Legislative efforts to stop the trade of conflict minerals originating from the Democratic Republic of the Congo and surrounding areas has gotten off to a shaky start, and as manufacturers struggle to meet compliance guidelines, the Obama administration is upping the ante through expanded sanctions.
For years, the mining and trade of conflict minerals by African warlords has led to widespread violence and human rights abuses in the Congo and neighboring Rwanda, Uganda, and Burundi. The recent Dodd-Frank Wall Street Reform and Consumer Protection Act, which requires U.S. manufacturers to identify the origin of the five so-called “conflict minerals”—gold, tin, tantalum, tungsten, and gold—that may be present in their products, was aimed at curbing much of this activity.
But preliminary filings last month were dismal. Only 5 percent of companies that filed reports under Dodd-Frank were able to trace the conflict status of the minerals used in their products, says Source Intelligence, a U.S. risk management firm.
Conflict minerals—often found in consumer electronics like smartphones—are difficult to trace, especially gold which, like diamonds is easy to smuggle because it has a higher value-to-weight ratio, and documenting and certifying origin is extremely tough.
While companies are scrambling to meet the requirements of Dodd-Frank, this week President Obama expanded sanctions against conflict minerals regions to include individuals and groups tied to militias involved in the illicit trade of natural resources from the Congo region.
Conduct that will trigger U.S. sanctions:
- Actions or policies that threaten the peace, security, or stability of the Democratic Republic of the Congo;
- Actions or policies that undermine democratic processes or institutions in the Democratic Republic of the Congo;
- The targeting of women and children with acts of violence (including killing, maiming, torture, and rape or other sexual violence), abduction, forced displacement, or attacks on schools, hospitals, religious sites, or locations where civilians are seeking refuge, or through conduct that would constitute a serious abuse or violation of human rights or a violation of international humanitarian law;
- The use or recruitment of children by armed groups or armed forces;
- Obstructing the distribution of, or access to, humanitarian assistance;
- Attacks against United Nations missions, international security presences, or other peacekeeping operations.
Companies and individuals that fail to adhere to the expanding sanctions could suffer fines of at least $250,000 or twice the amount of the underlying transaction, criminal penalties of up to $1,000,000, and, in extreme cases, imprisonment for up to 20 years.
Learn more about how you can become conflict minerals compliant.