The US government issued a 29-page advisory on 27 June warning that the Russian paramilitary organisation, the Wagner Group, and its leader, Yevgeny Prigozhin, are being funded by the illegal gold trade.
The Wagner Group made headlines last weekend when it appeared to be on the verge of overthrowing the government of Russian President Vladimir Putin.
The advisory – issued by the Treasury Department, State Department and several other federal agencies – notes that “the gold sector is critical to the economies and communities of many sub-Saharan African countries”, but adds that there are “numerous risks” associated with the industry, including “conflict and terror financing, money laundering activities, sanctions evasion, human rights and labour abuses, and environmental degradation”.
It says that “U.S. persons and entities involved in the gold sector – whether as miners, traders, refiners, exporters, users, consumers, financial institutions, or otherwise – should carefully consider [these risks] and ensure that they conduct enhanced due diligence to address these risks”.
The Treasury Department’s Office of Foreign Assets Control (OFAC) has sanctioned four gold and precious stones companies it says are linked to the Wagner Group and Prigozhin. (Wagner and Prigozhin are already sanctioned by OFAC).
The four companies are:Midas Resources SARLU, Central African Republic. According to OFAC, Midas is affiliated with Prigozhin and holds several mining concessions and licences for the prospecting and extraction of minerals, metals and precious stones in the Central African Republic (CAR). It also receives most of the output from the country’s Ndassima gold mine, which produces an estimated $1 billion in gold annually.
Diamville SAU, Central African Republic. OFAC alleges that Prigozhin-controlled Diamville sold gold mined in the Central African Republic to companies in Europe and the United Arab Emirates, and that it participated in a scheme to convert CAR gold into US dollars in 2022.
Industrial Resources General Trading, UAE. This industrial goods distributor was named for allegedly purchasing diamonds and gold from Diamville.
Limited Liability Company DM, Russia. Also known as OOO DM, this company participated in Diamville’s scheme to convert CAR gold into US dollars, according to OFAC.
The Wagner Group has a long history of diamond trading in the Central African Republic. The Kimberley Process banned CAR diamonds in 2013, but has allowed diamond shipments from certain “compliant zones” since 2016.
US citizens and companies with a US presence are prohibited from engaging in transactions with companies on the OFAC list, and sanctioned individuals may not conduct business in dollars or own property in the United States.
