Isabella Jewellers & Refiners

RISK MANAGEMENT POLICY & PROCEDURE

Purpose of this Policy
All activities undertaken by Isabella Jewellers & Refiners (Pty) Ltd carry an element of risk. In
managing risk, it is Isabella Jewellers & Refiners (Pty) Ltd practice to take advantage of potential
opportunities while managing potential adverse effects. Managing the risk is the responsibility of all
employees at Isabella Jewellers & Refiners (Pty) Ltd .
Policy Owner
The Managing Director and the Compliance officer is the policy owner of the risk Management Policy
& Procedure for Isabella Jewellers & Refiners (Pty) Ltd. The financial administrator will still have an
oversight over the risk management plan for Isabella Jewellers & Refiners (Pty) Ltd.
Applicability
This policy & procedure is applicable to all Suppliers/clients who are subject to KYC with due
diligence involved in Isabella Jewellers & Refiners (Pty) Ltd supply chain.
Understanding Risk Management
Risks have been described in terms of combination of consequences of an event occurring and its
likelihood of re-occurring. Risk is the chance of something happening that will impact on objectives.
Risk management is described as the processes and structures that are directed towards potential
opportunities whilst managing an adverse effect.
Isabella Jewellers & Refiners (Pty) Ltd risk management system is designed to identify the risk it faces
and has measures in place to keep those risks to an acceptable minimum. Risk owners at Isabella
Jewellers & Refiners (Pty) Ltd have been assigned responsibility for identified risk in the documents
designed to record the levels of risk. Isabella Jewellers & Refiners (Pty) Ltd risk assessment matrixes
are compiled as part of all KYC procedures and a matrix is used as a benchmark in planning and
implementing the risk management measures.
Risk owners have been identified assigned responsibility for identified risks and this is recorded on
the supplier risk assessments done at Isabella Jewellers & Refiners (Pty) Ltd this takes in
consideration the nature, scale and complexity of the business.
The risk management process consists of the following main elements:
1.1 Identify: Identify the risk (treats & opportunities and document the risk captured by the
supplier/client risk assessment (See document on Supplier Risk Assessment)
2.1 Assess: the primary goal is to document the effect of all identified treats & opportunities by
assessing the risk level of each supplier/client accordingly:
• The country where the supplier/ client is registered office is located.
• The country of origin of precious metal
• The nature of the business and material supplied
• The estimated of annual volume
• The presence of Politically exposed persons (PEP) in corporate structure

Levels of risks are evaluated as follows:
➢ Low: Allowing the business relationship under standard conditions.
➢ Medium: Allowing the business relationship subject to enhance a due diligence on the
supplier/client.
➢ High: Allowing business relationship only after appropriate checks have been done and it has
been approved by the Management at Isabella Jewellers & Refiners (Pty) Ltd.
Risks are effectively managed by Isabella Jewellers & Refiners (Pty) Ltd through the effective
implementation of various controls, policies & procedures, forms, assessments which include:
• Management approved risk management framework.
• Documented Policies & Procedures.
• Maintenance of records.
• Implementation of risk-based systems and processes designed by Isabella Jewellers &
Refiners (Pty) Ltd .
• Ongoing monitoring of regulatory obligations.
• Checklists designed to guide activities and business plans to record actions
• Internal and external reporting.
2.1 Assess Risk Management Procedure & Process:
The risk management system is dynamic and is designed to adapt to Isabella Jewellers & Refiners
(Pty) Ltd developments and any changes in the risk profile over time. At Isabella Jewellers & Refiners
(Pty) Ltd the risk level of each supplier/client is determined by the level risk calculation (see supplier
risk assessment form).
Compliance with applicable measures are used as a tool to address identified risks with the
applicable local and international anti-money laundering laws, the business relationship with a PEP
supplier/ client is considered high risk, Where PEP is identified the managing team shall seek
approval of the business director before commencing any business with supplier/ client.
As per KYC (Know our Customer) terms the following is considered:
• The country where the supplier/client’ s registered offices is located.
• The country corruption risk level according to the latest CPI (Corruption Perception Index
from transparency International.
As per KYP (Know your Product) terms the following is considered:
• The country of origin or of destination of precious metals.
• The country’s risk level according to the latest available release from the Heidelberg Institute
for International Conflict (HIIK)
• The country’s corruption level according to the latest available release from Transparency
International of the Corruption Perception Index (CPI)

Volume Risk – States that the supplier/ client volume risk level is determined as follows:
Low : transactions of up to 50kg per month of precious metals.
Medium: transactions of up to 200kg per month of precious metals.
High: Transactions of 200kg per month of precious metals.

The overall risk rating as for KYC or KYP can be
Low: The supplier/client presents no specific risk, no mitigation measures.
Medium: Requires ongoing monitoring however no further mitigation measures.
High: Requires ongoing monitoring and appropriate mitigation measures.

2.2 Risk Management Process & Traceability
At Isabella Jewellers & Refiners (Pty) Ltd the risk management system is based on the structured and
systemic process which considers Isabella Jewellers & Refiners (Pty) Ltd internal and external risks
assessments.

2.3 The main elements of the risk management process:
2.3.1 Communicate and consult: communicate and consult with internal and external stakeholders
as appropriate at each stage of the risk management process
Initial Risk Assessment -After a due diligence process the risk level for a new potential Supplier/
client shall be assigned.
2.3.2 Establish the context: Establish the external, internal and risk management context in which
the rest of the process will take place – the criteria against which risk level will be evaluated should
be established and the structure of analysis defined (See supplier assessment form)
2.3.4 Identify risk: identify where, when, why and hoe events could prevent, degrade, delay or
enhance the achievement of Isabella Jewellers & Refiners (Pty) Ltd objectives.
Periodic risk level reviews shall be conducted by the managing director annually.

As per the OECD due diligence guidance for responsible supply chain of Minerals from conflict-
affected and high-risk areas, Isabella Jewellers & Refiners (Pty) Ltd has adapted their policy as per

the standard requirement.
2.3.5 Record Risk: Document the risks that have been identified in the risk assessment forms
2.3.6 Analyse risk: Identify and evaluate existing controls. Determine consequences and like hood
and hence rate the level of risk by analysing the range of potential consequences and how these
could occur.

Guidelines on assessments know-how to assess the specific risk as follows:
1. Supplier/ Client registered office location: –
Rated Level Risk – High
• Information & documents obtained through Isabella Jewellers & Refiners (Pty) Ltd –
KYC process.
Low – where the registered entity is outside of South Africa and in a low-risk area.
Medium – where the registered entity is in South Africa.
High – where the registered entity is outside of South Africa and in high-risk area.
2. The Mined Gold or Recycled Gold originates from, has transited or has transported or has
been transported via a conflict affected or human rights abuse high risk area.
Rated Level Risk – High
• Review the context of each location of gold origin and transport, relying on evidence
from credible sources, and use fair efforts to make reasonable determinations based
on the destination of conflict-affected and high -risk areas advised in the ‘Red-Flag
Country list’
Low – where no material is sourced from these areas (if a SA entity and has no import
permit, this reduces the risk). All source is recycled or scrap.
Medium – where supplier/client does have an import permit but based upon the
information collected in KYC & KYP documentation can assess that they do not purchase,
mine or transport any gold in or from a conflict affected or high risk areas.
High – where supplier does produce or transport gold in a conflict-affected or high-risk area.
3. The Mined Gold is claimed to have originated from a country that has limited known
reserves, likely resources or expected production level of gold.
Rated Level Risk – High
• Review the information provided against available reports for the country in
question relying on evidence from credible sources, and fair efforts to make
reasonable determinations based on the information at hand.
Low – where no mined material is sourced from countries outside of SA, or where the
material is sourced from a country where it is well known to have significant gold reserves
Medium – where mine material is sourced from a country that has limited known reserves,
likely resources or expected production levels of gold, but the volume is significant in
comparison to the total market share, but sufficient information is obtained to substantiate
their market share.
High – where mine material is sourced from a country that has limited known reserves, likely
resources or expected production levels of gold and the volume is in excess of the total
market share for that country.
4. The Recycled Gold comes from a country where gold from conflict affected and human
rights abuse high risk areas are known, or reasonably suspected, to transit
Rated Level Risk – High
Low – where no material is sourced from these areas (if a SA entity and has no import
permit, this reduces the risk significantly).

Medium – where supplier does have an import permit but based on information collected in
the KYC and KYP documentation can assess that they do not purchase, mine or transport any
gold in or from a conflict affected or high risk areas.
High – where supplier does produce or transport gold in a conflict-affected or high-risk area.
5. Gold Supplying supplier/ client or other known upstream companies are in a country
representing high-risk for money laundering.
Rated Level Risk – High
• Review the context of each location of countries representing high risk for money
laundering relying on evidence from credible sources and use fair efforts to make
reasonable determinations based on the information obtained during the KYC & KYP
processes

Low – where no material is transacted by Gold-supplying supplier/client or other money-
laundering (if a SA entity and has no import permit, this reduces the risk significantly)

Medium – where no material is transacted by gold supplying supplier/client or other known
upstream companies located in a country representing high risk of money-laundering.
Where entity does have an import permit but based on information collected in the KYC and
KYP documentation can assess that they do not purchase, mine or transport any gold in or
from a conflict affected or high-risk areas.
High – where the Gold-supplying counterparty or other known upstream companies are in a
country representing high-risk for money-laundering.
6. Gold supplying supplier/client or other known upstream companies or their beneficial
owners with significant influence over the gold supplying supplier/client are politically
exposed persons.
Rated Level Risk – High
• Review the context gold-supplying supplier/client or other known upstream
companies or their beneficial owners with significant influence (significant control,
greater than 25% voting rights) relying on evidence from credible sources and use
fair efforts to make reasonable determinations based on the information obtained
during the KYC & KYP processes
• Gold -supplying supplier/client or other known upstream companies or their
beneficial owners (counterpart)
Low – where the supplier/client are not PEPs (where ownership and supply chain easily
identified)
Medium – where supplier/client have identified PEPs but do not have/exercise significant
control and /or influence.
High – where the supplier/client have identified PEPs but do have / exercise significant
control and or influence.
7. Gold-supplying supplier/client or other known upstream companies are active in higher
risk business activity such as arms, gaming and casino industry, antiques and arts, sects
and their leaders.
Rated Level Risk – High
• Review the context of gold supplying supplier/client or other known upstream
companies, relying on evidence from credible sources, and use fair efforts to make
reasonable determinations based on the information obtained during the KYC & KYP
processes.

Gold supplying supplier/client or other known upstream companies (counterpart).
• Identified by using credible source information obtained from the world research
accountabilities or alike.

Low – where the supplier/client are not active in higher risk business activity such as arms,
gaming, and casino industry, antiques and art, sects and their leaders.
Medium – where the supplier/ client are active in higher risk business activity such as arms,
gaming, and casino industry, antiques and art but specific entity has a reputable standing with
limited risk and where the supplier/client have no significant influence, control or stake.
High – where supplier/client are active in higher risk business activity such as arms, gaming,
and casino industry, antiques and art, sects, and their leaders.

8. Systematic or widespread human rights abuses associated with the extraction, transport
or trade of gold.
Rated Level Risk – High
• Review the reasonable determinations based on the information obtained during
the KYC & KYP processes based on the type of material supplied.
• Refer to the OECD guideline’s policy and procedure and all policies and procedures
defined at Isabella Jewellers & Refiners (Pty) Ltd.
Low – where the material is sourced from high-risk areas in this regard and site visits confirm
there is no evidence of such.
Medium – where supplier/client does not have import permit but based on the information
collected in the KYC & KYP process can reasonably assess that it does not purchase, mine or
transport any gold in or from a conflict-affected or high-risk area and their supporting
documentation can assist in providing satisfaction (Site visits).
High – where the supplier/client does produce or transport gold in a conflict-affected or
high-risk area in this regard.
9. Direct or indirect support to non-state armed groups or public or private security forces
(including contribution to conflict)
Rated Level Risk – High
• Refer to OECD guidelines and Isabella Jewellers & Refiners (Pty) Ltd – policies and
procedures
Low – where the material is sourced from high-risk areas in this regard and site visits confirm
there is no evidence of such.
Medium – where supplier/client does not have import permit but based on the information
collected in the KYC & KYP process can reasonably assess that it does not purchase, mine or
transport any gold in or from a conflict-affected or high-risk area and their supporting
documentation can assist in providing satisfaction (Site visits).
High – where the supplier/client does produce or transport gold in a conflict-affected or
high-risk area in this regard.
10. Bribery and fraudulent misrepresentation of origin of gold.
Rated Level Risk – High
• Review the information obtained during the KYC and KYP process, risk assessed
based upon type of material supplied.
• Refer to Isabella Jewellers & Refiners (Pty) Ltd policies and procedures.

Low – where the source of material is easily identifiable (second-hand dealers, jewellery)
and delivered in its original form and reasonable assurance and supporting documentation
can be obtained (register, licenses, no import permit)
Medium – where the source of material is identifiable, but the process is more complex
(supplier has upstream suppliers that are other refiners and limited tiers of supply that need
to be identified in order to confirm source) No import permit and does not hold
permit/licenses that enable them to misrepresent that material (mine) where cross border
material can be mixed into SA material, finger printing is required.
High – where sore of the material is identifiable, but the process us more complex (supplier
has multiple upstream suppliers that are other refiners and multiple tiers of supply that
need to be identified in order to confirm source) Has an import permit and does hold
variations of permit/ licenses that enable them to misrepresent the origin(i.e Second-hand
goods license and refining license)
11. Money Laundering and Finance of Terrorism
Rated Level Risk – High
• Review the information obtained during the KYC and KYP process, risk assessed
based upon type of material supplied.
• Type of company and regulatory environment and type of entity as well as country
of operations assist in determining risk element.
• Refer to OECD guidelines, and Isabella Jewellers & Refiners (Pty) Ltd Policies and
Procedures.
Low – where the company structure is clearly identified and do not have any cash like
transaction. Operates in low level risk country for finance of terrorism. Searches such as
Accountability and world check assist in this regard. Listed entities (due to their regulatory
environment)
Medium – where the company structure is clearly identifiable and do have limited cash like
transaction. Operates in a low-level risk country for finance of terrorism in this regard as well
as financial audit reports.
High – where the company structure is clearly identifiable but complex and have high
frequency of cash transaction. Operates in hight level risk country for finance of terrorism.
Searches as accountability and world check assist in this regard.
12. Transaction Type
Rated Level Risk – High
Low – where Isabella Jewellers & Refiners (Pty) Ltd is purchasing the material directly from
the supplier/client.
Medium – where Isabella Jewellers & Refiners (Pty) Ltd is toll refining and exporting the
material on behalf of the counterpart, where there is clear visibility on the origin of the
material and the destination is not on the ‘Red-Flag Country List’.
High – where Isabella Jewellers & Refiners (Pty) Ltd is toll refining and exporting the material
on behalf of the counterpart, where there is clear visibility on the origin of the material and
the destination is not on the ‘Red-Flag Country List’
13. Source of Material
Rated Level Risk – High
Low – where the supplier/client is the first tier, and the material are delivered in its original
form.

Medium – where the supplier/client is first, second and third tier and the material are not
delivered in its original form, but evidence of the origin is easily obtainable on hand.
High – where supplier/client is the is first, second and third tier and the material is not
delivered in its original form, but evidence of the origin is easily obtainable on hand.

14. Annual Volumes Produced or Transacted
Rated Level Risk – High
Low – transaction / production up to 50 Kg per month.
Medium – transaction / production up to 200kg per month.
High – transaction / production over 200kg per month.
16. Import permit held
Rated Level Risk – High
Low – supplier/client does not have an import permit.
Medium – supplier/client has an import permit but is not currently in use.
High – supplier/client does not have an import permit and is currently importing from
outside of South Africa.
17. Historic, Pending or Current legal action against supplier.
Rated Level Risk – High
Low- where the supplier/client does not have any identified historic, pending, or current
legal action.
Medium – where the supplier/client does have historic legal action but longer than 10yrs
past or has pending/current legal action where action is not that including bribery, fraud,
illicit sourcing or alike.
High – where the supplier/client does have historic legal action but sooner 10 years past or
has pending/current legal action where the action is including bribery risk, fraud, illicit
sourcing or alike.
18. Type of Licenses or Permits
Rated Level Risk – High
Low- where the supplier/client has a single license or permit in relation to precious metals
(delivered in original form)
Medium – where the supplier/client is not first tier and has a single or permit (not delivered
in original form)
High- Where the supplier/client has multiple licenses or permits enabling them to ast as a
first and second tier supplier (purchase material in its original form and alter/melt) eg.
Second-hand goods certificate and precious metals refining license.

Risk Mitigation
Risk Mitigation planning is a process for developing options and actions to enhance opportunities
and reduced risk/threats to a business project. Risk mitigation progress monitoring includes tracking
identified risks, identifying new risks and evaluating risk process effectiveness throughout the
business practises.

An enhanced Due Diligence is mandatory for high-risk suppliers/clients. The Managing Director shall
define the mitigation measures as per the Supplier/client risk assessments that have already been
conducted at Isabella Jewellers & Refiners (Pty) Ltd .
Consult Compliance Manager at Isabella Jewellers & Refiners (Pty) Ltd for any further information
related to Supplier Risk Management and KYC Processes.


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