BullionVault is regulated under English Law.
Regulatory responsibility rests on three mutually independent arms of law enforcement: (i) the investigating authority, (ii) the prosecuting authority and (iii) the Criminal Courts.
Bringing a criminal case is not something you would have to do yourself. You would report - for example - a theft, and the investigation and prosecution is the duty of these civil bodies.
In addition you have recourse to the civil law, which would rule on trade disputes between you and us if, for example, you were to allege that we were acting in breach of our stated Terms and Conditions - which form the basis of the business arrangement between us. Bringing a case under civil law would ordinarily incur costs for you.
You should understand that, together with the whole of the London Gold Bullion Market, BullionVault's regulatory status is markedly different from the financial services industry in general.
Modern financial services businesses throughout Europe and America tend to be companies which deal in paper based instruments generally called 'securities', and these are subject to increasing legal sophistication.
As a result of growing complexity too many instances of loss to investors have occurred, where victims have been told that the cause of their loss was regrettable management error, not dishonesty. Yet frequently the managers responsible are insured against personal lapses and many of those responsible for costly error have actually received substantial sums of money on the termination of their employment, while investors have suffered losses.
Meanwhile the effectiveness of straightforward property law has continued to enjoy the full power of the state to identify, prosecute and punish people who steal and defraud.
Because it concerns the absolute ownership of physical metal, and not paper based contractual rights traded as securities, physical bullion trading is deemed simple enough to fall outside the defined scope of formal financial services regulation. Consequently the London Gold Bullion market - which is the biggest in the world - is not regulated by the Financial Services Authority, but by traditional English property law, under codes of practice defined by the London Bullion Market Association [LBMA].
The LBMA, of which BullionVault is the only full member dedicated to retail investment, therefore defines the standards and practices of good commercial behaviour for the entire London Bullion Market. These have maintained such a high degree of trustworthiness and reliability that the LBMA continues to specify the standards for bullion trading around the world. The significant majority of bullion trades executed even in New York are - in fact - traded on the LBMA's 'loco London' terms. This means that deals will be settled in bars obeying LBMA specifications, and that they will pass from the seller's LBMA member vault to the buyer's LBMA member vault, via specialist LBMA member couriers.
We believe this offers a regulatory environment better understood by our customers than is the formally regulated securities industry. BullionVault customers own their gold, and not a piece of paper evidencing an entitlement under a trust, or a liability on a corporate balance sheet. The property rights customers enjoy are simpler, better established, and less subject to change than modern securities law.
Although it is not regulated by the Financial Services Authority BullionVault adopts many of the duties which have been applied by FSA to businesses which have responsibilities for other, less tangible, stores of private wealth. These include:-
BullionVault is a rigorous adopter of these good practices and seeks to maintain an environment where its compliance with these principles is visible and proven.
BullionVault maintains a compensation fund out of its commission and contributes at a rate of 10% per commission charged, to a maximum of 10 cents per order. The value of the compensation fund is currently capped at $4m which is a total maintained under review. The independent council for adjudicating on formal complaints has the exclusive power to distribute benefits from this fund.
Currently there is no reporting of your BullionVault business while your gold is maintained within a professional market vault in the normal BullionVault way. Wherever you live your trading activity and gold ownership are not reported to any authorities, anywhere in the world.
Nevertheless there are some issues you should understand.
Do not place the proceeds of crime in a BullionVault account. Do not attempt to launder them through a BullionVault account (which the linked bank account would render unworkable anyway). BullionVault is committed to keeping crime out of the professional bullion markets.
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