Banks and investors are failing to adequately screen for illegal mining risks even when operating in sectors highly exposed to the trade, according to a report by the World Wide Fund for Nature and financial-crime risk platform Themis that was reviewed by Reuters.

The study, based on a survey of 647 financial institutions across 22 countries, found that about 40 percent of respondents do not check for illegal mining risks in their due diligence, despite 84 percent operating in at least one high-risk sector, such as transport or transit, Reuters said. 

Banks and investment firms may be exposed to compliance risks through trade finance, lending to mining companies, commodity trading, and investment portfolios, the companies found. 

The report said illegally mined minerals are often shipped overseas in containers, fewer than 2 percent of which are inspected, creating openings for criminal networks to move illicit resources into global supply chains. One survey respondent described clients mislabeling precious stones as “apparel” to avoid audits, illustrating a known loophole.

Illegal mining generates at least $48 billion a year in criminal proceeds and is linked to offenses including environmental and sanctions breaches, money laundering, corruption, tax evasion and terrorist financing, Reuters reported.

The study said rising prices for metals such as copper, gold and silver, along with growing demand for minerals used in electric vehicles and data-center infrastructure, are creating fresh opportunities for illicit extraction networks, according to Reuters.

Last month, El País reported that rising prices of silver have attracted criminal cartels in Mexico and can be tied to recent kidnappings and murders of miners. Since 2017, at least six mines have had to temporarily suspend operations because of violence, the newspaper said. 

Read more at Reuters