Gold in your mobile phone could be funding drug gangs –FinCEN
Kaloti, a Dubai-based trader was buying gold from criminal networks who used him to launder drug money and have been allowed to sell gold into global supply chains used to make smartphones and cars.
The US Treasury was urged by law enforcement six years ago to warn the world that I was a primary money laundering concern, which was ignored. As a result, Kaloti continued to sell tonnes of gold to companies in the supply chains of Apple, General Motors, and Amazon, which use the precious metal in components, which has put firms and millions of consumers at risk of unwittingly funding criminal activity. Kaloti’s representatives said it “ Vehemently denied” it was knowingly involved in any crime or misconduct.
Codenamed “Honey Badger” and led by the Drug Enforcement Administration (DEA) the investigation concluded that Kaloti was involved in a scheme to transport or transfer a tremendous amount of illicit value through the use of gold as a commodity.
Under the scheme criminals anywhere in the world could use drug money or other unlawfully obtained cash to buy scrap gold such as second-hand jewellery and bring it to Kaloti. In exchange for gold according to investigators, Kaloti would offer bulk cash or send a wire transfer to them.
The Us Treasury never took action against Kaloti as they were concerned about the reaction of the United Arab Emirates, a key diplomatic ally, where Kaloti was based. When the UAE failed to act on its own initiative, the investigation was shelved. Kaloti, however, did not have the chance to see or challenge any of the evidence as they were not questioned by investigators and there could be undisclosed reasons justifying why the report wasn’t acted upon.
Lender Deutsche Bank and Barclays submitted 34 different reports about Kaloti to the US Treasury’s Financial Crime Enforcement Network (FinCEN) highlighting as suspicious thousands of transactions from 2007 to 015 totalling £7.26bn ( $9.3 bn). In 2017, a money laundering gang was convicted in France of laundering the proceeds of drug sales all over Europe including the UK.
Apple’s list of approved suppliers includes entities that have purchased tonnes of gold from Kaloti, including Valcambi, one of the largest gold refiners in the world, based in Switzerland.
All modern smartphones feature components made with gold, which is a highly conductive metal. This year the anti-corruption watchdog Global Witness reported that in 2018 and 2019l Valcambi purchased up to 20 tonnes of gold directly from Kaloti and a further 60 tonnes form a related entity.
Valcambi said it would neither confirm nor deny buying gold from Kaloti. The company said it only purchases gold from its suppliers, where the company can fully ensure the identification of the origin of the gold.”
Apple said it was committed to responsibly sourcing for its products “ If a refiner is unable or unwilling to meet our standards they will be removed from our supply chain. Since 2015, we’ve stopped working with 63 refiners of gold for this reason. Several thorough and independent reviews have been conducted since 2015, and there is no evidence that any gold from Kaloti enters Apple products.”
General Motors, which uses gold in car parts such as catalytic converters, said it was committed to responsible sourcing of goods used in its manufacturing and had not done business with Kaloti directly.