The U.S. government issued a 29-page advisory on June 27 warning that Russian paramilitary organization the Wagner Group and its leader, Yevgeny Prigozhin, are being funded by illicit gold trading.
The Wagner Group made headlines last weekend when it appeared momentarily poised to overthrow the government of Russian president Vladimir Putin.
The advisory—issued by the Treasury Department, the State Department, and several other federal agencies—notes, “The gold sector is critical to the economies and communities of many sub-Saharan African countries,” but adds there are “numerous risks” connected to the industry, including “conflict and terror financing, money laundering activities, sanctions evasion, human rights and labor rights abuses, and environmental degradation.”
It says that “U.S. individuals and entities engaged with the gold sector—whether as miners, traders, refiners, exporters, users, consumers, financial institutions, or otherwise—should carefully review [these risks] and ensure they conduct enhanced due diligence to address these risks.”
The Treasury Department’s Office of Foreign Assets Control (OFAC) sanctioned four gold and gem companies it says are connected to the Wagner Group and Prigozhin. (Wagner and Prigozhin are already under OFAC sanctions.)
The four companies are:
Midas Resources SARLU, Central African Republic. According to OFAC, Midas is linked to Prigozhin and owns several mining concessions and licenses for prospecting and extracting minerals, metals, and gems in the Central African Republic (CAR). It also receives the majority of the output from the nation’s Ndassima gold mine, which produces an estimated $1 billion in gold annually.
Diamville SAU, Central African Republic. OFAC claims that Prigozhin-controlled Diamville has sold gold mined in the Central African Republic to companies in Europe and the United Arab Emirates, and that in 2022 it participated in a scheme to convert CAR gold into U.S. dollars.
Industrial Resources General Trading, United Arab Emirates. This industrial goods distributor was cited for allegedly purchasing diamonds and gold from Diamville.
Limited Liability Company DM, Russia. Also called OOO DM, this firm participated in Diamville’s scheme to convert CAR gold into U.S. dollars, according to OFAC.
The Wagner Group has long been active in the diamond trade in the Central African Republic. The Kimberley Process banned CAR diamonds in 2013 but has allowed diamond shipments from specified “compliant zones” since 2016.
U.S. citizens and companies with a U.S. presence are forbidden from conducting transactions with companies on the OFAC roster, and sanctioned individuals are not allowed to do business in dollars or own property in the United States.
The OFAC statement can be seen here.
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