Preventing Fraud in African Gold Trading: The Importance of Due Diligence and Secure Transactions
Quote from chief_editor on September 14, 2023, 11:08 am"Africa is a beautiful continent with numerous business opportunities, but we often hear about scams and schemes related to gold trading from Africa. These scams are becoming increasingly common, and while victims take remedial actions, it's often too late.
Although we know that Africa has a substantial export volume of gold, most of it comes from established mining companies.
Recently, some typical scams have originated from countries like Zambia, Congo, Tanzania, Kenya, and Ghana. These traps may not necessarily cause financial losses but can waste a lot of your time. Every businessperson must acknowledge that time is money.
Fraudsters from Africa falsely claim to have licenses or mining rights to certain lands or regions in their home countries. To secure an upfront payment, these scammers often offer prices that are significantly lower (usually less than 30%) than the prevailing market rates on the London Metal Exchange (LME). However, buyers are required to pay for their export permits and export taxes. If a supplier offers a discount of 10-30% on gold, it is highly likely to be a scam.
In some cases we are aware of, scammers invite customers to inspect the goods at their hotels in their country/region. The inspection location is not their company premises, and you have no way of knowing if they are company employees or have any presence in the mining areas or refining facilities. They simply claim to be the owners of a well-known company and pretend that the company belongs to them. These deceptive tactics can be quite elaborate.
For such high-risk transactions where sensitivity is paramount, we recommend verifying the identity of the agent within the framework of due diligence. Another crucial aspect is who will verify the authenticity of the gold. While XRF gold testing devices are available, they are expensive, comparable in price to a new car. The ideal scenario is for the supplier to send the gold to a refining facility designated by the buyer for testing and verification of purity before payment is made. Additionally, if a supplier cannot provide details or references from their own clients or claims to have been selling gold worldwide for several years but cannot produce any documentation, this is a clear red flag.
When asked reasonable key questions (such as mining rights, client information, reference letters, past export delivery certificates), a dishonest supplier will become agitated, impatient, and emotional. They often use accusations of mistrust or racism as excuses. Honest and professional suppliers will readily provide the necessary transparency. We do not recommend making payments to the supplier before the authenticity and purity of the gold have been verified by your designated refining facility in your region or country. You can have a law firm handle the payment, inspect the gold at your specified refining facility, and release the payment to the selling party once the gold's authenticity and purity have been verified."
"Africa is a beautiful continent with numerous business opportunities, but we often hear about scams and schemes related to gold trading from Africa. These scams are becoming increasingly common, and while victims take remedial actions, it's often too late.
Although we know that Africa has a substantial export volume of gold, most of it comes from established mining companies.
Recently, some typical scams have originated from countries like Zambia, Congo, Tanzania, Kenya, and Ghana. These traps may not necessarily cause financial losses but can waste a lot of your time. Every businessperson must acknowledge that time is money.
Fraudsters from Africa falsely claim to have licenses or mining rights to certain lands or regions in their home countries. To secure an upfront payment, these scammers often offer prices that are significantly lower (usually less than 30%) than the prevailing market rates on the London Metal Exchange (LME). However, buyers are required to pay for their export permits and export taxes. If a supplier offers a discount of 10-30% on gold, it is highly likely to be a scam.
In some cases we are aware of, scammers invite customers to inspect the goods at their hotels in their country/region. The inspection location is not their company premises, and you have no way of knowing if they are company employees or have any presence in the mining areas or refining facilities. They simply claim to be the owners of a well-known company and pretend that the company belongs to them. These deceptive tactics can be quite elaborate.
For such high-risk transactions where sensitivity is paramount, we recommend verifying the identity of the agent within the framework of due diligence. Another crucial aspect is who will verify the authenticity of the gold. While XRF gold testing devices are available, they are expensive, comparable in price to a new car. The ideal scenario is for the supplier to send the gold to a refining facility designated by the buyer for testing and verification of purity before payment is made. Additionally, if a supplier cannot provide details or references from their own clients or claims to have been selling gold worldwide for several years but cannot produce any documentation, this is a clear red flag.
When asked reasonable key questions (such as mining rights, client information, reference letters, past export delivery certificates), a dishonest supplier will become agitated, impatient, and emotional. They often use accusations of mistrust or racism as excuses. Honest and professional suppliers will readily provide the necessary transparency. We do not recommend making payments to the supplier before the authenticity and purity of the gold have been verified by your designated refining facility in your region or country. You can have a law firm handle the payment, inspect the gold at your specified refining facility, and release the payment to the selling party once the gold's authenticity and purity have been verified."