity of critical documentation, institutions can detect fraudulent permits or nonexistent licenses, addressing the vulnerabilities of illegal mining operations.

Set specific scenarios and thresholds to flag large or repeated payments arising from mineral sales by entities lacking a recognized mining license or established operating history. Cross-reference financial inflows with the legitimate production capacity of the account holder, investigating sudden income spikes or cross-border transfers from known high-risk mining locations. This approach captures illicit proceeds introduced into legitimate financial channels.

Require thorough due diligence on any smelters, refineries, and brokers involved in the precious metals supply chain. Validate their licenses, compliance programs, and traceability protocols. Periodically audit the chain of custody to ensure that unlicensed or illicitly extracted minerals are not entering legitimate refining or trading channels.

Provide specialized training to compliance and frontline teams on recognizing fabricated mining permits, confirming legitimate production figures, and detecting unauthorized smelters or refineries. Teach staff to scrutinize documentation, follow up on discrepancies with licensing authorities, and escalate potential red flags swiftly for further investigation.

Use publicly available mining registries, government databases, and external records to confirm the validity of permits, verify declared operating capacity, and identify any known history of unlicensed or corrupt practices. Check for open-source reports of illegal extraction, unauthorized smelting, or problematic licensing officials during onboarding or periodic reviews to help detect forged licenses or misrepresented ownership structures.

Limit or deny account services to mining clients or traders who cannot demonstrate valid permits, transparent sourcing, or adherence to production thresholds. Suspend or freeze accounts if forged permits, repeated shipment discrepancies, or conflicts with regulatory data are uncovered, blocking further laundering of illegally mined assets.

Review and compare shipping documents, invoices, and bills of lading against official production records, licensing details, and typical output for the declared operation. Investigate discrepancies in the volume or quality of shipped minerals that exceed the operator’s licensed capacity. Validate smelter or refinery certifications before approving trade-related transactions to prevent criminals from blending illicitly mined materials into lawful cargoes.

• Criminals can repurpose or present illegally mined gold as jewelry to bypass detailed scrutiny of its original sourcing.
• Jewelry maintains high resale value and is transportable, allowing criminals to relocate and sell the items, thereby reintegrating illicit proceeds into the formal market.
• Minimal verification for jewelry transactions in certain jurisdictions helps criminals obscure the metal’s criminal provenance.

• Criminals illegally extract precious metals (e.g., gold) and co-mingle them with legally sourced stock, exploiting minimal documentation or corrupt channels to disguise the illicit origin.
• These commodities retain high intrinsic value and can be sold domestically or exported abroad, making it straightforward to convert illicitly acquired output into ostensibly legitimate revenue.
• By merging unlawful and lawful supplies, criminals blur the source of funds, facilitating subsequent placement or layering of proceeds within regulated financial channels.

• Illegally mined gold is often quickly exchanged through cash-for-gold services, receiving physical currency with minimal paperwork.
• The anonymity and ease of handling physical cash make it difficult for authorities to trace its origin, aiding criminals in placing funds into legitimate circulation.
• This straightforward liquidity option allows the untracked proceeds to be integrated without extensive oversight or record-keeping.

• Criminals can swiftly monetize unlawfully mined gold or other precious metals by selling through legitimate trading platforms, intermingling illegally sourced metals with legitimate inventory. • Facilitates the appearance of lawful revenue streams from the sale of metals, aiding in layering and integration of illicit proceeds into the financial system.

• Facilitates cross-border transport of illegally mined minerals under falsified customs declarations, disguising true origin and quantity. • Provides logistical cover for mixing illicit shipments with legitimate cargo, reducing detection risk and enabling global distribution of illicitly sourced minerals.

• Criminals can forge or alter export licenses, permits, and shipping documents, legitimizing illegally extracted minerals on paper. • Conceals pivotal details such as origin, production capacity, or authenticity of mineral shipments, thwarting effective due diligence and AML checks.

• Enables rapid conversion of unlawful precious metals into cash with minimal documentation, obscuring the original illegal source. • Some providers may accept semi-processed or raw gold presented as jewelry, circumventing formal identification checks and hindering AML scrutiny.

Organized crime groups knowingly direct unauthorized mineral extraction and sales, profiting from the illicit proceeds. They:

• Oversee unlicensed mining operations and bypass legitimate permitting.
• Merge illicitly mined ore with lawful supply to disguise its illegal origin.
• Funnel proceeds into financial accounts, falsely characterizing them as legitimate revenue from mineral sales, complicating due diligence for financial institutions.

Document forgers knowingly produce or modify mining permits, shipping documents, or export licenses, enabling criminals to:

• Legitimize unauthorized mining or export activities on paper.
• Conceal true production volumes or origins in compliance submissions.

This frustrates financial institutions' attempts to verify the authenticity of transaction and trade records.

Shipping and logistics companies can be exploited, knowingly or unwittingly, to move illicitly mined minerals. Criminals:

• Provide falsified cargo manifests or customs documents to mask the true origin or volume.
• Merge illegal shipments with legitimate cargo, eluding detection by authorities.

This undermines financial institutions’ reliance on trade data for transaction monitoring and due diligence.

Dealers in precious metals, such as gold, knowingly or unknowingly enable illicit mining proceeds to enter formal markets. They:

• Purchase or handle unlawfully sourced metals, providing criminals with a channel to legitimize illicit stock.
• Commingle illicitly mined output with legal supplies, obscuring its origin.

Financial institutions face difficulty determining genuine sources of funds when proceeds appear to stem from legitimate metal sales.