Key differences between the EU CM Regulation and the US Dodd-Frank CM requirements

Most of you probably know the European Union (EU) agreed on legislation to regulate the usage of 3TG in their member states. The regulation becomes effective on January 1, 2021. Most of you are also probably familiar with the requirements of Section 1502 of the U.S. Dodd-Frank Act (DF 1502). There are, however, significant differences between the two.

What many are still unclear on is to whom this regulation applies. The EU Regulation applies to importers of 3TG into the EU in mineral or metal form. These can be importers who provide ores or unrefined minerals to EU smelters and refiners or importers who import specified 3TG metals processed outside of the European Union. So, if you are a manufacturer of parts, components or finished products that are imported to the EU, you are not covered unless you are importing minerals or metals as defined by the regulation. The same can be said for retailers, distributors or importers who do not import minerals or metals.

Another significant difference between the EU regulation and DF 1502 is that small volumes of 3TG will be exempt. Volume thresholds for some of the listed minerals and metals are presented in Annex I of the regulation. Gold importers beware! Interestingly, the European Commission has indicated they may pay close attention to the effectiveness of the regulation as it relates to gold since gold is valued so high in small quantities.

The other thing that’s unique about the EU regulation is that it covers the sourcing of 3TG from high-risk areas anywhere in the world. The EU views 3TG as potentially playing a role not only in conflict and human rights abuses in the Great Lakes Region of Central Africa but also in issues related to child labor, money laundering, the illicit global arms trade and terrorist financing on a global scale. This is very different from the geographic scope of DF 1502, which only covers 3TG that is sourced from the DRC and its adjoining countries.

While this may seem daunting, Source Intelligence is committed to actively staying ahead of the requirement. In fact, we have already implemented algorithms to incorporate sourcing conflict risks associated with every single country in the world.

We are making improvements to our UI so that our clients are well-positioned to seamlessly move from program to program depending on their reporting needs. For example, our clients will be able to leverage data that has already been collected for DF 1502 compliance and see two different assessments of risk, one which is specific to DRC and surrounding regions sourcing and the other relevant to global sourcing. By broadening the scope, our clients will now have access to a deeper level of risk assessment within their supply chains. If you’re interested in learning more about the upcoming regulation in the EU, click here to download our EU conflict minerals compliance guide.

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