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Due Diligence Rules of Gold and Silver Supply Chain
of Shenzhen Point Gold Refining Co., Ltd.
1. Scope of application
The Due Diligence Rules of Gold and Silver Supply Chain are applicable to Shenzhen Point Gold Refining Co., Ltd. and all gold/silver suppliers and gold/silver-related partners who have gold/silver transactions and gold/silver processing with Shenzhen Point Gold Refining Co., Ltd. (including gold/silver manufacturers, middlemen, traders, exporters and transporters.)
2. Internal organizational structure and responsibilities of the Company
2.1 Internal organizational structure of the Company for gold and silver supply chain
Shenzhen Point Gold Refining Co., Ltd. has set a special organization for the due diligence of gold and silver supply chains. The organizational structure is as follows:
2.2 Management system construction and internal organizational responsibility of the Company for gold and silver supply chain
The Company strictly follows the requirements of “establishing strong company management systems” in Step 1 of LBMA Responsible Gold and Silver Guidance and has established strong management systems to ensure the full implementation of supply chain due diligence. The Company has approved and issued a supply chain due diligence policy, which is in line with the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas and extends to environmental and sustainability responsibilities.
The Company has formulated the Supply Chain Due Diligence Management Measures and Supply Chain Due Diligence Management Policy according to the LBMA Responsible Gold (Silver) Guidance stipulating the organizational structure, responsibilities and definition of high-risk areas of supply chain due diligence and developed high-risk supply chain evaluation standards, investigation and handling procedures, transaction monitoring, document preservation, etc.
A set of supply chain traceability systems has been established by the Company to collect and maintain the supply chain information of each batch of products, assign a unique number to each batch of ex-warehouse products, and trace the source through QR code. All suppliers will be subject to credit investigation. After the credit investigation is passed, a contract will be signed to stipulate that the raw materials are legal and meet the requirements of LBMA due diligence policy. With regard to each batch of incoming materials sent by the supplier, the materials shall be provided with in-warehouse sheets indicating the product type, weight, acceptance personnel and the supplier’s signature for confirmation. After smelting, sampling and testing, the standard gold and silver products are finally formed with a unique number and can be traded through the Shanghai Gold Exchange.
The responsibilities of the Compliance Risk Control Director, Compliance Risk Control Officer and Compliance Officer of Department set by the Company are as follows:
2.2.1 Compliance Risk Control Director
Authorized Senior Manager of Shenzhen Point Gold Refining Co., Ltd.: Shi Wei
The Compliance Risk Control Director is responsible for all matters in the gold and silver supply chain, such as supervising the implementation and improvement of supply chain due diligence to ensure that appropriate measures are taken in supply chain transactions and the risk assessment report is submitted.
(1) Have the right to supervise the due diligence process of the gold and silver supply chain and evaluate whether the due diligence is adequately performed. Have the right to request additional documents or information if deemed necessary.
(2) Timely report to the leader in charge of the group if there is a high-risk supply chain or transaction.
(3) Organize training on gold and silver supply chain rules for employees once a year, draft and update gold and silver supply chain rules, and provide accurate information for senior management to fulfill responsibilities.
(4) Assign the Risk Compliance Officer to conduct on-site investigation on important customers and potential high-risk customers at least once a year.
(5) Assist and encourage gold/silver raw material suppliers and gold/silver trading customers to make a commitment to conform to the gold/silver supply chain due diligence rules.
(6) Establish a sound management system and employ an independent third party to audit due diligence practices approved by suppliers.
(7) Take charge of drafting internal LBMA supply chain due diligence management compliance report.
2.2.2 Compliance Risk Control Officer
Authorized Compliance Risk Control Officer of Shenzhen Point Gold Refining Co., Ltd.: Huang Jing
The Compliance Risk Control Officer is responsible for regularly implementing corresponding strategies for identified risks in accordance with the compliance audit process and providing accurate information for the Compliance Risk Control Director to fulfill his/her responsibilities.
(1) Collect and sort out LBMA supply chain-related data and cooperate with the Compliance Risk Control Director to complete the daily compliance report.
(2) Implement the supply chain risk identification and assessment and fulfill the responsibility of relevant personnel related to risk assessment establishment.
(3) Report suggestions and opinions of employees on gold and silver supply chains or any newly identified risks from time to time and put forward their own opinions.
2.2.3 Compliance Officer of Business Department
Authorized Compliance Officer in Business Department of Shenzhen Point Gold Refining Co., Ltd.: Zhuang Qingxiong
The Compliance Officer of Business Department is responsible for collecting and keeping sufficient supporting documents of the supply chain, such as copies of the supplier’s business license, mining license, ID card, gold and silver purchase contracts, supplier’s social responsibility commitment letter, etc.
(1) Take charge of purchasing raw materials to ensure the stability and security of gold/silver raw material supply and refusing to cooperate with relevant enterprises, organizations or countries in high-risk areas.
(2) The Business Department shall confirm the identity information of the free carrier and adopt a supervision mechanism during the transaction to guarantee the security of the transaction and ensure that the Company does not involve terrorist financing.
(3) Assess and identify supply chain risks and report the conditions of supply chain due diligence.
(4) Conduct on-site investigation on important customers (annual supply up to 1000kg) at least once a year;
(5) Assist and encourage spot gold/silver suppliers to commit and confirm in writing to comply with the gold/silver supply chain due diligence rules;
(6) Timely report to Compliance Risk Control Director in case of any abnormal situation.
2.2.4 Financial Compliance Officer
Authorized Compliance Officer in Financial Department of Shenzhen Point Gold Refining Co., Ltd.: Zhang Liping
The Compliance Officer in the Financial Department is responsible for keeping the transaction vouchers of all customers in full.
(1) The Compliance Officer should conduct the financial entry of the in-and-out-of-storage data of the supply chain contract prices, raw material gold/silver and finished gold/silver products, and take care of the filing and recording of relevant invoices and payment vouchers.
(2) The Compliance Officer should prevent corresponding financial risks and report risks (if any) to the Compliance Risk Control Director timely.
(3) The Compliance Officer should regularly check the in-and-out-of-storage inventory of gold and silver materials for the Production Workshop and the incoming and outgoing warehouse of the Company. Before the official inventory by financial personnel at the end of each month, the incoming and outgoing warehouse managers must carry out pre-inventory of gold and silver materials in stock. After the inventory by financial personnel every month, warehouse managers are required to issue the inventory reconciliation statement with the statistical clerk at the end of each month and prepare the inventory lists.
(4) Transaction vouchers include but are not limited to: in-and-out-of-storage sheet and relevant legal qualification proof of customers, etc. The records must be kept for at least 5 accounting years.
2.2.5 Logistical Compliance Officer
Authorized Logistical Compliance Officer of Shenzhen Point Gold Refining Co., Ltd.: Liu Bin
The Logistical Compliance Officer is responsible for selecting transport companies and insurance companies meeting the gold and silver transport qualification requirements.
(1) A supply chain tracing system should be established and the supply chain information of all incoming batches should be collected and maintained, including the allocation of the independent reference number for all inputs and outputs:
a) Tracing up of gold/silver products (gold/silver - raw materials)
-- Gold/silver-containing material type (mineral gold/silver, renewable gold/silver);
--Storing weight and analysis reports;
-Raw material storing date and finished product storing date
b) Tracing down of gold/silver products (gold/silver-customers)
-Transaction weight and analysis reports;
(2) The shipping documents and insurance policies of all incoming batches should be kept as specified and the shipping documents should be traced with the transport route of the transport company or insurance company determined;
(3) Any abnormalities (if any) must be reported to the Compliance Risk Control Director timely.
2.2.6 Compliance Officer of General Affairs Department
Authorized Compliance Officer in General Affairs Department of Shenzhen Point Gold Refining Co., Ltd.: Yang Ruai
The Compliance Officer is responsible for incoming management, collecting opinions from various departments and the staff, sorting and collecting relevant data.
2.2.7 Compliance Officer of Testing Department
Authorized Compliance Officer in Testing Department of Shenzhen Point Gold Refining Co., Ltd.: Lin Yuhang
The Compliance Officer is responsible for testing all incoming materials and manufactured samples, guaranteeing the timeliness and accuracy of the test and keeping test documents well.
3. High-risk gold and silver supply chain evaluation criteria
3.1 Precautions for high-risk gold and silver supply chains
1. Systematic or widespread abuses of human rights related to gold/silver mining, transport and transaction, forced labor, child labor, torture, inhuman and degrading treatment;
2. War crimes, violations of international human rights laws, crimes related to human rights or ethnic cleansing;
3. Purchasing precious metals or assistance for direct or indirect support for non-governmental armed groups, public or private security forces (refer to definitions in the Gold and Silver Appendix to OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas);
4. Acquisition of gold or silver through bribery or concealing the origin of gold or silver;
5. Purchasing precious metals from areas with money laundering or inherent high risks or areas of conflict;
6. Existence of terrorist financing;
7. Existence of intensified conflicts;
8. Utilization of mercury production for mining gold;
9. Possibility of violating legal requirements concerning environmental protection and sustainable development, gold mining from world heritage sites or domestic ecological natural reserves;
10. Existence of soil erosion, water and soil loss, land desertification, land subsidence, collapse, mountain collapse, landslide, debris flow and other geological disasters arising from the development of mineral resources;
11. Existence of water, soil and air pollution due to waste residues, wastewater and water gas, destruction of wild animal and plant resources and natural geomorphological landforms, citizens’ health endangered and property loss.
3.2 High-risk gold and silver supply chain classification criteria
1. Mineral silver or renewable silver originates from, is transferred via or passes areas impacted by conflicts or with high risks of human rights abuse.
2. Mineral gold and silver are said to originate from a country that is known or expected with limited reservoirs or yield.
3. Renewable gold and silver originate from known areas impacted by conflicts and with high risks of human rights abuse, or are reasonably suspected to be transferred via such areas.
4. Companies on the gold and silver supply chains or other known upstream companies are located in a country with high risks of money laundering, crimes and corruption.
5. The beneficiaries of companies on the gold and silver supply chains or other known upstream companies are politically sensitive.
6. Companies on the gold and silver supply chains or other known upstream companies are actively involved in high-risk business activities, e.g., weapons, gambling, gaming industry, antiques, artworks, diamonds, religion and religious leaders.
7. Companies on the gold and silver supply chains or other known upstream companies infringed the rights of employees and violated environmental protection and other laws and regulations, etc.
3.3 Internal class rating of companies on gold and silver supply chains
Risk value (R)
(i) Low risk
Continue transactions to reduce risks
(ii) Medium risk
2 points＜R＜6 points
Suspend transactions to reduce risks
(iii) High risk
Cease transactions to reduce risks
Risk Level Scores
Business counterparty (including banks)
1.1 Relevant business license, etc.
1.2 Relevant beneficiary
1.3 Identity documents of the beneficiary
1.4 Relevant business relations
1.5 Financial conditions
1.6 Gold/silver origin data, etc.
2.1 Proof showing the rationality of goodwill of efforts to identify the origin of gold or silver
2.2 Mining permit
2.3 Gold/silver import/export license
2.4 Mining information
2.5 Data related to mining capacity
(Including natural persons)
3.1 Qualification information of renewable gold and silver suppliers
3.2 Business relations of renewable gold and silver suppliers
3.3 Proof of origin of gold/silver by renewable gold and silver suppliers
3.4 Description of the relevant beneficiary’s background information of renewable gold and silver suppliers
3.5 Relevant beneficiary’s identity documents of renewable gold and silver suppliers
4. Provisions on due diligence of gold and silver supply chain
4.1 Due diligence measures of gold and silver supply chain
The Company shall establish corresponding due diligence measures for gold and silver supply chain for all gold and silver suppliers and gold and silver related partners engaged in gold and silver transactions and gold and silver processing, and clearly inform them at the time of transaction. The due diligence measures of gold and silver supply chain mainly include:
1. Establish supply chain customer files, including: name, legal representative, address, contact information, operation mode, transaction contract, etc.
2. Check the existing supply chain customers regularly. Check the archives in time and update the archives database if there are new and changed customers.
3. Ensure that each customer in the supply chain is not on any government’s money laundering, fraud or terrorism wanted list.
4. Regularly obtain information on the operation status (including commercial and financial details) and transaction purpose of supply chain customers.
4.2 Mineral gold and silver customers
For customers of mineral gold and silver, it is needed to pay attention to the following problems and inform customers at the same time:
1. Obtain origin information of gold and silver;
2. Provide mining license;
3. Provide import/export licenses for gold and silver;
4. Provide evidence of mining information, including whether human rights are violated, whether illegal operations are carried out, etc.;
5. Mining capacity data;
6. The Company will continue to conduct due diligence on mineral gold and silver customers.
4.3 Gold and silver customers from artisanal mines and small mines
For gold and silver customers from artisanal mines and small mines, it is needed to pay attention to the following problems and inform customers at the same time during transaction:
1. Whether the manual/small mine is legal; Provide relevant qualification certificates;
2. When gold and silver do not come from legal manual/small mines, the Company will take safeguard measures (such as refusing to purchase from them or suspending or interrupting their contacts immediately, and then dealing with them when they become legal);
3. The Company will continuously conduct due diligence on manual/small mine customers.
4.4 Customers of recycled gold and silver
For customers of recycled gold and silver, it is needed to pay attention to the following problems and inform customers at the same time:
1. Customers of recycled gold and silver shall provide legal business relations, including: certificate of source of recycled gold and silver, certificate of beneficiary, etc.;
2. The Company will continue to conduct due diligence on customers of recycled gold and silver.
4.5 Handling steps for high-risk situations
Judging from the risk level, the Company will take the following steps to deal with high-risk situations:
1. On-site investigation/visit to high-risk supply chain to confirm the findings recorded in the supply chain due diligence document.
2. For gold and silver mined on a large scale: Documents, data and information from credible and independent sources are used to verify the situation. From mines to refineries, the income owners and government monitoring list information of every company in the supply chain (including gold and silver producers, intermediaries, traders, exporters and transporters) are required to be verified.
3. For gold and silver mined by manual/small-scale mines: Documents, data and information from reliable independent sources are used to verify the situation. From gold and silver exporters to refineries, the income owner and government monitoring list information of every company in the supply chain (including international gold, silver dealers and transporters) are required to be verified.
4. For the recycled gold and silver: Documents, data and information from credible and independent sources are used to verify the situation. From the gold and silver suppliers to the refineries, the income owners and government monitoring list information of each company in the supply chain (including transporters) are required to be verified.
5. Gold and silver supply chain transaction monitoring
The Company will always review and supervise the process of transaction correlation to ensure that the understanding of supply chain and risk prediction is consistent during transaction. The supervision of transactions is carried out using a risk-based approach.
Therefore, the Company obtains and records the following information for each batch of gold and silver received:
5.1 Primary gold and silver
1. Estimated weight and test results (from the supplier).
2. Freight/shipping documents (freight/air waybill, proforma invoice).
3. Import and export forms for high-risk transactions.
5.2 Recycled gold and silver
1. Estimated weight (from the supplier).
2. Freight/shipping documents (freight/air waybill, proforma invoice).
3. In case of high-risk transaction of recycled gold and silver, the Company must require customers to provide corresponding documents for mutual confirmation, verify whether the documents are true and consistent, and conduct transaction background investigation. In case of inconsistency, it is necessary to conduct investigation and obtain written investigation results.
The Compliance Officer of each department shall submit the risk assessment report to the Compliance Risk Control Officer every year, and the Compliance Risk Control Officer shall submit the summarized risk assessment report to the Compliance Risk Control Director.
The Compliance Risk Control Director and senior management of the Company approve each supply chain assessed as high risk through risk assessment, and re-decide whether to continue to maintain business relationship with it every year.
6. Retention of due diligence documents and records of gold and silver supply chain
The Company shall keep sufficient supporting documents and records of the supply chain, judge the risk according to the standards of the supply chain due diligence system, and prove that the due diligence has been fully and continuously completed. Records shall be kept for at least 5 fiscal years.
7. Gold and silver supply chain due diligence training
The Company will train all employees in the gold and silver supply chain on the rules every year. In addition, it is needed to incorporate the training plan into the Company’s annual training plan.
7.1 Training requirements
All employees must attend and confirm relevant training in the form of training sign-in.
7.2 Training methods
Internal training and explanation are adopted. The lecturer is designated by the Compliance Risk Control Director and arranged by the Human Resources Department.
7.3 Training feedback
After the training, the grass-roots managers shall check the training effect. It is needed to check the non-compliance and conduct retraining. The retraining list shall be provided by grass-roots managers.
7.4 Training files
After training, corresponding training files shall be established. Records shall be kept for at least 5 fiscal years.
8. Gold and silver supply chain violation complaint communication mechanism
All internal gold and silver supply chain related staff of the Company shall timely appeal by email and telephone to the compliance officers of their respective sectors. If they find violations, and then the Compliance Risk Control Officer shall appeal by email and telephone to the Compliance Risk Control Director.
Compliance Risk Control Director
Compliance Risk Control Officer
Compliance Officer of Business Department
Compliance Officer of Financial Department
Compliance Officer of Logistics Department
Compliance Officer of General Affairs Department
Compliance Officer of Testing Department
Shenzhen Point Gold Refining Co., Ltd.
Human Resources Department
January 8, 2020