INTERNATIONAL PRECIOUS METALS LEGISLATION ALSO ANSWERS TO THE
REQUIREMENTS OF THE PATRIOT ACT I AND ACT II
The procedures listed here are specific as to what was issued by the U.S. Federal Reserve Bank (FED) and
the World Gold Council on June 6th, 2007 as what are required by law and now to be followed on all Gold
(AU) transactions. The specific guidelines as set forth by these two agencies exactly as required now to do
AU transactions and you will probably want to keep a copy of this for your records as it is the only legal
way of doing these transactions now.
As the stage of Bank Officer to Bank Officer it can also be set up as a Table Top meeting at the bank if the
seller and buyer wish, or a ledger inter-bank contract transaction Bank Officer to Bank Officer.
U.S. Federal Reserve Bank and World Gold Council International Procedure:
1. The Seller or his Mandate issues a Full Corporate Offer. All AU metal offers must show the seller
2. Only the Seller or his legal Mandates may issue an AU Offer and if it is the mandate issuing it, it
must be accompanied by the letter evidencing the receipt of mandate authorization from the seller. All
offers received from non-authorized intermediaries will be automatically rejected.
3. The International Precious Metals Legislation does not allow buyers to first send a letter of
purchase Intent because it is considered soliciting and is strictly forbidden.
4. Seller or Seller's mandate must move first with an offer which should include metal license details
5. The Buyer/Buyer's Mandate submits a Letter of Intent RWA (Ready, Willing and Able).
6. The Seller and Buyer exchange signed and sealed contract.
7. Seller extends an invitation for the Buyer to contact the Bank or LBMA Approved Storage Facility
to arrange a meeting between Seller’s and Buyer’s bullion officer.
8. After confirmation of the existence of an account; the Buyer initiates the contact with the Seller's
9. Upon receipt of the SWIFT proof of existence of the AU metal and the certificate of authority to
sell, the Buyer bullion officer to confirm the availability of funds to be used as payment when the gold is
10. The Buyer and the Seller agree on a window time for exchange. The payment to the Seller will be
disbursed within 24 hours against the transfer of ownership of the metal. Commissions will be paid
immediately and without delay to each appointed paymaster. Paymasters must provide BUYER with their
written procedures and release of liability.
11. A Separate Master Fee Protection Agreement (MFPA) must be accomplished between each
Paymaster groups and each intermediary group. All transfer and other related fees will be deducted from
each Paymaster group.
12. The paymaster will likewise pay to the intermediaries their earned commission immediately upon
receipt of funds.
GOLD/AU TRANSACTION (SINCE 1.8.2006)
Under the new guidelines recently set forth by the Federal Reserve for Gold AU metal it is required by the
bank officers to do standard FED compliance on the metal and the seller/beneficial owners of the metal on
a bank to bank basis before any contracts can be signed.
Anything outside of a strict Swiss procedure of POP with Sellers client info sheet and passport is now
illegal to even attempt to transact. The seller, if they are legitimate, must be ready, willing and able to
submit this information directly by SWIFT to the Buyer's Bank Officer for standard banking compliance
under the new regulations.
Upon completion of this compliance the buyer's bank officer will then respond with POF including the
Buyer's client info sheet and passport information for the seller's bank officer to do their compliance as
well. If the seller is not willing to comply with the new guidelines, we are sure there is no transaction worth
going to jail over.
These guidelines are to be used to provide security and procedural guidance to sellers interested in doing
business with BUYER. This is based on the requirements of the FED and WGC. In addition to this is
additional security requirements from BUYER to ensure credibility of offer submitted to BUYER.
A Soft offer submissions to BUYER
1. The soft offer must clearly identify the Seller’s Mandate to BUYER with full contact information
that includes a copy of his or her Passport. No exceptions will be acceptable.
2. The NCND Working Agreement and later will be referred to as Master Fee Payment Agreement
(MFPA) that will be issued by BUYER(only our form will be acceptable). At this point only contact
information for each person listed on the NCNDWA will be required; including a photo copy for their
3. The soft offer must clearly identify the source of the gold and the current physical location.
4. The soft offer must also clearly state if the gold is in a LBMA certified bullion storage
facility/Bank or in a secure warehouse/Non-accredited bank.
5. BUYER will not accept offer if the commissions are closed on the seller’s side with self appointed
intermediaries to the buyers side claiming specific commission percentages. These percentages can only be
determined by the Buyer after the MFPA document is completed. The Sellers Mandate will have to consult
the Buyer Mandate about the number of intermediaries and on which side of the commission structure they
will be appearing and in what Paymaster group they will be assigned.
6. The offer price in Gross and Net to buyer must be clearly stated. The commission split must also
be clearly stated.
7. Once the soft offer is accepted by BUYER, an LOI will be sent to the Seller or Sellers mandate
and under no circumstance will it be issued to any intermediary.
8. Once this has been received by the Seller; then the Seller and its Mandate must complete
BUYERS NCNDWA (Appendix A) along with Appendix B to be attached to the document. This shall
contain all the names and information on Sellers Mandate and any intermediaries involved in the
transaction. The final percentages payable to the list of intermediaries will be confirmed after negotiations
are concluded between the Seller’s Mandate and the Buyer. This will also list all outside Paymasters,
along with an understanding that the Paymasters must provide BUYER with their written procedures and
release of liability.
9. Under no circumstance will any Buyers Banking information will be given to any Paymaster,
Mandate or Intermediary.
10. A full set of Passport copies must be supplied to the buyer’s mandate that correspond to the names
on the MFPA document. This can be supplied directly by each individual to BUYER for security reasons.
Any person not presenting his passport copy will not be included in the final MFPA document and they
will thus be excluded from any payments.
11. The next step is Paragraph B of this document with information on the FCO requirements.
Full Corporate Offer (FCO)
1. Seller presents a Full Corporate Offer (FCO) to Buyer’s mandate. Said Full Corporate Offer will
give the following information:
Quantity of Gold for sale
Form of the Gold 1 or 12.5 Kilogram Bars (Au metal)
Fineness: 999.5% or better
Hallmarks: Exact Name Johnson Matthey or other LBMA accredited hallmarks (under 5
years of age)
Location: Current Location and original origin of Gold
Discount: Gross and Net
Commission split: Negotiated directly between Seller and/or its Mandate and Buyer
and/or its Mandate
The availability of the following documents will also be listed in the FCO (Where applicable):
a) Safe Keeping Receipt
b) Original Certificate of Deposit
c) Certificate of Origin
d) Certificate of Legal Ownership
e) Seller’s Certificate stating that the Gold (AU) is free and clear of all liens and encumbrances
and freely tradable and exportable and of non-criminal origin.
f) Certified Weight List and Assay describing each Bar as follows:
* Serial Number as stamped on each Bar
* Raw weight as stamped on each Bar
* Total weight as stamped on each Bar
* Receipt of paid custom duties and taxes
* Export Permit(s) If needed
g) Certificate of New Ownership
2. The FCO must contain the full contact info of the seller. This must be accompanied by a copy of
the seller’s passport document which will be used to verify the Sellers identity. In return the buyer and
Buyer’s mandate will also be prepared to supply a copy of their passport documents to the seller for
authentication via the US embassy and Sellers embassy.
3. Buyer answers FCO with Full Corporate Positive Answer (RWA).
4. If the gold is in an LBMA certified depository or bank the Seller will have to send a copy to buyer
and mandate of the Safe Keeping Receipt or Custodial Receipt and a Letter to his banker, bullion officer or
warehouse manager giving him instructions to allow buyer to verify the existence of the gold and the
pertinent information on said gold. The reason behind this request is that buyer must physically confirm
the existence and verify the documentation it before supplying any financial instruments which can be used
to pay for the Au metal. Having verified and audited the existence of the gold, the buyer will hand to the
seller a Bank to Bank Proof of Funds.
This step is non-negotiable for the buyer as this must be confirmed before any financial information will be
made available to any Seller or Sellers Mandate. This inspection will be done at the expense of the Buyer;
the Seller will only have to provide his permission/instruction letter and contact information for the
responsible bank officer. If this step is not feasible from the supply perspective with the gold not in an
LBMA bullion facility please refer to Paragraph C of this document.
5. Seller completes and signs contract and returns it to Buyer directly or through our Mandate.
6. Buyer signs contract and return it to Seller; all above done electronically on the same day, if
permitted by time zones.
7. Buyer instructs his Bullion Officer to deal with Seller’s Bullion Officer and set up a meeting in
person or by secure bank communication. During this meeting the transfer of ownership and the transfer of
funds will happen electronically and or physically.
8. The gold must be in GLD system and the documentation must conform to LBMA standards.
Timing for the total transaction from start to finish should be 48 to 72 hours.
Non GLD bullion; Bullion older than 5 years; Dore Bars; Gold Nuggets and Dust
If the gold Bullion was not held in an LBMA Certified Bullion Bank, or if the bullion is not in the Standard
twelve and a half (12.5) kilogram GLD format, or the hallmark is older than five (5) years, the only way to
prove the physical existence of the AU metal would be by completing one of the following 2 procedures
which would then lead into a transaction that can be done via bank to bank payments with the LBMA
refinery acting as agent and referee of the physical existence of the product on behalf of the seller.
1. The “3 step Procedure”: In order to establish trust and insure reliability of delivery and payment
the “Seller” agrees to make three (3) initial shipments consisting of a minimum of one (1) twelve and a half
(12.5) kilogram gold bar ( or the equivalent in any form i.e. Dust, Nuggets or in Dore form) on three (3)
separate days to a agreed on LBMA certified Refinery, convenient to your depository and make this AU
metal available to BUYER for purchase via your account at the Refinery. Or the closest equivalent weight
on more to this, but not less than 12kg per delivery. The refinery will then have the total combined weight
of the 3 separate deliveries of AU metal for sale to BUYER via the sellers account at the specific Refinery.
The gold will then be represented by an acceptable LBMA assay certificate. BUYER will then purchase
this AU metal immediately from the seller, via the LBMA refinery, at the agreed contract price for cash.
Only after this procedure has been fully and unconditionally been concluded will BUYER provide full
Proof of Funds Bank to Bank, issue a Bank letter of Credit only if needed.
2. The “One & Done” Procedure: This is where the seller does not have sufficient funds to deliver
complete first tranche of AU metal to a suitable LBMA refinery. This procedure can be described as a cash
purchase procedure. The “Seller” agrees to make one shipment of any amount of Gold to be refined in any
form (i.e. gold Dore bars, gold dust or gold bullion) to an LBMA approved refinery at the Sellers own cost
and then have the gold smelted and represented by an acceptable LBMA assay certificate. BUYER will
then purchase this AU metal immediately from the seller, via the LBMA refinery, at the agreed contract
price for a cash payment. This will then provide the seller with funds to ship the complete first tranche of
AU metal to the refinery for smelting and hallmarking, where after the gold will be purchased immediately
with full payment made in cash for each trench; however no Proof of Funds or Letter of Credit will be
issued to “Seller”.
1. Requested by Seller: All Table Talks requested by Seller and or its Mandate will be held in the
Corporate Offices of BUYER in Los Angeles, California USA. Any Table Talks requested outside of Los
Angeles, CA must be pre-paid by Seller; to include Business Class Airfare, Transportation to and from
Airport and two Nights lodging for the Buyer and his Mandate. This must be verified by Travel Agent
confirmation. All visas if needed; must be arranged by Seller and verifiable through the USA embassy.
2. Requested by Buyer: All Table Talk meetings requested by BUYER. will be conducted at:
a. The Corporate Offices of BUYER are in Los Angeles, California USA;
b. The Bank or LBMA Bounded Warehouse where the Gold is being housed;
c. The Refinery where the Gold is being processed.
3. Table Talk: Only principles from each side to be present and may include Mandates and Banking
Officers. At no time will any Intermediary be present.