Gold flows from Venezuela: supporting due diligence on the production and trade of gold

By David Soud, Ian Ralby and Rohini Ralby: Organisation for Economic Co-operation and Development (OECD)

Gold flows within Venezuela can be categorized under two broad headings: centralised and dispersed. The centralised flows carry a portion of production from the country’s myriad small mining operations to the government-monitored trading hubs. Centralised flows reportedly include gold transfers from the Venezuelan Central Bank to foreign governments and other entities in Turkey, the United Arab Emirates, Iran and elsewhere. While these flows of gold out of Venezuela might be considered legal, companies are still expected to carry out enhanced due diligence to ascertain whether conditions of extraction and trade are associated with actual or potential risks of severe human rights abuses, conflict financing and other financial crimes as per the OECD Guidance, as well as environmental harm.

In contrast, dispersed flows are those that leave the country from mining areas by various other routes. The Venezuelan military and political elites, Colombian militant groups, and domestic gangs are reported to be key actors in both categories of domestic gold flows. Gold from dispersed flows departing Venezuela appears to be laundered primarily within the Latin America and Caribbean region, mainly in one or more key regional transit hubs. Laundering networks can, however, extend across the globe and actors connected in other continents. Since many of the high-risk gold flows out of Venezuela involve regional transit hubs as well as distant transit countries and destination markets, any approach to mitigating the risks tied to Venezuelan gold should include regional and international coordination among both government and industry actors. This consideration is heightened by the evident involvement of transnational criminal organisations and designated terrorist groups in exploiting mining communities, extracting gold and laundering it into the legitimate supply chain. The resulting picture is preliminary but also revealing. The role of the maritime space in high-risk gold flows needs more attention; so does the role played by Free Trade Zones (FTZs) in facilitating gold flows and related financial crimes. A few recommendations on how best to address the risks that characterise Venezuelan gold flows conclude the report.

Paris: Organisation for Economic Co-operation and Development (OECD) 2021. 68p.