The LBMA’s Gold Standard Has an Enforcement Problem

 

Madagascar’s central bank needed a refiner willing to accept its gold. Swiss firms questioned the metal’s origins and legality. The bank reached an agreement with Istanbul Gold Refinery in 2023.

The New York Times investigation, How a Trillion-Dollar Industry Launders Illegal Gold, follows that gold into the legitimate market. It reports that when European scrutiny exposed problems with the sourcing paperwork, the London Bullion Market Association helped the refiner’s auditor revise and backdate the report.

 

The LBMA’s approval carries commercial weight. According to the Times, the major international marketplace accepts bars from 67 certified refineries. Those firms must document their gold’s origins and undergo independent audits. Banks and governments rely on that process. The association is financed and run by participants in the industry it oversees.

Madagascar had begun buying domestic gold for a national stockpile. Government records reviewed by the Times traced purchases to Madagold, where the reporter observed children working. Other metal came through intermediaries buying from informal mines.

Istanbul’s auditor filed paperwork claiming the company did no business with mines raising red flags, a declaration that allowed it to avoid inspections.

 

The Times describes what usually happens once the paperwork arrives:

 Normally, once the Turkish refiner filed the paperwork with the L.B.M.A., that would be the end of it. Unless discrepancies surface — from whistle-blowers, journalists or law enforcement authorities, for example — the L.B.M.A. does not typically independently verify that the paperwork matches the reality.

When discrepancies do surface, the refiners seldom face serious consequences.

The newspaper gives examples. An approved refiner received illegally mined Amazon gold and blamed its supplier; the LBMA took no action. After an Australian refiner bought gold tied to child labour and other abuses in Papua New Guinea, the association blacklisted the auditor and required management improvements. The refiner’s gold kept selling.

In 2021, the Times reports, the LBMA learned that Istanbul Gold Refinery had received gold originating from small-scale mines in Mauritania without disclosing it or reporting inspections. The association found that no rules had been broken.

Gold Scandal Breaks Wide Open https://t.co/uA7VRyhFqn

— VBL’s Ghost (@Sorenthek) October 22, 2026

In Madagascar’s case, an EU inspector asked how a refinery could process the country’s gold while reporting no red flags. The LBMA referred the problem to a compliance panel that included chief executive Ruth Crowell.

 

According to the Times:

Association officials worked with the Istanbul Gold Refinery’s auditor to create a new report that made it seem like the refiner had disclosed the red flags from the beginning and had taken steps to scrutinize the supply chain, according to documents and the refiner.

The second report acknowledged that the company bought gold that originated in small-scale, red flag operations. But the report concluded that the mines “do not use child labor.”

The report was backdated, as if it had been filed in real time.

That backdated report remains on the L.B.M.A.’s website, with no indication of any alterations. The document serves as proof that Istanbul Gold Refinery processed only gold that had no connection to child labor or other abuses — claims that are undercut by what I saw in the mines.