Due Diligence Checklist for Private Gold Transactions: What Institutional Buyers Must Verify

Why Due Diligence Is Different for Private Gold

Buying gold through a regulated bullion dealer is straightforward. The dealer has done the due diligence: they sourced from an LBMA-accredited refinery, their bars have serial numbers cross-referenced in LBMA databases, and they are regulated by their national authority.

Private large-lot transactions are fundamentally different. You are buying from a counterparty whose background, documentation, and legitimacy you must independently verify. This is not a reason to avoid private transactions — it is a reason to approach them with a structured framework.

The 15-point checklist below is the minimum institutional standard. A buyer who cannot complete all 15 items should not proceed.

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The 15-Point Due Diligence Checklist

1. Seller Identity Verification (KYC)

What to verify: - Full legal name of the selling entity (individual or company) - Government-issued identification (passport for individuals; company registration certificate, articles of association, and register of directors for companies) - Ultimate beneficial ownership (UBO) declaration — who ultimately controls and benefits from the entity - Sanctions screening against OFAC, HM Treasury, EU Consolidated List, and UN Security Council lists

How Tranche helps: We conduct independent sanctions screening and UBO verification before introducing any seller to a buyer. We maintain KYC records in our audit ledger.

Red flag: Seller cannot or will not provide company registration or passport copies. Seller identity changes between initial contact and documentation phase.

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2. Chain of Custody Documentation

What to verify: - Documentary trail from point of production to the seller's current possession - Each transfer of title (who sold to whom, when, for what consideration) - Location history of the physical gold - Storage and handling certificates from any intermediate vault holders

Red flag: Chain of custody begins with the current seller; no documentation of prior ownership history. Seller claims custody from a deceased or unavailable prior owner.

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3. Independent Assay by Accredited Laboratory

What to verify: - Assay must be conducted by a laboratory accredited under NABL (India), UKAS (UK), DAkkS (Germany), or equivalent national accreditation body - Fire assay method for fineness determination (XRF alone is insufficient for settlement purposes) - Physical weight measurement on calibrated scales with laboratory certification - Certificate issued to buyer (not to seller) or jointly

Process: Buyer appoints the lab from an approved list; seller facilitates access to the physical gold. Never accept a seller-provided assay certificate as the sole basis for purchase.

Red flag: Seller insists on using their own lab. Seller provides a certificate from an unaccredited or unverifiable laboratory. Seller requests payment before assay.

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4. Export Documentation

What to verify: - Valid export licence or export permit issued by the relevant national authority (Minerals Commission, DNGM, TMAA, etc.) — verify authenticity directly with the issuing authority - Export duty payment receipts - Country-of-origin certificate authenticated by a notary or Chambers of Commerce in the country of origin - Customs export declaration filed with national customs authority

Red flag: Export licence is expired. Export documents are photocopies only with no originals available for inspection. Documents appear altered or inconsistently formatted.

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5. Anti-Money Laundering Compliance

What to verify: - Seller has completed AML/KYC requirements in their home country - Source of gold is documented (mine licence, purchase invoices, or aggregation records) - Source of seller's business funds is traceable (for company sellers, management accounts or audited financials) - No adverse media findings for seller, seller's principals, or associated entities

Applicable standards: FATF Forty Recommendations, specifically Recommendations 22 and 23 (designated non-financial businesses and professions, including dealers in precious metals).

Red flag: Seller has adverse media coverage. Source of gold cannot be explained beyond "we have always had it." AML documentation is template-generic rather than specific to the transaction.

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6. Conflict Minerals Check

What to verify: - Declaration confirming gold is not sourced from conflict-affected areas as defined by the OECD Due Diligence Guidance - For US-listed public companies: Dodd-Frank Section 1502 disclosure compliance - For all institutional buyers: OECD annex country status check for the country of origin - ASM (artisanal and small-scale mining) source declarations where applicable

Tools: OECD iPoint system, UN Panel of Experts reports for DRC and neighbouring countries, Global Witness publications for risk assessment.

Red flag: Country of origin is on the FATF grey or black list. Seller cannot provide mine-level sourcing documentation for high-risk country gold.

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7. Bank Reference Letters from Seller

What to verify: - A formal bank reference letter on the bank's letterhead confirming the seller's account holder status, account history, and good standing - Reference should come from a named officer at the bank, verifiable by direct contact with the bank's corporate banking division - Reference should note the duration of the banking relationship

Red flag: Bank reference cannot be verified by direct call to the bank. Bank is located in a high-risk jurisdiction (FATF grey list country, Cayman Islands, Seychelles, etc.) with no obvious legitimate business reason.

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8. Sale and Purchase Agreement (SPA) Legal Review

What to verify: - SPA drafted by or reviewed by legal counsel in both buyer's and seller's jurisdiction - Price formula anchored to an objective external reference (LBMA PM Fix) - Conditions precedent clearly defined (assay approval, export documentation completeness) - Escrow mechanics detailed: bank name, account details, release conditions - Dispute resolution mechanism: arbitration clause naming a specific arbitral institution (KLRCA/AIAC for Malaysia, SIAC for Singapore, ICC for international) - Force majeure and termination provisions

Red flag: SPA is a one-page document. Price is stated as a fixed USD amount without reference to a benchmark. Escrow terms are vague. No dispute resolution mechanism.

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9. Escrow Account at a Regulated Bank

What to verify: - Escrow account is at a named, regulated commercial bank (not a payment company, cryptocurrency platform, or "escrow company") - Bank is SWIFT-enabled and can receive international wires - Escrow terms are confirmed in writing by the bank (not just by the seller or broker) - Buyer receives direct communication from the bank confirming escrow receipt

Acceptable escrow banks for Malaysia-facing transactions: Maybank, CIMB, Public Bank, RHB, Citibank Malaysia, Standard Chartered Malaysia, HSBC Malaysia, and international banks with Malaysia correspondent relationships.

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10. Physical Inspection Before Fund Release

What to verify: - Buyer or buyer's appointed representative has physically seen the gold before funds are committed to escrow - Physical inspection includes bar count, visual hallmark check, and XRF screening as minimum - Inspection location is a neutral, insured venue (laboratory, bank vault, bonded warehouse)

Red flag: Seller refuses physical inspection before commitment. Seller offers "video proof" only. Gold is claimed to be in a country where no physical access is possible.

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11. Insurance During Transport

What to verify: - Marine cargo and air freight insurance (all-risk, valued policy) covering the full settlement value of the gold - Named insurer is a recognised international insurer (Lloyd's of London syndicate, Munich Re, Allianz Trade) - Insurance covers door-to-door from point of assay to destination vault - Policy is in buyer's name or endorsed to buyer's interest

Typical cost: 0.1–0.3% of declared value for international gold shipment.

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12. Import Documentation Pre-Clearance

What to verify: - Malaysian customs broker appointed before the shipment leaves origin - HS code confirmed: 7108.12 for non-monetary gold bars - SST exemption eligibility confirmed (if gold is 99.5%+ fineness) - BNM reporting requirement triggered and process initiated - JKDM import permit obtained if required

Red flag: Buyer has not checked import requirements before committing to purchase. No customs broker engaged.

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13. End-Buyer Beneficial Ownership Declaration

What to verify: - Declaration by the buyer (if a company) of the ultimate beneficial owner of the gold being purchased - This is a FATF requirement for dealers and is required by Malaysian AML regulations for transactions above reporting thresholds - The UBO declaration should be signed, dated, and notarised

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14. Funds Source Declaration

What to verify: - Buyer declares the source of funds being used to purchase the gold - For company buyers: certified management accounts or bank statements showing sufficient funds and legitimate business income - For individual buyers: personal bank statements, income documents, or wealth provenance documentation

Why this matters: If the transaction is later challenged on AML grounds, a buyer who cannot demonstrate legitimate fund sourcing faces significant legal exposure.

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15. Post-Transaction Audit Trail

What to verify: - Complete document package archived: SPA, assay certificates, export documents, escrow receipts, bank confirmations, insurance certificates, import documents - All actions logged with timestamps - Records maintained for minimum 7 years (standard AML record-keeping period)

Tranche's approach: Every action in a Tranche-facilitated transaction is written to an immutable audit ledger. All parties receive a complete post-transaction document pack.

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Tranche's Role in Each Step

We operate across all 15 points: conducting initial seller KYC, coordinating assay, reviewing documentation, structuring the SPA and escrow, and maintaining the audit trail. For the current 10kg Africa mandate, all preliminary checks are complete for the seller side. Buyer due diligence can begin immediately upon contact.

WhatsApp +60 19-873 8500 for the full seller documentation package.

Transact with confidence

Active mandate: 10 kg African gold at USD 5,000 below LBMA spot per kg, assay-certified, export-ready