Inner Mongolia Qiankun Gold & Silver Refinery Share Co Ltd

Refiner’s Compliance Report 

This report summarized how Inner Mongolia Qiankun Gold & Silver Refinery Share Co., Ltd（hereinafter referred to as “the company） has complied with the requirements of <LBMA Responsible Gold (Silver) Guidance> for the year ended of Dec 31st, 2020 base on the requirements of ISAE3000 Standard. According to <LBMA Responsible Gold (Silver) Guidance>, the company has established complete management system. As LBMA Good Delivery Refinery, the company adopts high standards of due diligence in order to combat systematic or widespread abuses of human rights, to avoid the contribution of conflict and to comply with high standards of anti-money laundering and combating terrorist financing practice.

This report summarized how we have complied with the requirements of <LBMA Responsible Gold (Silver) Guidance> and keep system operating normally.

Refiner’s name: Inner Mongolia Qiankun Gold & Silver Refinery Share Co., Ltd

Location: Yuanwuwei Road North, Ruyi Development Zone, Huhhot City, Inner Mongolia.

Reporting year-end: 31/12/2020

Date of report: February 18, 2021

Senior management responsible for this report: Mr. Xing Xiaofeng ( Compliance director )

Contact information: Tel: +86-(0)13804711612

Step 1: Establish strong company management systems

1. Company Policy: The company has amended and re-issued <Responsible Gold (Silver) Supply Chain Due Diligence Management Policy >(QK/LBMA/WJ-01) in March 2018, which is consistent with the model set out in <Annex II of OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas>. The policy sets out our policy, responsibility, process for conducting risk-based due diligence, screening and monitoring of transactions and the governance structures in place.

2. Internal Management Structure: An internal management system has been set up to define the governance, roles and responsibilities, communication and senior management review as per the adopted <Responsible Gold (Silver) Supply Chain Due Diligence Management Policy>. The company has set up a compliance team and a senior management has been appointed as compliance director, team member include three compliance officers such as marketing compliance officer, warehouse compliance officer and finance compliance officer, a coordinator is also included. The team hold meeting regularly and organize training course for staffs related. All compliance officers report to compliance director Mr Xing Xiaofeng and company management directly. For new added supplier, compliance director and company management would participate in the assessment of compliance during the contract assessment.

3. Internal System: The company has complete procedures to purchase gold and silver bearing materials. The company followed the <Responsible Gold(Silver) Supply Chain Due Diligence Management Policy>(QK/LBMA/WJ-01) and <Gold/Silver trading risks control procedures> (QK/LBMA/WJ-02) strictly and conducted risk-based due diligence investigation for suppliers. All the transactions were monitored to avoid building relationship with the suppliers associated with high risk. Meanwhile, all due diligence investigation findings and results were reviewed by the Compliance Officer and all gold and silver-bearing purchasing contracts are approved by vice general manager in charge. The company would record every batch of compliance materials with unique code, this code will be traceable from materials to production process and final product. The files of suppliers of gold and silver bearing materials have also been recorded and are traceable(for 5 years)

4. Communication Mechanism: The company has a complete communication system with gold (silver) suppliers and have signed letter of undertaking in written, and try to assist gold and silver suppliers to establish their own due diligence system. For every supplier (include trade agent) and every business would be advised of our supply chain due diligence policy in advance and made investigation accordingly. Any business that couldn’t meet requirements would be rejected. Suppliers are required to meet the requirements of both LBMA and Shanghai Gold Exchange. For big suppliers with large trade volume, company management should attend special meeting to assess compliance. 

5. Anonymous Complaint Mechanism:

The company has issued <Communication procedure for gold(silver) supply chain >(QK/LBMA/WJ-03), a report box has been set together with compliant phone 0472-2212930 to allow customers and staffs comment and report any risks that newly found, compliance officer is responsible for reviewing and report to compliance director or company management directly when necessary.

Conclusion: We have fully complied with Step 1: Establish strong company management systems.

Step 2: Identify and assess risk in the supply chain

1. Risk Identification for supply chain:

According to <Responsible Gold (Silver) Supply Chain Due Diligence Management Policy >(QK/LBMA/WJ-01) and <Risk Identification and Evaluation Standard for Gold(Silver) Supply Chain>(QK/LBMA/WJ-06), before entering into business relationship, need to complete < Responsible Gold Supply Chain Due Diligence Form >. We set up customer profile for every supplier, collect supplier’s information and classify base on <Risk Identification and Evaluation Standard for Gold(Silver) Supply Chain>(QK/LBMA/WJ-06). Fully aware of the type of the supplier, point of registration, origin of material, resources and make sure that relative beneficiary parties operate legally with no criminal record, evaluate finance information. Compliance officers are responsible for these reviews. For mined gold/silver, suppliers are required to provide mining license or import/export license to meet the relative regulation of OECD. For recycled gold/silver, to check if suppliers are on the list of terrorist organization published on the website of Ministry of public security of the people's Republic of China and Check whether there is any record of violating due diligence policy through the platform of national enterprise credit information publicity system and personal credit system. Through investigation to identify if suppliers have activities of forced labor, violation of human rights, illegal uses of child labor and ethnic discrimination..

In 2020, the company has conducted risk identification and clarification on eight gold suppliers and 5 silver suppliers, these suppliers are all classified as low risk base on <Risk Identification and Evaluation Standard for Gold(Silver) Supply Chain>. The company has also traded as agent of 6.22 tons of gold and 56.5 tons of silver through Shanghai Gold Exchange for customers according to the requirements of LBMA and Shanghai Gold Exchange, ruled out risks that maybe existed. For newly added suppliers this year, compliance team organized company management to meeting to assess compliance and found to meet with compliance requirements in all respects.

2. Risk assessment for suppliers

The company has conducted risk assessment for all suppliers that have signed contracts with the company based on <Responsible Gold (Silver) Supply Chain Due Diligence Management Policy > and <Risk Identification and Evaluation Standard for Gold(Silver) Supply Chain>.

Risks include:

1.) Systematic or widespread human rights abuses associated with the extraction, transport or trade of gold/silver, activities of forced labor, illegal uses of child labor and ethnic discrimination;

2.) Direct or indirect support to illegitimate non-state armed groups, or organized criminal security forces;

3.) Bribery and fraudulent misrepresentation of the origin of gold/silver;

4.) Money laundering or terrorism financing;

5.) Contribution to conflict

   If any of abovementioned risks have been identified, the supplier would be classified as high risk supplier and no deal could be done with them. If any of abovementioned risks in doubt, business should be suspended until further evidences have been found and risks eased, anyway continues supervision should be kept.

   In year 2020, all 8 gold suppliers and 5 silver suppliers have been assessed base on abovementioned standard and being concluded that there are no activities of forced labor, violation of human rights, illegal uses of child labor and ethnic discrimination, so all suppliers have been classified as low risk.

   During the risks evaluation, all purchase records, assay reports, transportation documents and relevant documents for each batch has been kept in customers’ file, through finance compliance officer to control fund transaction.

   Before signing contract with suppliers, compliance officer would report to compliance director and company management to avoid any possible risks. Compliance director and company management are responsible for approving contracts.

3. Assess and report high risks to nominated high level management

The company has established assessment and report system for high risks, would report to compliance director Mr. Xing Xiaofeng and company management when find high risks in gold and silver supply chain.

We find no high risk supply chain in 2020.

Conclusion: We have fully complied with Identify and assess risk in the supply chain.

Step 3: Design and implement a management strategy to respond to identified risks

Risk Management: The company has conducted risks identification and evaluation for every supplier strictly base on <Risk Identification and Evaluation Standard for Gold(Silver) Supply Chain>(QK/LBMA/WJ-06) , if due diligence on gold/silver supply chain conclude that there are materials from sources related to money laundering, seriously violation of human rights and support terrorism, the company would reject such materials and through further investigation to make sure continue trading or suspend trading base on the results of risk identification and evaluation to avoid high risks. During the whole process of risks management, it’s the compliance officer’s responsibility to judge to maintain, suspend or stop cooperation with suppliers according to company’s relative regulations and report to compliance director and company management from time to time. 

 The company try to improve supply chain with suppliers sincerely according to <Gold(Silver) Supply Chain Risk Mitigation Strategy>(QK/LBMA/WJ-04). The company will conduct evaluation and risk identification for every supplier according to the content of assessment form, suspend trade from possible high risk supply chain and request and help supplier to correct for a period of six months to eliminate risk factors. Through verification make sure that the supplier has made reasonable and honest work and adopted effective measurement, the company may continue accept gold and silver from this supplier, but still need to strengthen monitoring, assess during corrective period and report results to company management; if couldn’t find the improvement, shall stop cooperation with supplier immediately. In this reporting year, our supply chain doesn’t exist illegal activities such as forced labor, violation of human rights, illegal use of child labor, racial discrimination, support of organized criminal gang, money laundering and bribe, etc. The company has conducted risk assessment for all the suppliers and Compliance Officer has reviewed the assessment result, all supply chains have been identified as low risk. More strict assessment measures are set for newly added suppliers to make sure the system to face all kinds of risks. 

Conclusion: We have fully complied with design and implement a management strategy to respond to identified risks.

Step 4: Arrange for an independent third-party audit of the supply chain due diligence

1.) The company engaged the services of the assurance provider Bureau Veritas,

2.) There are no non-compliance have been found in the LBMA responsible gold/silver audit.

3.) The company would engage Bureau Veritas to perform a limited assurance engagement in accordance with International Standard in Assurance Engagements ISAE 3000 Assurance Engagements (ISAE 3000) this year.

Conclusion: We have fully complied with arrangement for an independent third-party audit of the supply chain due diligence.

Step 5: Report on supply chain due diligence

1.) To align to the specific requirements in the <LBMA Responsible Gold(Silver) Guidance>, the company has regulated system, procedure, process and control measures in its gold(silver) supply chain policy. More details to obtain through the company’s website at www.qk9999.com.

2.) The company has conducted internal audit on gold/silver supply chain due diligence system during 28^th December 2020 to 29^th December 2020 and no non-compliance has been found. Training course for management and related staffs have been conducted according to plan.

Conclusion: We have fully complied with report on supply chain due diligence.

Overall speaking, in 2020 the company has conducted effective management rules, procedure, process and operation according to the requirements of <LBMA Responsible Gold(Silver) Guidance>, established complete due diligence and risks control systems, after years of operation and could meet LBMA’s requirements.

The company focuses on improving and upgrading, aim to combine the responsible gold/silver supply chain process with our existing supply chain process more effectively. Any corrective action identified will be monitored internally on a regular basis. 

Conclusion: Therefore the company fully complied with <LBMA Responsible Gold(Silver)  Guidance> in the year ended 31st December 2020.

If users of this report wish to provide any feedback to us with respect to this report, feel free to contact us by E-mail 13804711612@163.com.