LBMA Responsible Gold Guidance - Summary Assessment Report For third-party audits based on ISO19011:2011.

Transcription

1 LBMA Responsible Gold Guidance - Summary Assessment Report For third-party audits based on ISO19011:2011. Prepared for: London Bullion Market Association (LBMA) Date: 28 March May 2017 Draft Version 2

2 ASSESSMENT INFORMATION Refiner Name: Republic Metals Corporation Refiner Location: NW 38 th Ave, Miami, FL Refiner Person: Name, Title: Phone: Assessment period: Contact ASSESSMENT CONCLUSIONS Richard Lani- Compliance Officer January 1, 2016 to December 31, 2016 Non compliance risk level CATEGORY SUBCATEGORY Compliant Low Medium High General Information Zero Tolerance Step 1: Establish strong Refiner management systems 1.1 X 1.2: X 1.3 X 1.4 X Step 2: Identify and assess risk in the supply chain Step 3: Design and implement a management strategy to respond to identified risks Step 4: Arrange for an independent thirdparty audit of the supply chain due diligence Step 5: Report on supply chain due diligence 1.5 X 2.1 X 2.2 X 2.3 X 3.1 X 3.2 X 4.1 X 5.1 X Based on the above assessment conclusions, X Non Compliance risk level Compliant Low Medium High Zero Tolerance May 9, 2017 Page 2 of 7

3 the overall rating of the Refiner s performance is determined to represent: Assessment scope: Refiner location(s) included in the assessment scope Republic Metals Corporation NW 38th Ave Miami, FL USA Assessment Period Assessment methodology: 4T The auditor used a triangulation of findings to evaluate the existence and implementation of appropriate systems at the Refiner, addressing all areas covered by the LBMA Responsible Gold Guidance. Each area of the LBMA Responsible Gold Guidance was verified by documentation review and management/employee interviews, as well as observation during the facility tour. The evidence of compliance that was reviewed included: The following areas of the facility were visited during the tour: Refinery, including Receiving/Weigh In, Vault The following interviews were conducted with management: Jason Rubin- President/ CEO Richard Lani- Compliance Director Luis Pena- Global Sales Director Zack Shair- Production/Refinery Director Sean Giesler- Vault and Receiving/Shipping Manager The following interviews with employees were conducted: Compliance Analysts Receiving Weigh In Refining The assessment team took into account all relevant objective evidence provided by the Refiner. Relevant evidence was either qualitative or quantitative in as far as it is appropriate and sufficient to support the assessment team s conclusions. Appropriate evidence is evidence that is relevant and reliable. Sufficient evidence refers to the amount of evidence provided to allow the assessment team to reach a conclusion. All actual or potential gaps in the Refiner s systems in regards to the LBMA requirements are rated in accordance to the level of risk each presents to the credibility and integrity of the LBMA Responsible Gold Program for the responsible sourcing of gold-bearing materials Any significant or inherent limitations or areas not covered that were within the assessment scope: 4T There were no significant or inherent limitations or areas not covered within the assessment scope based on the LBMA audit guidelines. It is noted that high risk transactions and files were selected as per what it is currently displayed in the system. The system does not have the capability to generate a report indicating the risk level of the accounts last year, only current risk and last review date. No electronic historical data, just in the file. May 9, 2017 Page 3 of 7

4 24 transactions selected were not reviewed due to time constraints. No transaction non-conformances were noted in the sample reviewed, including the sample of transactions from high risk suppliers as per refiner determination. Assessment summary: 4T A full assessment audit of Republic Metals Corporation was conducted March 9 and 10, A total of 4 man-days were spent conducting the onsite systems reviews. On March 7, 2017, and additional 0.5 mandays were spent in Opening Meeting and facility walkthrough however these activities were shared with Opening Meeting and Walkthrough activities of the RJC CoP and CoC audits carried out by the same audit team on March 7 and 8, During the opening meeting, the audit team met with Compliance Director, Sr. Compliance Analyst, Security Director, Supervisor of Operations, Secretary and Head of Internal Audit. Other members of the team were present however their contributions were more closely related to the RJC Audit. The assessment process was explained. Additional key personnel was interviewed during the walkthrough for verification of implementation of LBMA RGG and refiner s procedures. Areas and activities reviewed during the walkthrough included receiving, weigh in, lot assignment, inventory management, refining, sampling/ assaying and minting. Supplier risk assessment, onboarding procedures, documentation request and follow up process as well as transaction documentation procedures were assessed. During the period from 1/1/2016 through 12/31/2016, supplier make up was as follows: Industrial Mining Operations: 14% Recycled Materials/ Collectors: 84% Industrial Scrap Providers: 1% Aggregators: 1% As reported by the refiner and confirmed through sampling of supplier files, the refiner is eliminating the use of aggregators. A sample of 2 aggregator s files are requested and it indicates that business relationship has ended as of early to mid Out of the GSC for the period, 7.4% are classified as high risk at the time of the verification audit. The facility specializes in the refining of precious metals. Gold inputs include: Mining Dore Au/Ag, mining precipitates, gold scrap in jewelry and bar form (secondary), silver scrap containing gold in bar and jewelry form. The refiner currently holds a number of certifications, including: RJC CoP Certification RJC CoC Certification ISO 9001: 2015 ISO 14001:2015 The refiner has undertaken a corrective action plan to address noted deficiencies within 30 days. Step 1 The refiner has put in place a gold supply chain policy in accordance with LBMA standards. The policy, which was last updated in October 2015, is publicly available at: May 9, 2017 Page 4 of 7

5 The refiner has assigned responsibilities for implementation of the policy, with overall responsibility under CEO and individual responsibilities at the different levels of the organization, including Compliance Department. Employees have received communication in the policy and department SOPs drafted such as to ensure that the procedures are embedded into day-to-day operations. Specialized training with focus on anti-money laundering is also provided on an annual basis to applicable personnel. Compliance department may be reached confidentially to report any issues or concerns. The refiner has communicated the gold supply chain policy to suppliers and as of 2016, suppliers are required to accept the terms of the policy by signing and acknowledging the policy. Step 2 The refiner has developed a comprehensive risk matrix that takes into consideration 37 different elements to assign a numerical risk to the GSC. The numerical risk is translated into low, medium or high risk. The refiner takes into consideration higher risk activities and it is reflected in the refiner s risk matrix, however, it is noted that, all else being equal, the risk assigned to these activities currently is equal or less than 10, therefore it would not prompt the supplier as High Risk as per matrix. This was raised as a nonconformance and found to be addressed and closed during desktop review. In the past the Compliance Director was responsible for the ultimately approval of new GSC and CEO was responsible for approval of GSCs identified as high risk. Starting in 2016, the refiner has put new procedures in place, where a Committee has been developed, including Director of Compliance, Secretary, CEO, Finance/Accounting, where accounts are reviewed based on matrix and diligence conducted by Compliance department and approval based on members vote, with final sign off for high risk account by CEO. A scheduled account review is conducted with timeframe depending on risk, ranging from 24 months for low risk and 9 months for high risk. Instances of account closure/ denial based on risk/ lack of documentation are observed. Instances of lapse in account review are noted during annual audit however found to be addressed and closed during desktop review. The refiner has an application process where information is requested from GSC. In addition, GSC specific research and inquiries are conducted by compliance department on cause. The GSC is also communicated the refiner gold supply chain policy, which the GSC signs agreeing to abide by the policy statement. While the combination of information requested by the refiner, additional information gathered and policy statements that the GSC must abide by correspond with the LBMA RGG requirements, recommendations for the consistent gathering/ request to better align with the Best Practice Toolkit/ RGG Questionnaire were made to the refiner. While evidence of document request and follow up are observed, instances of missing documentation from GSC are noted as non-conformances. During desktop review, evidences of pending licenses and permits are reviewed and changes have been made to application in order to align more closely to Best Practice Toolkit/ RGG Questionnaire. The refiner has proceeded to send Wolfsberg Anti-Money Laundering Questionnaire request sent to foreign suppliers. Nonconformances under this section are addressed and closed during desktop review. The refiner has conducted onsite visits of some suppliers, including high risk suppliers. However, not all high risk suppliers have undergone a site visit. While no use of subcontractors is reported, the refiner may source scrap from other refining counterparties. No site visits have been conducted to verify these counterparties practices. During desktop review, it is verified that refiner has conducted onsite visit of pending high risk suppliers. The refiner has proceeded to conduct site visits of scrap suppliers. This is found to be addressed and closed during the desktop review. Step 3 The refiner has implemented a risk mitigation strategy, which is embedded in in AML, Compliance and Supply Chain procedures. Additional diligences may be conducted and accounts have been closed due to individual risk. The refiner also evaluates risk associated with supplier type and/or specific countries. As a May 9, 2017 Page 5 of 7

6 result of these evaluations, the refiner has worked to eliminate the use of aggregators as GSCs and sources from specific countries. While weigh in personnel reports that materials have been temporarily held until all necessary documentation has been provided, no instances of non-conforming materials identified are reported. Since the last annual assessment, the refiner has permanently relocated one of the three compliance analysis to work with receiving personnel to eliminate gaps in transactional documentation and support in the identification and mitigation of potential risks. Step 4 The refiner has undergone annual audits as per LBMA guidance. Step 5 Audit report is publicly available in the refiner website: May 9, 2017 Page 6 of 7

7 The Auditors confirm that: The information provided by the Refiner is true and accurate to the best knowledge of the Auditor(s) preparing this report. The findings are based on verified Objective Evidence relevant to the time period for the assessment, traceable and unambiguous. The Auditor(s) have acted in a manner deemed ethical, truthful, accurate professional, independent and objective. The Auditor(s) are properly qualified to carry out the assessment at this Refiner s facility. Lead Auditor: Sheer Garcia Signature: (on file) Date: March 28, 2017 May 5, 2017 (Desktop Review) May 9, 2017 Page 7 of 7