Early this year, Colombia’s defense minister approached the Trump administration with a request: Could the U.S. government place financial sanctions on Colombia’s illegal gold industry?
Illicit gold mining underwrites the Clan del Golfo, a drug cartel that the U.S. government had designated as a terrorist group. Washington had already placed cartel leaders on a financial blacklist. Extending sanctions to illegal gold dealers would help Colombia fight the cartel.
But the request put the Treasury Department in an unusual situation: It had, for many years, been buying gold that originated with the very industry that it was being asked to blacklist.
The sanctions request, which the United States has not acted upon, highlights weaknesses at both ends of the global supply chain for illicit gold.
First, the Colombian military has been all but helpless to stop criminals from tearing up hundreds of square miles of land at a clip, paying cartel leaders and even encroaching on a military base in the search for gold. And Washington has done so few checks of its own gold supply that cartel gold ended up in Lady Liberty coins sold by the U.S. Mint.
Such weaknesses contradict the notion — spread by institutions like the Mint and the world’s major gold refiners — that there is a clear line between clean, legally mined gold and gold tainted by criminality and corruption. Institutions that are supposed to be keeping illegal gold out of the mainstream supply have proved unwilling or unable to do so.
The New York Times reported in April that the U.S. Mint, which the Treasury runs, bought gold that originated in an illicit, cartel-controlled gold mine. With gold hovering around $5,000 an ounce, even the most environmentally destructive and wasteful mining is profitable. And as long as big refiners and buyers like the U.S. Mint look the other way, getting the gold to market is relatively easy.
“The harsh reality is that criminal mining is defeating the Colombian state,” Colombia’s defense minister, Pedro Sánchez, said in an interview.
He said that, in March, he had asked the United States to put financial sanctions on “those who participate in criminal mining.” Mr. Sánchez said he had made his request through the State Department.
American financial sanctions can make it all but impossible for people to do international business. The Treasury Department, which maintains the government’s financial blacklists, declined to comment on whether it was considering Colombia’s request.
After the Times articles, Mr. Sánchez took a helicopter flyover of Colombia’s major gold-producing areas. Miles and miles of open-air mining pits sprawled into each other. Though it was all in the open, and had been documented for years, Mr. Sánchez said he was shocked at the scale, which included dozens of barges that used vacuum pumps to suck up river sediment and extract gold.
Illegal mining was so rampant, The Times reported, that one operation had actually expanded onto the grounds of a military base. That revelation “shook not only the country but also the armed forces, so action will be taken against this illegal mining,” Mr. Sánchez said.
The military said it had destroyed heavy equipment at cartel-linked mines during a nighttime raid last month. Soldiers dismantled operations that produced an estimated $4.7 million worth of gold each month, military officials said.
The military later said that it had discovered a 38-year-old government document showing different boundaries for the military base. Under those boundaries, officials said, the illegal mining came up to the base’s perimeter, but not onto it. Officials declined to provide a map of those boundaries, and a government map from the time shows that the illegal mining was indeed within the base’s 1988 boundaries.
“Whether it is or is not inside the battalion is not the important issue,” Mr. Sánchez said.
While Colombia has taken steps against illegal mining, action on the U.S. side is less clear. The Treasury Department said it would investigate how illicit gold had gotten into its supply chain for so many years, but officials have since refused to answer follow-up questions.
U.S. law says the Mint may only buy gold mined in the United States to make investment-grade coins. The Times reported that it had in fact been buying gold from many other places for those coins. A Treasury spokeswoman said the Mint was investigating its supply chain.
On May 14, Senators Ron Wyden of Oregon and Elizabeth Warren of Massachusetts sent a letter to Treasury Secretary Scott Bessent demanding to know what the Mint was doing to make sure it wasn’t buying gold with illegal origins. The two senators, both Democrats, have not heard back.
