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US Government Publishes Africa Gold Advisory

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On June 27, 2023, the US Departments of State, the Treasury, Labor, Commerce, and Homeland Security, and the United States Agency for International Development issued a joint advisory — the Africa Gold Advisory (“Advisory“) — that (i) highlights the opportunities and specific risks raised by the gold trade across sub-Saharan Africa and (ii) encourages industry participants to adopt and apply strengthened due diligence practices to guard against such risks. The Advisory states that it was issued in light of increasing awareness of the exploitation by illicit actors, including the Wagner Group, of the gold sector in Africa.  

Below we summarize certain key parts of the Advisory:

  • Part I summarizes the opportunities in the gold sector in sub-Saharan Africa, emphasizing the potential of artisanal and small-scale gold mining.
  • Part II identifies the risks associated with the gold sector in sub-Saharan Africa, including upstream risks connected to gold extraction (e.g., risks of corruption, contribution to conflict, smuggling, human rights and labor abuses, and environmental harm) as well as downstream concerning conducts associated with the transport, refining, and sale of gold (e.g., misuse of recycled gold labeling, money laundering, and terrorist financing).
  • Part III discusses potential sanctions the United States may impose to address risks associated with the gold supply chain, including the designation of individuals or entities operating in the gold sector to the list of Specially Designated Nationals and Blocked Persons (“SDN List”) maintained by the US Treasury Department’s Office of Foreign Assets Control, an import ban on certain Russian products (including gold), and visa restrictions on individuals connected to human right violations or corruptions in the gold sector. Part III also includes a case study regarding US and EU sanctions on the Wagner Group and its affiliated entities operating in the gold sector.
  • Part IV sets forth due diligence guidance and best practices, with a special focus on the Organization for Economic Co-operation and Development’s Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas adopted in 2011 (“OECD Guidance“). In particular, Part IV discusses gold-focused OECD Guidance, due diligence requirements and resources for Anti-Money Laundering compliance, and industry frameworks that may be used to facilitate due diligence in the gold sector.
  • In addition to the above-mentioned four parts, the Advisory also includes two annexes. Annex I identifies gold-related actors designated to the SDN List in the past five years. Annex II describes gold-related programs supported by the US government and related efforts supported by other leading donors and development organizations.

Although the Advisory is explanatory only and does not have the force of law, it informs industry participants and attempts to help industry participants evaluate and manage potential risk exposures when dealing in the gold sector in Africa. Individuals and entities engaged in the gold sector across Africa should be aware of the risks identified in the Advisory and consider enhanced due diligence and mitigation measures to manage such risks.

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Author

Bart McMillan leads the Chicago Office’s International Trade Compliance Subpractice within the North American International Commercial Practice. He advises US and non-US companies on international trade compliance matters arising under US export controls, trade sanctions, and antiboycott rules, as well as under US customs laws with respect to classification, valuation, country of origin, free trade agreements, and the protection of intellectual property at the US border. His practice also covers anti-bribery and specialized commercial compliance issues in sales and sales promotion under the US Foreign Corrupt Practices Act (FCPA), non-US anti-bribery law, and non-US commercial laws. Mr. McMillan has been practicing with Baker McKenzie for the entirety of his legal career, and during 2004 he was located in the Washington, DC office. He is a frequent speaker on international trade compliance matters at seminars, conferences, and company training events. While pursuing his J.D. at NYU School of Law, Mr. McMillan was Staff Editor (1997-98) and Associate Editor (1998-99), New York University Law Review; and he participated in a semester exchange to the Central European University (Budapest) (Legal Studies Dep’t).

Author

Eunkyung Kim Shin regularly advises multinational companies on complex international trade, regulatory compliance, customs and import law, and supply chain-related matters. She also counsels on cross-border compliance and commercial issues. Eunkyung has written on these topics for a number of publications, including WorldECR and Law360, and frequently speaks on these areas. She is a frequent contributor to Baker McKenzie's Sanctions & Export Controls Update, Global Supply Chain Compliance, and Import and Trade Remedies blogs. Eunkyung has been recognized as a "Next Generation Partner" member of Baker McKenzie's international trade team by Legal 500. Legal 500 reported a client as stating that, Eunkyung is "outstanding in giving practical and effective advice." She began her legal career as an associate with Baker McKenzie, and has been with the firm since 2013.

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Iris Zhang is an associate in the Firm's International Commercial & Trade Practice Group. Iris regularly assists multinational companies on sanctions, customs and export control compliance as well as other international trade matters. Before joining the Firm, Iris worked in a Chinese law firm in Beijing on regulatory compliance and risk controls relating to Chinese anti-bribery laws and US Foreign Corrupt Practices Act.

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