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System name |
Hunan Shuikoushan Non-ferrous Metals Group Co.Ltd Silver Supply Chain Due Diligence Regulations | ||
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Main Control |
Business Management Department |
Execution |
Member units to undertake the implementation system | |
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Effective date |
2019-03-27 |
The revision date |
2020-12-18 | |
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category |
Risk Management |
Level |
Regulation | |
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Scope of application |
Company headquarters and member units |
Subject of examination and approval |
The company is in charge of leadership | |
1. According to the requirements of the London Bullion Market Association(LBMA) Responsible Silver Guideline, the Silver Supply Chain Due Diligence Regulations of Hunan Shuikoushan Non-ferrous Metals Group Co, Ltd, (here in after referred to as"the Company" )are hereby formulated to combat systematic or widespread human rights violations, avoid conflicts, and comply with strict anti-money laundering requirements to combat terrorist financing.
2. Scope
The Regulations apply to all the suppliers and customers in the upstream and downstream of the supply chain, including the purchase of silver containing raw materials, the sale of silver and gold and silver materials, the entrusted refining of silver, and all the risks identified according to the due diligence policy of silver supply chain.Sources of silver covered in the Regulations include mineral silver, recovered silver and various forms of stored silver produced after January 1, 2015.
3. Terms and definitions
The terms and definitions involved in the Regulations are those described in the London Bullion Market Association(LBM4)Responsible Silver Guideline.
4. Organizational structure
The Company has set up a special organization for silver supply chain due diligence work. Its structure is as follows:
The director of compliance is the director of operation and management department, who is responsible for the senior management of the company.
The compliance team leader shall be the leader in charge of the relevant unit, and another management personnel shall be appointed as the compliance specialist, which shall be reported to the operation and management department for the record.
5. Responsibilities of various personnel (See the attachment).
5.1 Responsibilities of company executives.
1) Responsible for the approval of silver high risk supply chain.
2) Responsible for the approval of policies and guidelines related to the due diligence of the company's silver supply chain.
3) Responsible for the approval of the company's annual silver supply chain risk assessment report.
5.2 Responsibilities of the Compliance Director
1) In charge of and be fully responsible for the silver supply chain due diligence work of the Company.
2) Preside over the preparation of the company's silver supply chain annual risk assessment report and submit it to the company's senior management for approval.
3) Conduct silver supply chain due diligence and evaluate whether the due diligence is adequately conducted: if necessary, ask for additional documents or information.
4) Take appropriate actions to reduce and eliminate risks in the silver supply chain or transaction where risks have been identified.
5) In case there is a high-risk silver supply chain or transaction, promptly report it to the senior management of the Company and take strict control measures; be responsible for approving new silver supply chains that are rated as high-risk after authorized by the senior management.
6) Regularly train employees on the responsible silver guidelines and suppl Ain due diligence policy.
7) Be responsible for drafting and revising the policies and guidelines related to The silver supply chain of the Company.
8) Provide necessary and accurate information for the Company’s senior management to fulfill their due diligence responsibilities.
9) Regularly participate in training on the responsible silver guide and supply chait due diligence policy.
5.3 Responsibilities of compliance team leader of marketing company
1) Strictly implement the supply chain due diligence regulations and high-risk silver supply chain evaluation criteria.
2) Be responsible for collecting and maintaining sufficient silver supply chain documents.
3) Be responsible for collecting and urging importers and exporters to complete corresponding due diligence reports.
4) Verify the qualifications of shipping agents 、insurance company and transportation companies, track and properly keep each shipping document, and analyze and evaluate the transportation routes through which the goods pass.
5) Conduct regular on-site investigations of major foreign suppliers and foreign customers.
6) Assist and encourage foreign suppliers to commit and confirm in writing that they comply with the provisions in Appendix II of the OECD Due Diligence Guideline for Responsible Supply Chains of Minerals from Con/lict- Afected and High-risk Areas.
7) Report to the Compliance Director in case of abnormality in the due diligence process and silver transaction.
8) Regularly participate in training on the le responsible silver guidelines and the supply chain due diligence policy.
9) Be responsible for collecting, summarizing and reporting the opinions and suggestions of internal employees of the Company on silver supply chain due diligence work.
5.4 Responsibilities of compliance team leader of financial management department.
1) Strictly implement supply chain due diligence regulations and high-risk silver supply chain evaluation criteria.
2) Be responsible for collecting and maintaining sufficient silver supply chain documents.
3) Completely keep all transactions and financial documents of silver suppliers for a period of at least 5 financial years.
4) Evaluate the financial data of silver suppliers and clarify the purpose and original intention information of their business relations
5) Report to the Compliance Director in case of abnormality in the due diligence process and silver transaction.
6) Regularly participate in training on the responsible silver guidelines and the supply chain due diligence policy.
7) Be responsible for collecting, summarizing and reporting the opinions and suggestions of internal employees of the Company on silver supply chain due diligence work.
5.5 Responsibilities of compliance team leader of technical center
1) Strictly implement the supply chain due diligence regulations and high-risk silver supply chain evaluation criteria.
2) Be responsible for collecting and maintaining sufficient silver supply chain documents.
3) Verify and record the weight and test results of each silver product received.analyze and evaluate whether these data are consistent with the supply chain knowledge;in case there is any discrepancy, a detailed investigation shall be conducted and a written investigation report shall be produced.
4) Retain the relevant silver-containing material sample for at least 3 months.
5) Report to the Compliance Director in case of abnormality in the due diligence process and silver transaction.
6) Regularly participate in training on the responsible silver guidelines and the supply chain due diligence policy.
7) Be responsible for collecting, summarizing and reporting the opinions and suggestions of internal employees of the Company on silver supply chain due diligence work.
5.6 Responsibilities of the compliance team leader of refined lead factory
1) Strictly implement the supply chain due diligence regulations and high-risk silver supply chain evaluation criteria.
2) Be responsible for collecting and maintaining sufficient silver supply chain documents.
3)Supervise the production and use process of each batch of silver-containing materials, make corresponding records and maintain it for at least 3 years.
4) Report to the Compliance Director in case of abnormality in the due diligence process and silver transaction.
5) Regularly participate in training on the responsible silver guidelines and the supply chain due diligence policy.
6) Be responsible for collecting, summarizing and reporting the opinions and suggestions of internal employees of the Company on silver supply chain due diligence work.
Regardless of mineral silver or recycled silver. the Company will identify risks in strict accordance With regulations in Appendix II of OECD Due Diligence Guideline for Responsible Supply Chains of Minerals from Conflict-affected and High-risk Areas.
6.1 In case of the following risks in silver supply chain sources, the Company should pay close attention to:
1) Systematic or widespread human rights violations related to the extraction transportation or trade of silver.
2) Direct or indirect support to non-governmental armed groups, public or private security forces.
3) Bribery and fraudulent misrepresentation of the origin of silver.
4) Money laundering and terrorist financing.
5) Financing conflict areas
6.2 According to LBMA and OECD associated regulations and in combination with actual conditions of the Company, the following evaluation criteria for high-risk silver supply chains are specified:
I) Mineral silver or recycled silver is originated from, transited in, and transported across high-risk areas affected by conflicts and with human rights abuse.
2) It is claimed that mineral silver comes from a country with limited known reserves. silver resources, or expected silver production.
3) Recycled silver is originated from known high-risk areas affected by conflicts and with human rights abuse, or there are reasons to doubt that it is transited in the area.
4) Silver supply counterparties or its known upstream companies are located in a country with high risks of money laundering:
5) Silver supply counterparties or other known upstream companies or its beneficial owners that have significant influence on it are politically sensitive person.
6) Silver supply counterparties or its known upstream companies actively participates in high-risk business activities, such as weapons, gambling. antique, artwork, religion and being a religious leader.
7) Other high risk situations recognized by the Chinese Government.
7. case any of the above evaluation criteria exists objectively, the silver supply chain shall be evaluated as the high-risk supply chain. The Compliance Officer of the department shall immediately prepare materials and report them to the Chief Compliance Officer. The Chief Compliance Officer shall collect and sort out the relevant information materials and report to executives of the Company and reapprove the high-risk suppl ply chain with the authorization.
8.Principles of investigation
8.1 In order to master the supply chain and assess risks effectively. the Company must Pet rform due diligence for the le supply chain in accordance with a risk-based approach before entering into business relations with any silver suppliers. The risk assessment shall begin with investigation of geographical origin of silver.
8.2 The Company will constantly carry out due diligence for the supply chain of silver. So as to ensure effective compliance with LBMA rules.
9. Investigation procedure.
9.1 Information collection and assessment of the Supplier
1) Create files of the supply chain customer, including: enterprise name, legal representative. address. contact information, operation manner. production mode and business contract, etc.
2) Carry out regular inspection of sup apply chain customer. If there is new-add or modification in customers. it is needed to check their archives to keep the archive database up to date.
3) Identify every customer, enterprise and benefit owner of enterprise. Use reliable independent source documents data or information to verify their identification.
4) Confirm that every customer company and benefit owner of company is not in the wanted list of money laundering, defraud or terrorism of the government.
5) Obtain detailed information for business and financial affairs. purposes of engagement in gold trading and business operation situation of supply chain customers regularly.
9.2 Additional investigation requirements for the silver derived from mineral silver.
1) Obtain the geographical origin information of silver.
2) Obtain the mining license information of the Supplier, if possible.
3) Obtain the import and export license information of the Supplier, if possible.
4) Collect and make an assessment on the information of mining situation.
5) Obtain mining capacity data, if possible.
6) When the mineral gold(silver)comes from manual or small mines. it is needed to assess whether it is legal at first. If it is legal. it is important to ask the other party to provide relevant qualification certificates. If it is illegal. it is a must to suspend the transaction and refuse to procure from them or accept their manufacturing consignment.
9.3 Additional investigation requirements for silver derived from recycled silver.
If possible. collect and estimate policy action documents about anti-money laundering and anti-terrorism financing of recycled silver suppliers.
9.4 Additional investigation requirements for strengthening due diligence under high-risk circumstance.
The Company determines the extent to which the due diligence measure will be implemented based on the type of supplier enterprise, business relationship, transaction type, and location or transportation region of the enterprise. For higher-risk circumstance the Company will take strengthened due diligence. And take the following additional processing procedures.
1) Investigate or visit high-risk supply chains on the site to verify if the document record of the due diligence result of high-risk supply chains is true.
2)For large scale mining of silver: verify condition with documents, data, and information from trusted independent sources. Each return owner and government surveillance list information of each enterprise in the supply chain (including silver manufacturer, middleman, silver trader, exporter, and transporter) require verification from mines to refineries.
3) For mineral silvers from manual or small-scale mining: verify condition with documents data. and information from trusted independent sources. Each return owner And government surveillance list information of each enterprise in the supply chain (including international silver dealer and transporter) requires verification from mineral silver exporters to refineries.
4) For recycled silvers: verify the condition with documents, data, and information from trusted ii: dependent sources. Each return owner and government surveillance list information of each enterprise in the supply chain (including transporter)requires verification from recycled silver suppliers to refineries.
10. Investigation and supervision go throughout the silver trading process of the Company to ensure the transaction is consistent with understanding and risk prediction of the supply chain of the Company. The Company supervises transactions based on risks.
11. The Company requires obtainment and record of the following information of each batch of received silver:
11.1 For mined silver: Estimated weight and test results (provided by the supplier) Shipping or cargo documents (delivery documents, shipping documents, proforma invoice, etc. if possible): If possible. import and export form of high-risk transaction.
11.2 For recycled silver: Estimated weight (provided by the supplier): Shipping or cargo documents (delivery documents, shipping documents, proforma invoice, cte. if possible);possible, import and export form of high-risk transaction.
12. The Company will verify if the documents above verify each other and are consistent with the understanding of the supply chain. In case of any transaction back ground discrepancy, an investigation will be conducted and a written survey result will be obtained.
13. At the beginning of each year. the Company's Compliance Director shall submit the previous year's risk assessment report on silver supply chain due diligence to the Company 's senior management.
14. The Company’s senior management retains ultimate control and highest responsibility over the silver supply chain. Senior management carefully selects and supervises the Compliance Director and gives him the necessary authority to complete his duties.
15. According to the authorization of the senior management. the Company’s Compliance Director approves each new supply chain rated as high risk and re-determines whether to continue to maintain business relations with it every year.
16. The Company collects and reserves sufficient supply chain documentary evidence records and assesses risk requirements according to standards of the supply chain due diligence system. so as to prove that it adequately and continuously completes silver supply chain due diligence work.
17. It is required to preserve supply chain documentary evidence records for at least accounting years.
18.The Company regularly carries out training about due diligence policies for all PersonneI in the silver supply chain each year.
19.Compliance team leader of functional departments, secondary and tertiary units of the company regularly collect, summarize, and submit opinions and suggestions of the Company's internal personnel towards the silver supply chain due diligence work.
20.When finding violation mattes or abnormal conditions in daily silver transaction and Compliance leader of their departments: Compliance Officers shall report it to the supply chain management work. personnel of the Company shall immediately report it to Compliance Director at once after their verification. and Compliance Director shall organize relevant materials and report to the Company,s senior management in writing if necessary.
21. The Regulations shall be interpreted by Business Management Department.
22. The Regulations shall come into force on the date of promulgation, the original management measures for due diligence of LBMA silver supply chain of Hunan Shuikoushan Nonferrous Metals Group Co., Ltd. (Water Group [2019] No. 91) shall be abolished at the same time.
