Risk Indicators for African Commodity Transactions
This is a structured catalogue of the risk indicators our analysts look for in African commodity transactions. It is organised by category — counterparty, documentation, custody, operational, and compliance — and each indicator is accompanied by guidance on what it means and what to do when you encounter it.
1. Counterparty risk indicators
These indicators relate to the supplier or counterparty themselves — their existence, ownership, and behaviour.
- Supplier not found in the official company registry
- Company recently registered with no trading history
- Registered address is virtual or does not exist physically
- Beneficial ownership is obscured or undisclosed
- Supplier pressures for rapid payment before verification
- Supplier refuses or avoids a site visit
- Payment requested through personal or third-party accounts
- Supplier cannot meet in person at their claimed operating site
- Supplier is unwilling to use a letter of credit or escrow
- Any red flag is dismissed as "confidential" or "unnecessary"
2. Documentation risk indicators
These indicators relate to the documents presented in support of the transaction.
- Export permit not found in issuing authority records
- Permit format does not match the authority's current template
- Permit is expired or expires before the proposed shipment
- Permit issued to a different entity than the supplier
- Certificate of origin is a generic template or signed by unrecognised party
- Assay certificate details do not match the claimed material
- Purity claim is implausibly high for the origin
- Weights or quantities differ across the document set
- Dates are inconsistent or impossible across the set
- Signatures, stamps, or letterhead differ from the same issuer
3. Chain-of-custody risk indicators
These indicators relate to the supplier's ability to account for the commodity's journey from source.
- Supplier cannot specify where the commodity was mined
- No documents supporting custody transfers
- Custody path inconsistent with transport documents
- Consolidation with unnamed or cross-border sources
- Supplier acquired material "recently" but cannot say from whom
- Timeline gaps that cannot be explained
- Vague sourcing language without specifics
- No warehouse or storage records available
4. Operational risk indicators
These indicators relate to the supplier's physical operations and capacity.
- Site visit reveals a staged or showroom operation
- No visible staff, equipment, or infrastructure
- Storage conditions inconsistent with the commodity
- No evidence of prior successful exports
- Stock photos presented as current inventory
- Supplier cannot demonstrate capacity for the volume offered
5. Compliance risk indicators
These indicators relate to regulatory, sanctions, and responsible sourcing exposure.
- Supplier or owners appear on sanctions lists
- Supplier or owners are PEPs without disclosure
- Transaction structure inconsistent with the country's regulations
- Origin inconsistent with custody path or transport documents
- Conflict-affected area without OECD-aligned due diligence
- No responsible sourcing or ESG documentation
- Price significantly below market — a common fraud lure
- Unusually large volumes from a country with limited production
Risk indicators are signals, not proof. But multiple indicators across categories — counterparty, documentation, custody, operational, and compliance — should stop the transaction until independent verification is complete.