Bolivia defends central bank gold buying against laundering accusations

Bolivia’s government has defended the legality of domestically produced gold purchased by the central bank, following allegations by opposition lawmakers that the practice may constitute gold laundering.

The bank has met all traceability requirements, allowing it to purchase and refine more than 18 metric tons since May 2023, when a law to strengthen foreign reserves was enacted, Finance Minister Marcelo Montenegro told reporters in La Paz. That includes 14.5 tons — worth $1.3 billion at current prices — refined last year alone.

“The central bank requests all necessary documentation to guarantee the gold’s legality,” he said on Thursday. “It’s very careful.”

Growing mining activity in Bolivia’s Amazon region combined with record-high gold prices are putting the spotlight on the central bank purchases. Last November, opposition lawmaker Andrea Barrientos alleged that much of the gold finding its way to the bank was from illegally produced metal bought by state-owned trader EPCORO.

Mining Ministry data show 99.5% of Bolivia’s gold is produced by cooperatives, although some politicians, including former Deputy Mining Minister Hector Cordoba, as well as analysts and consultants have said most of those operate without permits.

Buying and selling locally produced gold has been an effective way for the Bolivian central bank to meet foreign obligations and finance fuel imports, according to the finance minister, with 39 tons sold for those reasons.

Before the May 2023 law was introduced, Bolivia held 43 tons of gold reserves. By last December, that had dropped to the 22-ton minimum requirement. But that could change soon after a Jan. 1 government decree to allow the central bank to use remaining reserves as collateral for new loans or credits.

(By Sergio Mendoza)