ScotiaMocatta Put For Sale After Multibillion Money-Laundering Scandal

Tyler Durden's picture

The world's oldest gold trader is for sale after a massive money laundering scandal may have terminally crippled one of the most iconic names in the business.

Canada’s Bank of Nova Scotia is exploring options for its gold business ScotiaMocatta, the Financial Times reported, which include a possible sale of Canada's most popular precious metals trader. Scotiabank made a decision to sell ScotiaMocatta following a massive money laundering scandal centered on a U.S. refinery that involved smuggled gold from South America. The ScotiaMocatta business, a mainstay in PM trading, is one of London’s main gold trading banks and is being sold by JPMorgan.

According to the FT sources, ScotiaMocatta’s future had been underway for several months, with ScotiaBank allegedly seeking a buyer for up to a year and was likely to shrink the business if a sale is not completed, although according to the article Chinese buyers - the world's dumbest money these days - are rumoured to be the key targets of the sale.

While gold trading has been in a cyclical decline in recent years, the “straw that broke the camel’s back” in prompting the sale was Scotiabank’s lending to Elemetal, a precious metals refinery in Dallas. Scotiabank was one of its biggest lenders, they said. The problem emerged in March, when US prosecutors accused workers at a subsidiary of Elemetal, NTR Metals in Florida, of a money laundering scheme using “billions of dollars of criminally derived gold” mostly from Peru.

Here the story take a turn into a slightly surreal detour:

NTR imported more than $3.6bn of gold from Latin America between 2012 and 2015, the court documents allege. Two of the accused, Samer Barrage and Juan Granda, pleaded guilty last month to a charge of money laundering in plea deals.


After the story came to light in March, Elemetal was kicked off the London Bullion Market Association’s “Good Delivery List” of gold refiners;

This was an almost instant death sentence for the company as buyers will usually only buy gold from a refiner on the list. Indeed, in the same month, New York’s Comex futures exchange said it was no longer taking gold from Elemetal for delivery against futures contracts in the world’s biggest gold futures market.

And this is where the scourge of gold rehypothecation emerged, as in the scandal surrounding Elemetal, it became impossible for holders of Elemetal gold to sell the gold bars on, leaving them sitting in bank vaults, according to traders quoted by the FT. Buyers are reluctant to take the gold, given the investigations.

This means that hundreds of millions in loans made to Elemetal by ScotiaMocatta are suddenly stuck in limbo. It also means that one of five bullion banks that settle gold trades in the London market, the world’s largest, has effectively been blackballed. It was built on the 1997 purchase by Scotiabank of Mocatta Bullion, which traces its roots back to 1671. And with Mocatta crippled, Scotiabank, which has the biggest foreign presence of any Canadian bank, is focusing its international strategy on the Pacific Alliance, a Latin American trade bloc comprising Mexico, Peru, Chile and Colombia. It will also hope to find a willing Chinese buyer for the gold trading operation.

Mocatta's exit will be good news for HSBC and JPMorgan, which dominate the London market; their large balance sheets enable them to provide credit to clients and refiners around the world. Additionally, and unlike Scotiabank, they also have vaults in London. Gold trading in London is estimated to be worth more than $5tn a year, although as the FT notes, there are no precise figures on how much gold is traded there every day.

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Luc X. Ifer's picture

Canada doesn't have anymore gold reserves, why would they keep it anymore then?!
May be also the sign of the next mega socio engineering experiment comming to Kanuckistan after multiculturalism - the cashless economy.

MozartIII's picture

If the assets are right. Buy it for pennies on the dollar. Screw what Canada did, they are stupid!!


If I am wrong, I do have some sure win island property"s that will never lose value. Great prices!!!!!!

tmosley's picture

So, did the news of this fraud just come out, or did I somehow miss this? Seems like the sort of thing that would be stickied on ZH for a week.

bardot63's picture

First I've heard of it, and I read everything.

opport.knocks's picture

It was in the Canadian business news yesterday and the Financial Times 2 days ago.

Please note that the original fraud was reported in March and was being done by Americans and obviously South Americans through an American Company, Elemetal, based in Texas. The Canadian entity was only providing financing.

Perhaps tmosley can make a bid in Bitcoin.

jimmy c korn's picture

Money laundering? I think if they had donated to Clinton Foundation and sponsored a Bill Clinton speech, they wouldn't be in this mess.

Pinto Currency's picture

Take it more that the London gold rig is exploding and Scotiabank is getting rid of the evidence.

opport.knocks's picture

That is possible too. I don't know that Scotia Mocatta's loans to a company that was using gold for laundering money would cause Scotiabank any legal issues as long as they did their due dilligence on the loans. The only material impact might be that some bad loans get defaulted on.

My other read was that someone was pushing this story to get a lower price for the company. Perhaps scare away the Chinese bid.

stacking12321's picture

what "fraud" are you referring to?

it was a gray market sale, but the gold was genuine, there was no fraud.

opport.knocks's picture

Read the linked Bloomberg article, it says the illegally South American mined gold was smuggled into the US for money laundering and fraud on behalf of drug smugglers and others.

stacking12321's picture

that doesn't answer the question, so i'll ask again, what is the fraud?


auricle's picture

Perhaps the fraud was claiming it was legally obtained bullion. 

0valueleft's picture

China buyers to use Bitcoin to purchase tarnished Scotia Mocatta.

There ya go, a headline you cant miss.

opport.knocks's picture

Citizen held gold and government held gold are totally unrelated. Lots of financially diversifed Canadians hold private gold and would prefer to deal with a division of a large well established company legally domiciled in Canada.

wee-weed up's picture



"Citizen held gold and  held gold are totally unrelated"

Until said government tries to confiscate said citizen gold.

Laowei Gweilo's picture

Canada has more gold in the ground than the top 5 gold reserves, combined, or the top 2 gold-holders have in physical and on paper, combined.

Why dig it up to stick it in a hole when it's already perfecly safe in a much better guarded hole?

I'd trust 'gold in the ground' more than 'gold in a vault' anyhow... In the ground, at least we know it's there. 'In a vault'... right... 


At least in the ground, we know it belongs to the people, as much as we're willing to fight or surrender for it, in the case of a war. 'In a vault,' I trust it as much as a trust a Prime Minister or a CEO.

I'd say the same thing for any natural resource, whether it's our gold or our rivers -- I don't need it in a vault just so some globalist can 'quanitify' it and get rich of it.

AR15AU's picture


AR15AU's picture

Next question, is this Lehman or just Bear Sterns.

jmack's picture

I am really disappointed in the Tylers for missing this headline gold...

Disgruntled Goat's picture

First, they came for Pluto....


Disgruntled Goat's picture

First, they came for Pluto....


my new username's picture

Is the gold not real?
Sell it to India or China - It will be smelted and recycled in no time.

ArthurDaley-OldieTimeTrader's picture

So it goes from the inept (the Cannuks) to biggest players who are long 500 million ounces of silver ?? Sounds like a perfect fit.. / Sarc on.

opport.knocks's picture

The fraudsters were Americans and South Americans, not Canadians. The Canadian bank subsidiary only provided financing.


Rex Andrus's picture

It calls to us, moppet. It says, this is all the gold from the WTC vaults.

Argos's picture

AND...... gold futures are down, of course. 

tmosley's picture

Of course. With no clear owner, re-hypothicated gold not only becomes worthless, it has negative value as whoever takes possession also takes on the liability of being sued.

fbazzrea's picture

if anyone has a contact #, i'd be happy to give 'em a call and take on the responsibility

Herdee's picture

Is the buyer of ScotiaMocatta liable for all their illegal activities over the years?

gigadeath's picture

ScotiaMocatta? more like, ScotiaWedontgotta. *chuckle chuckle*

King of Ruperts Land's picture

Never ever bring your gold to the USA.

uhland62's picture

According to the book "Gold Warriors' it doesn't matter much where you take it, they were/are all in cahoots due to the Yamashita treasure Golden Lily in the Philippines. The 'mining' was rife under Marcos, Manafort would know.  

ReturnOfDaMac's picture

Yanks do the crime, canuks do the time.  Figures.  Stawks are sooo much simpler.  Just garden variety fraud in stawks, ya know pro-forma earnings and stuff. So, BTFD.

Consuelo's picture



Just thought I'd mention it here regarding Scotia:

Uncle Jim Willie was all over the skankery going on at that firm 3+ years ago...

haruspicio's picture

Why on earth does any foreigner doing fraudulent business have a nexus in the US?

JailBanksters's picture

It's only laundering if you get caught,

prior to that it's Busuness baby

overmedicatedundersexed's picture

diamonds are for money laundering..what did the cartels think would happen using gold this way?

who controls the diamond markets?? it rhymes with stew.

the tribe does not like an end run around their main business, think of the % charge they missed out on here.

blood diamonds we now got dirty gold.

SweetDoug's picture




This story is NON-EXISTENT in Canananada, the nanny state.




venturen's picture

Rule #1...if you aren't on Wall Street you can't money launder...on Wall is OK....Canada isn't WS

gdpetti's picture

Not true, any member of the club can participate in this business, say the infamous Vatican Bank... long history of supporting Western imperial activity there.

Not to say it's only the 'West', but we have been taking turns at the helm of global imperialism for the last few centuries, before that it was mostly a regional concern.... unless you go back even further... but that gets into former empires of long ago.

MrBoompi's picture

I take issue with the notion that recent depressed gold prices are of a "cyclical" nature.  This infers natural market forces at work.  Gold and silver prices are heavily manipulated through the futures and derivatives markets.  If actual supply and demand (the things that USED TO determine commodity prices) was what determined gold and silver prices, they would be much higher.  

PrometeyBezkrilov's picture

The first line reads: "The world's oldest gold trader is for sale". Should have been: "The world's oldest gold trader is going to jail". This is what would happen to you and me if caught money laundereing.

PrometeyBezkrilov's picture

Second question, why would Scotia Bank want sell its division? If there are liabilities attached to this deal, who would want to buy the problem? If the problem is fixable and the unit is functional, why are they selling it? It seems like nobody is goning to jail anyways, with the exception of a few scapegoats.

marunovich's picture

Just saw this news on other dealer's blog, where I usually buy my gold. What are you arguing about? They will laundry their money till the end of the world, but the main issue how it affects us-regular bullion clients. As much as we all understand the importance of reliability, it seems to me like you actually never know 100% whats behind any business.