While made of real gold, these bars carry reproductions of hallmarks of renowned manufacturers and forged serial numbers. These bars are used in order to avoid rules to prevent money laundering and trade in conflict minerals.
Counterfeit kilobars are a growing problem in the gold bullion industry. High gold prices in recent years have incentivized illegal gold mining activities in places like Africa, Venezuela and North Korea. And to make this gold easier to move on the global market, they now come with hallmarks from major refiners and are ending up in vaults worldwide.
Since 2016, at least 1,000 kilobars, totaling $50 million, made to look like they have been produced at one of Switzerland's leading refineries have been found in the vaults of J.P. Morgan Chase & Co., «Reuters» reported, citing industry sources. Thousands more counterfeit kilobars are likely in circulation and going undetected, given the advanced nature of these forgeries, the head of Switzerland's largest refinery told «Reuters.»
The publication said that industry executives think most of the pirated bars originate in China and enter the market through dealers and trading houses in Hong Kong, Japan and Thailand. However, a Shanghai Gold Exchange executive told «Reuters» it was unaware of such gold being made or moved through China, and that gold entering its warehouse is strictly managed.
Trusted Hallmarks
According to the news wire, The gold industry as a whole produces 2 million to 2.5 million kilobars per year, and Switzerland's «Big 4» refineries – Valcambi, PAMP, Argor-Heraeus and Metalor – process 2,000-2,500 tonnes of gold a year, worth around $100 billion.
Their hallmarks are among the most trusted worldwide, mainly because they are London Bullion Market Association (LBMA) accredited refiners.
Major world refiners are on LBMA Good Delivery List, which means their bars have been accredited by LBMA as meeting the exacting standards for trading on the global OTC market, and the refiner has implemented LBMA Responsible Gold Guidance, which includes measures to combat money laundering, terrorist financing and human rights abuses globally.
