PF carries out operation against gold extraction in illegal mining – 02/15/2023 – Market

This Wednesday (15th) the Federal Police launched an operation against a gang accused of smuggling gold extracted from illegal mines in the Amazon region.

Target of investigation, a company headquartered in the United States would be primarily responsible for clandestine export, according to the PF. The company’s name was not disclosed.

According to the investigation, the group used cold bills to “heat” the exploited ore, that is, to falsify a legal origin. From the beginning of 2020 to the end of 2022, the issuance of these documents would have been in excess of BRL 4 billion, corresponding to approximately 13 tons of illicit gold.

Three arrest warrants and 27 search and seizure warrants are served in Belém, Santarém and Itaituba, all in Pará, Rio de Janeiro (RJ), Brasília (DF), Goiânia (GO), Manaus (AM), São Paulo, Tatuí and Campinas, in São Paulo, in addition to Sinop (MT) and Boa Vista (RR).

Judicial authorization is also fulfilled for the kidnapping of more than R$ 2 billion from those investigated.

How the illegal gold mining scheme works

The essential item for registering the mined gold is the presentation of the PLG (Mining Permission), granted by the ANM (National Mining Agency). A good part of the PLGs used in the registration of illegal gold are borrowed. The clandestine uses the permission of a legal area, in conjunction with its owner or employee, when he needs to heat the gold.

It is also possible, with some ease, to issue the document of a ghost mine, as they say, in an area where there is no gold. Or, still, get a registration to operate a place where the ore has already been extracted, but nothing is left, with the argument that there is still gold.

The ANM requests geological reports, but does not carry out a due diligence on the site, in part, due to lack of structure. For years, professionals in the mining area have warned against the scrapping of the agency.

The key link in the chain that heats up the precious metal is the first officially registered buyer. Most of the gold that circulates in the country ends up becoming a financial asset, and for a simple reason: the tax is lower in this category. So, it needs to be sold to a financial institution authorized to operate by BC (Central Bank). The majority in this segment is DTVM (Distributor of Titles and Securities).

In this establishment, the prospector enters with a PLG and leaves with the invoice. One of the best-known places with the structure to legalize ore in the Amazon is the city of Itaituba, in Pará, where branches of these financial institutions are located.

In this process, the PLG is usually accompanied by a “good faith” declaration, guaranteeing that that document tells the truth. Officially, the file exempts DTVM from the responsibility of checking the veracity.

The use of good faith in a crime-prone business is a recent creation of deputies and senators. It was instituted in 2013, thanks to an amendment inserted in a bill that dealt with insurance for agricultural crops.

There is a lawsuit in the STF (Federal Supreme Court) that tries to overthrow good faith, and two bills are being discussed in Congress with proposals to change the legislation, including the creation of a system to track gold. But everything goes slowly.

There is no organized mining bench in Congress. However, there are deputies and senators linked to the activity. Survey of Sheet indicated that at least eight parliamentarians who secured mandates in the 2022 election have connections with mineral extraction, including mining.

Regulatory bodies in the financial area find it difficult to question suspicious institutions. Good faith, for example, limits BC’s action, since DTVM can claim that it is not obliged to demand the origin of the metal.

At least 30% of the gold sold in Brazil, from January 2021 to June 2022, has evidence of irregular origin, according to one of the main surveys on the legality of gold in the country. The study methodology was developed in a partnership between the Public Ministry and researchers Bruno Antônio Manzollli and Raoni Rajão, from UFMG (Federal University of Minas Gerais).

In January, a complaint provoked the CVM (Comissão de Valores Mobiliários) to open an investigation into five DTVMs.

The survey also points out that the biggest bottlenecks are in mining, compared to the concession, a regime adopted for larger companies, whose requirements for installation and operation are much more rigorous.

In Minas Gerais, the largest and oldest gold producing state, the concession for gold exploration prevails, and 92% of it is legal. In Pará, a mining region par excellence, 48% of the gold has evidence of irregularities.

The invoice, the definitive legalization document, is another item criticized by specialists.

A 2001 Federal Revenue instruction, amended in 2010, which deals with gold as a financial asset, says that the invoice must be issued by a financial institution or prospector’s cooperative authorized by the BC. But it also determines that this document, in the middle of the 21st century, must be issued on paper.

There was, in the rule, no justification for the decision, considered more strange by the fact that gold as a commodity has an electronic note.

There are reports that in the Midas Dilemma operation in 2019, which investigated irregularities in gold extracted from the Tapajós basin, the Federal Police had to carry out a task force to type thousands of invoices as quickly as possible and make investigations feasible.

If the invoice were digital, it would be more agile and efficient to cross-check the data and check how much gold comes out of each mine, and even the type of gold, explains delegate Alexandre Saraiva, who was superintendent of the Federal Police in Amazonas, Maranhão and Roraima for almost a decade.

Jewelry ‘recycling’

Another way to legalize mining gold is to declare that it comes from jewelry recycling.

In 2020, two Americans almost managed to leave the country with 35 kg of gold, via Manaus, claiming to be a recycling product. At the airport, however, a device capable of reading the composition of metal had been installed a few days ago. The analysis showed that the piece had 98% impurity, denouncing that it was gold from mining.

“With high-resolution satellite images, for example, it is already possible to see if a declared mine is operating”, says Saraiva. “The greater the digitization, the better the fight against illegality.”

Most of the Brazilian gold is exported and, as everything indicates, mixed with mining.

The state that fluctuates between second and third place as the largest exporter is São Paulo, where companies able to carry out the final purification stage for financial use of the metal are located. In this process, gold from various parts of the country is mixed, putting an end to the possibility of registering the origin of the mining metal.

The gold from the Yanomami land may have made this journey of legalization, via Pará, and left the country for São Paulo. But there are also those who believe that the bulk could have been smuggled north, across the borders of Suriname, Guyana and Venezuela, serving drug and arms traffickers.

In that region, investigations point to connections between mining and the PCC, Comando Vermelho and Farcs (Revolutionary Armed Forces of Colombia).

The perception is that the work would be more agile and efficient if there were consistent and permanent collaboration of all the organisms, which today act in isolation. Not just an occasional task force.

“Financial crimes are complex, multidisciplinary, involve different investigative competences, so the possible way to curb illegal trade and the evasion of foreign exchange related to the illicit extraction of gold would be the joint action of federal agencies, including PF, BC, CVM, Federal Revenue, in international cooperation with authorities that monitor this gold in other countries,” says Leandro Chiarottino, a lawyer specializing in litigation linked to financial fraud.

Collaborated with Alexa Salomão