Global Financial Integrity

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New Report Finds Colombian Gold Sector Vulnerable to Illicit Financial Flows 


WASHINGTON D.C. – Global Financial Integrity (GFI) today published a new report “The Gold Standard,” which examines the issues facing gold mining in Colombia and presents policy solutions to strengthen transparency and supply chain integrity. Written in partnership with Colombian organizations Cedetrabajo and the Alliance for Responsible Mining, this report explores what gold sector vulnerabilities mean for the environment, trade, and artisanal mining communities themselves.

The report traces the gold supply chain, from extraction to commercialization, and to eventual exportation to international markets. It identifies issues in this process such as illegal extraction, environmental damage, trade misinvoicing, illicit financial flows and asset laundering. While law enforcement responses have often targeted informal mining communities for these issues, the reality is much more complex, and informal miners are often victims of larger forces at play. This report argues that tackling opacity throughout the supply chain on a systemic level, as opposed to targeting specific stakeholders, is a more effective approach.   

President and CEO of GFI Tom Cardamone issued the following statement: 

“Not only does the illegal gold trade result in misinvoicing and revenue losses for the government but the study points out the tremendous collateral damage associated with this activity. Degradation of wetlands, deforestation and the elimination of animal and plant species will create lingering effects for decades to come.”

Mario Valencia, project manager for Cedetrabajo says “the government has fallen short with regards to regulating the mining sector, failing to differentiate between criminal and informal mining. All of this has a high social and economic cost. Between 2010 and 2018, illicit financial flows from trade misinvoicing in the mining sector surpassed US$5.6 billion.”

Natalia Gonzalez, Regional Manager for Colombia and Peru at the Alliance for Responsible Mining, notes that “there are various initiatives that are promising in terms of formalizing and protecting subsistence and small scale gold miners, including certifications as well as community programs. Our analysis includes recommendations to strengthen supply chain integrity while safeguarding the rights and livelihoods of these communities.”

The report is divided into two major chapters. The first offers a perspective on gold in the Colombian national context. This chapter includes analysis of mining sites in relation to ecosystems and endangered species. It also addresses the challenges facing local mining communities.

The second chapter explores trade issues at an international level. This chapter provides analysis on trade misinvoicing within Colombia’s gold exports as well as trade data and risk factors for illicit transactions. Finally it offers a discussion on the efforts by Colombian law enforcement to address the problem, and how future efforts could be strengthened through financial transparency strategies.

Notable Findings: 

  • Artisanal and small-scale gold miners in Colombia face numerous regulatory challenges, from complex requirements to inadequate coordination among government agencies, which make it difficult for them to comply with existing requirements. 
  • 10,253 Ha of alluvial gold mining are located in deforestation hotspots, and six critically endangered species are currently affected by such mining operations. 
  • When comparing Colombian gold exports to imports by international trading partners, the report finds a value gap of more than US$5.6 billion over the period of 2010-2018, which is indicative of trade misinvoicing. 
  • The United States and Switzerland are the largest importers of Colombian gold by weight.
  • In analyzing publicly-available data on criminal gold cases, as reported by Colombian authorities, the single largest destination for illicit gold was Opa-Locka, Florida. Moreover, this analysis indicates that some of the main channels used in the illicit gold trade are fake companies, human couriers and the international trade system itself. 

Notable Policy Recommendations:

  • Prioritize specific responses for the endangered species affected by gold mining operations
  • Form a task force in regards to small-scale mining to ensure current regulations are appropriate, differentiated and communicated effectively
  • Address trade misinvoicing, including through the use of technological tools such as GFTrade
  • Verify the information of companies involved in the gold exports, including company names and ownership, to ensure greater supply chain integrity
  • Strengthen requirements and better verify information regarding the beneficial owners to prevent illicit financial flows
  • Enhance collaboration between Colombia, the United States and Panama to address the illegal gold trade

GFI thanks Cedetrabajo and the Alliance for Responsible Mining for their participation. These partnerships ensure that a variety of perspectives are considered in exploring the problem and the potential policy solutions. 

Read the full report in English here.

Lea el informe completo en Español aquí.


ABOUT GFI: Global Financial Integrity (GFI) is a Washington, D.C.-based think tank, producing high-caliber analyses of illicit financial flows, advising developing country governments on effective policy solutions and promoting pragmatic transparency measures in the international financial system as a means to global development and security.


Lauren Anikis

Communications Coordinator