Applicable legal norms and standards of the industry

National legislation

Specific rules and regulatory requirements must be observed when identifying the supply chain whilst trading in precious metals. Companies located in Switzerland are primarily subject to the relevant provisions of Swiss law. For trading in precious metals, these companies are subject to the Criminal Code and the Precious Metals Act. A financial intermediary is subject to the Anti-Money Laundering Act and thereby obliged to join a self-regulatory organisation and comply with its regulations and statutes.

Precious Metals Control Act

The Precious Metals Control Act (PMCA) stipulates that a commercial production of smelted products requires a smelter’s licence. This law does not regulate due diligence with regard to the origin of the gold, but it does stipulate that refiners must enjoy a good reputation and offer guarantees of irreproachable business activity.

The Precious Metals Control Ordinance obliges refineries to accept melting material only from persons who can prove that they have legally acquired it. The holder of a melter’s licence must verify the identity of the customer. If there is any doubt about the origin of the goods, the holder of the melter’s licence is obliged to be particularly diligent in clarifying the origin of the melted goods. The holder of the licence shall take the necessary organizational measures in his business to prevent the melting of melting material of unlawful origin. He shall ensure that controls are carried out and shall provide for adequate internal supervision and appropriate training of personnel. The holder of a melting licence shall keep records of his purchases of melting material and products. The Central Office shall keep a register of the holders of melting permits and shall supervise the establishments. The inspection bodies shall be granted access to the business documents, the commercial accounts and the stocks of goods.

The due diligence obligations of the Precious Metals Ordinance are limited to clarifying the lawful acquisition of the precious metals. The question of the conditions under which the gold was produced does not fall within its scope. In particular, it is not one of the obligations imposed by the PMO to clarify the origin of precious metals with regard to possible non-compliance with international social and environmental standards.The Precious Metals Control Act (PMCA) stipulates that a commercial production of smelted products requires a smelter’s licence. This law does not regulate due diligence with regard to the origin of the gold, but it does stipulate that refiners must enjoy a good reputation and offer guarantees of irreproachable business conduct.
he Precious Metals Control Ordinance obliges refineries to accept melting material only from persons who can prove that they have legally acquired it. The holder of a melter’s licence must verify the identity its customer. If there is any doubt about the origin of the goods, the holder of the melter’s licence is obliged to be particularly diligent in clarifying the origin of the melted goods. The holder of the licence shall take the necessary organizational measures in his business to prevent the melting of melting material of unlawful origin. He shall ensure that controls are carried out and shall provide for adequate internal supervision and appropriate training of personnel. The holder of a melting licence shall keep records of his purchases of melting material and products. The Central Office (Eidg. Zollamt) shall keep a register of the holders of melting permits and shall supervise the establishments. The inspection bodies shall be granted access to the business documents, the commercial accounts and the stocks of goods.

The due diligence obligations of the Precious Metals Ordinance are limited to clarifying the lawful acquisition of the precious metals. The question of the conditions under which the gold was produced does not fall within its scope. In particular, there is no obligation imposed by the PMO to clarify the origin of precious metals with regard to possible non-compliance with international social and environmental standards.

https://www.fedlex.admin.ch/eli/cc/50/345_357_401/en

Anti-Money Laundering Act

The Anti-Money Laundering Act (AMLA) regulates the fight against money laundering, the fight against terrorist financing and the assurance of due diligence in financial transactions (Art. 1 AMLA). Its purpose is to prevent any act likely to impede the identification of the origin, tracing or confiscation of assets that the financial intermediary knows or must assume stem from a crime or a qualified tax offence, or to prevent assets from being collected or made available with the intention of financing a violent crime. In addition, its intention is to ensure due diligence in financial transactions in general.

For trading via precious metal accounts, margin no. 16bis of FINMA Circular 2008/3 “Public Deposits with Non-Banks” must be observed.

Trading in bank precious metals is subject to the Anti-Money Laundering Act. It defines what counts as bank precious metals. This includes bars and granules of gold with a minimum fineness of 995 thousandths. Trading in smelted goods, precious metal goods, semi-finished goods, plaqué and substitute goods as well as direct acquisition by manufacturing companies for the purpose of producing such goods are not subject to the AMLA.

The duties of clarification and due diligence imposed on the financial intermediary by the AMLA are aimed solely at combating money laundering and the financing of terrorism. An obligation to clarify the origin of assets with regard to minimum social and environmental standards is not associated.

https://www.fedlex.admin.ch/eli/cc/1998/892_892_892/en

OECD Due Diligence Guidance to Promote Responsible Supply Chains for Minerals from Conflict and High-Risk Areas

In 2011, the OECD adopted due diligence guidelines for promoting responsible supply chains for minerals from conflict-affected and high-risk areas, which have since been amended twice. The guidelines contain recommendations in order to guide companies towards responsible global supply chain management for all minerals so that they respect human rights and do not contribute to conflict through their decisions and practices when purchasing minerals or metals. The aim is to create transparent, conflict-free supply chains and sustainable corporate engagement in the mineral commodities sector.

The Guide was developed by the OECD in a multi-stakeholder process involving representatives from governments, international and regional organisations, companies and NGOs. This is the first time that a joint government-backed initiative has been established, bringing together a wide range of stakeholders to promote the responsible management of supply chains for minerals from conflict zones.

OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas:

https://www.oecd.org/daf/inv/mne/OECD-Due-Diligence-Guidance-Minerals-Edition3.pdf

 

International industry standards

Responsible Gold Guidance of the London Bullion Market Association (LBMA)

The LBMA is a globally recognised association of precious metals dealers that coordinates over-the-counter trading in precious metals. It sets out the weight, appearance and marking guidelines under which gold and silver bullion are awarded the internationally recognised “Good Delivery” status. LBMA certifies the most important international banks as well as a limited number of refineries and processing and refining companies. LBMA certification is accepted by almost all market participants worldwide.

The LBMA’s Global Precious Metals Code contains the standards and best practices expected of market participants in the precious metals industry worldwide. This code defines a transparent, fair and secure market in which participants act in accordance with best practice guidelines and adhere to common principles, such as those relating to ethics, compliance and risk management, information exchange or business conduct. Participants in the international wholesale precious metals market are expected to adhere to and act in accordance with the principles of this Code.

The primary objective of the SPMI is to incorporate this Code into the Swiss market and legislation.

Responsible Jewellery Council (RJC)

The Responsible Jewellery Council (RJC) is an international non-profit organisation that sets standards for an ethically, socially and environmentally responsible supply chain for diamonds, gold and platinum metals.

RJC-certified members agree to adhere to the strict guidelines of the Code of Practice (CoP) and Chain of Custody Standards (CoC) and ensure responsible practices throughout the supply chain. The standards cover human rights, labour conditions, environmental protection, ethical business conduct and the inadmissibility of conflict financing. Members are regularly audited by independent auditors and the RJC certificate is valid for three years.

London Platinum and Palladium Market (LPPM)

The London Platinum and Palladium Market is the most important over-the-counter trading centre for platinum and palladium. The world market price for platinum and palladium has been determined here since 1989. In line with the LBMA’s Good Delivery List, the LPPM maintains lists of certified producers in the platinum and palladium sector, who are subject to regular strict checks and controls.