Policies & Issues

U.S. Sanctions Gold Cos. Allegedly Tied to Russian Mercenary Group

Policies & IssuesJun 29, 2023

U.S. Sanctions Gold Cos. Allegedly Tied to Russian Mercenary Group

OFAC sanctioned four companies it claims are helping fund the Wagner Group, the organization that just attempted a coup in Russia.

Stock photo of gold bars
On Tuesday, the U.S. Treasury Department announced sanctions against Midas Resources SARLU, Diamville SAU, Industrial Resources General Trading, Limited Liability Company DM, and Andrey Nikolayevich Ivanov. The department alleges these four companies and one individual are involved in illicit gold dealings that help fund the Wagner Group. (Stock photo)
Washington, D.C.—The U.S. Treasury Department’s Office of Foreign Assets Control has announced sanctions against four gold companies it says are connected to Russia’s Wagner Group and its leader, Yevgeniy Prigozhin.

The Wagner Group is a government-backed network of mercenaries (fighters for hire) that has been heavily involved in Russia’s invasion of Ukraine, including the capture of the city of Bakhmut in eastern Ukraine.

In recent months, though, the relationship between Prigozhin and the Russian government has soured, with Prigozhin accusing the country’s military leadership of incompetence and claiming they were withholding ammunition from his fighters.

On Saturday, the Wagner Group staged an insurrection that was quickly de-escalated but has raised questions about Russian President Vladimir Putin’s ability to hold onto power.

Prigozhin and the Wagner Group already are under U.S. sanction.

On Tuesday, OFAC announced sanctions against four companies and one individual it claims are involved in illicit gold dealings that fund the Wagner Group. 

They are: 
— Midas Resources SARLU, a company based in the Central African Republic that is affiliated with Prigozhin and has mining concessions and licenses for sites where precious metals and gemstones are mined; 
— Diamville SAU, another CAR-based company controlled by Prigozhin; 
— Industrial Resources General Trading, a Dubai, United Arab Emirates-based industrial goods distributor that allegedly has provided financial support to Prigozhin through its business dealings with Diamville; and
— Limited Liability Company DM (also known as OOO DM), a Russia-based firm that allegedly participated in a gold selling scheme.

OFAC also sanctioned one individual, Andrey Nikolayevich Ivanov, a Russian national it says is an executive in the Wagner Group. 

“The Wagner Group funds its brutal operations in part by exploiting natural resources in countries like the Central African Republic and Mali,” said Brian E. Nelson, the Treasury Department’s undersecretary for Terrorism and Financial Intelligence. 

“The United States will continue to target the Wagner Group’s revenue streams to degrade its expansion and violence in Africa, Ukraine, and anywhere else.”

 Related stories will be right here … 

The U.S. Treasury Department announced the sanctions the same day a group of federal agencies, including the State Department and the Department of Homeland Security, published a lengthy advisory on gold from sub-Saharan Africa that U.S. State Department’s Brad Brooks-Rubin described as “unique.”

Available to read in full online, the alert calls attention to the “increasingly concerning reporting” on illicit actors, like the Wagner Group, exploiting weaknesses in the gold supply chain across sub-Saharan Africa to finance their activities.

Industry participants, “should be prepared for increased U.S. government attention to the relationship between gold and these groups’ revenue streams and should be prepared for the possibility that U.S. sanctions could be used to disrupt these groups’ operations,” the alert states.

It notes the importance of companies doing their due diligence when it comes to sourcing gold and reporting publicly on their efforts whenever possible.

The alert also calls on U.S. individuals and entities that are involved in the gold trade to support responsible investment in both large-scale gold mining operations in Africa as well as its artisanal and small-scale gold mining sector (ASGM), which employs an estimated 10 million to 25 million people.

The advisory includes a list of three non-governmental organizations working to improve Africa’s ASGM sector and the lives of the people who depend on it.

They are: Impact (formerly Partnership Africa Canada), an NGO that specializes in artisanal and small-scale mining in Africa; the Alliance for Responsible Mining, which works to better the lives of artisanal and small-scale miners worldwide through capacity building and improved market access; and the Artisanal Gold Council, which focuses on training, education, and capacity-building programs, as well as guiding sector governance. 

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