The analysis presented here draws on a series of closed-door workshops convened by the Global Initiative Against Transnational Organized Crime (GI-TOC) and the Heinrich Böll Foundation in May and June 2026, in which expert participants candidly discussed the gold sector, including where existing safeguards are falling short.

Most decision-makers and commentators misread where the real risks in the gold sector lie. Small-scale miners in conflict-affected regions are too often treated as the principal problem, while state corruption, financial crime and regulatory gaps in major gold markets are overlooked.

These vulnerabilities are becoming harder to ignore. Weak chain-of-custody and due diligence enforcement in major refining and trading hubs allow illicit gold to enter the same bullion markets, and the same loco swaps and lending operations, that global central banks and gold-backed investment products rely on. A fundamental rethink of how the sector is governed is long overdue.

The cost of a systemic failure

Research tracking the gold sector for over a decade paints a bleak picture. Gangs, armed groups and organized criminal networks have tightened their grip on mining sites across dozens of countries, extorting workers and laundering their illicit profits through exports. The consequences range from mercury-poisoned rivers and illegal logging in critical ecosystems such as the Amazon and the Congo Basin, to severe human rights abuses and violations of Indigenous rights, not to mention violent conflict.

In south-eastern Nicaragua, for instance, land grabs in protected wildlife reserves and Indigenous territories have allegedly been facilitated by political operators. More broadly, amid a state-led gold boom, vast industrial mining concessions have been granted without the legally required consent of the local communities, and reforms have been introduced to allow the commercial exploitation of ecologically important areas.

Despite issues such as these, disengaging from all informal gold mining would be counterproductive. In certain countries, structural problems such as prohibitively high taxes can make legitimate participation financially unfeasible, encouraging illicit activities such as smuggling. Responsible engagement with miners and mining communities is essential to reducing risks and improving oversight.

A fractured framework

Despite years of reform, the global gold trade remains riddled with loopholes that allow illicit or illegally mined product to enter the formal market. The international community is beginning to take greater notice. In October 2025, the G20 recognized the threat posed by precious metal trafficking and illicit finance. In December 2025, a UN resolution was adopted on the environmentally sound management of minerals and metals, while in 2026, the G7 set up a working group on artisanal and small-scale mining, with a particular focus on gold. In October this year, the United Nations Convention against Transnational Organized Crime (UNTOC) agreed to commence negotiations on a new protocol on environmental crimes, including illicit mining.

Policy and regulatory responses have not kept pace with illicit gold threats, however. Experts have emphasized the need for measures that can adapt quickly to changing trafficking and trading patterns and address well-known regulatory gaps. Doing so will require a fundamental shift in understanding. Governments, regulators, refiners, banks and industry bodies must translate that shift into concrete, targeted action.

Ultimately, a harmonization of standards across jurisdictions will be essential. Conflicting requirements between regions and regulatory systems create a patchwork that sophisticated criminal actors exploit with ease. It also encourages geographical arbitrage, where the private sector moves into jurisdictions with weaker requirements rather than acting responsibly within the industry.

Understanding international gold flows

Money laundering, illicit gold flows and conflict financing are well-documented risks throughout gold supply chains. Addressing them will depend on thorough and transparent due diligence processes, know-your-customer procedures, rigorous third-party audits and – critically – behavioural change. While the Organisation for Economic Co-operation and Development Due Diligence Guidance provides an important framework, regional responses, including regulatory endeavours, have yet to prove fully effective.

Throughout the gold industry, actors rely on checks carried out further up the chain. Once gold has been refined into London Bullion Market Association (LBMA) Good Delivery bars, for example, banks often swap, trade and hold it based on trust in the processes that brought it to market. However, LBMA accreditation does not guarantee responsible sourcing. While the LBMA sets standards and provides guidance on compliance, it does not verify the absence of illicit gold from supply chains.

Partially refined doré bars can be flown to global downstream markets within 48 hours of leaving the mine. They are often sent straight to international bullion centres, where physical gold is traded, refined, cleared and priced. Centres in locations such as London, Dubai, Switzerland and Hong Kong sit at the heart of the global trade, handling trillions of dollars in transactions annually, yet are among the least scrutinized nodes in the supply chain. Some producing countries are also building their own national refineries, allowing doré to be melted into bars before export, making its origin and trading history harder to verify.

Recycled gold also remains one of the weakest points in the system, providing cover for illicit material entering the market as scrap. Moreover, global commodity traders, which once handled gold only as a by-product of copper concentrate shipped by the tonne, have opened precious metals desks that buy raw gold directly from mines, bringing them closer to the areas in the supply chain where oversight is most limited. This year, for example, following a policy shift by the US administration, major commodity traders entered the Venezuelan gold trade, despite reports that some of the mines involved were linked to extortion by armed gangs.

Another vulnerability in the system lies in how official gold reserves are managed. Most central bank holdings consist of bars from the LBMA’s Good Delivery List. However, many of these institutions also acquire gold through private, bilateral, over-the-counter transactions, and engage in loco swaps and lending operations that are often opaque and minimally scrutinized. Currently, there is no binding international framework governing due diligence on official gold reserves, and only 6 per cent of central banks in regions classified as advanced economies apply responsible investment criteria to gold.

Some central banks are also beginning to buy closer to the mine. Rwanda, Uganda and the DRC, for example, now source gold from domestic supply, where co-mingling can occur and material from areas linked to smuggling and, in some cases, conflict financing may enter the same supply chains.

Russia’s invasion of Ukraine exposed the fragility of this system. In 2022, the LBMA suspended six Russian refineries from its Good Delivery List. However, this did not prevent Russian gold finding its way into major bullion markets. Since the ban, Kazakhstan and Uzbekistan, whose central banks are among the world’s largest gold sellers, have exported far more gold than they have mined, raising concerns that Russian gold is being relabelled before re-emerging in London and Switzerland.

An urgent call for meaningful reform

It has been 15 years since voluntary due diligence frameworks were introduced in the gold sector. It is clear that they have not kept pace with the criminal threat. What is needed now is mandatory, enforceable due diligence across the entire supply chain, informed by the lessons learned from existing regulatory frameworks.

Any new framework must recognize the role of artisanal and small-scale miners in finding solutions, rather than treating them as the source of the problem. It should include independent investigative audits backed by meaningful consequences, and apply the same responsible sourcing standards to central banks and major bullion markets.

The gold market is governable. But governing it requires understanding and confronting where risk really lies, and who pays the price when those risks go unchecked.