In a context of high gold prices and increasing due diligence requirements, Colombia faces the challenge of progressively integrating legitimate small-scale mining into the formal economy. The main gap lies not only in enforcement but in the lack of mechanisms to differentiate and support formalization processes. The CRAFT Code provides a technical transition framework to connect on-the-ground realities with regulatory and market demands.
Photo archives ARM
Illegality or Lack of Transition Infrastructure?
Public debate often treats mining informality as a homogeneous condition, when in reality it encompasses very different realities. At one extreme, there are openly illegal operations: activities without mining rights, operating in excluded zones, or showing clear signs of capture by criminal economies.
At the other extreme, there is a segment of small-scale mining operating in authorized areas, holding some form of mining right or in the process of obtaining one, and demonstrating a verifiable willingness to comply with regulations, yet still lacking the full set of technical and environmental instruments required for complete formalization.
This distinction matters because it determines which actors can be supported and integrated into legal supply chains, and which must be excluded and subject to enforcement and sanction.
In practice, however, both segments often converge in the same local trading channels. When accessible formal channels do not exist for those in transition, gold from legitimate organizations is sold through the same buying houses, intermediaries, and processors where illegal gold also circulates. This creates a gray zone that undermines traceability, increases the risk of money laundering, and reduces the State’s ability to exercise effective differentiation. The issue is not merely a lack of enforcement; it is that the current institutional design offers limited tools to separate, support, and monitor formalization pathways in real time.
In this context, the dominant industry response tends to be a highly risk-averse approach, often resulting in immediate disengagement rather than progressive engagement and support measures. While understandable from a legal and reputational risk management perspective, this approach has unintended consequences for sector competitiveness. Closing formal market access to mining organizations in transition strengthens illegal intermediaries, consolidates financial dependency relationships, and expands the space for illegal actors to capture mining revenues and territorial control. In short, exclusion may reduce immediate risk for some actors but amplifies systemic risk for the sector in the long term.
Addressing criminal activity remains the responsibility of the State and law enforcement authorities. For us, as organized civil society specialized in responsible mining, the central challenge is to build a transition mechanism that recognizes and supports legitimate small-scale mining while it completes regulatory requirements. Without infrastructure to differentiate and manage this transition, public policy becomes trapped between two equally insufficient options: tolerating the gray zone or demanding instant formalization that, in practice, becomes exclusionary.
From the experience of the Alliance for Responsible Mining, it is necessary to broaden the analytical lens. Framing the issue solely as a matter of supply and demand oversimplifies the problem and obscures layers of complexity where intervention opportunities may exist. When viewed through a broader lens of territorial impact and institutional presence, the scope for intervention becomes significantly broader, and the horizon of action can extend beyond purely transactional approaches.
Photo ARM – Training workshops for ASM miners, Alliance for Responsible Mining
The Bottleneck of Formalization
Within Colombia’s regulatory framework, mining formalization is often understood as full compliance with a set of requirements: a valid mining title, an approved Work and Investment Plan (PTO), environmental licensing, and registration in the RUCOM registry authorizing mineral commercialization. From a legal standpoint, this definition is sound. However, in practice for small-scale mining organizations, formalization is not a single administrative event but a progressive process of building technical, organizational, and financial capacities that must be sustained over time.
A small-scale mining organization seeking formalization must do more than complete paperwork. It must develop internal management systems, establish basic production controls, implement occupational health and safety practices, strengthen internal governance, manage environmental impacts, and build mechanisms for traceability, recordkeeping, and accountability. Each of these elements requires time, technical support, and, above all, a structure capable of monitoring progress and addressing shortcomings.
This is where the real bottleneck lies. The State faces operational limitations in providing individualized support to hundreds of organizations dispersed across complex territories. At the same time, formal markets demand levels of traceability and due diligence that are difficult to demonstrate immediately for actors still consolidating their organizational structures. The result is a gap between regulatory expectations and what many organizations can demonstrate in the short term.
This gap does not necessarily reflect a lack of willingness to formalize. In many cases, it reflects the absence of intermediate infrastructure capable of organizing the process, documenting progress, and applying objective criteria to differentiate those who are advancing from those who are not. Without a structured transition framework, public policy tends to operate in binary terms: legal or illegal; authorized or excluded. Institutions remain confined to an oversight and enforcement role, lacking tools to generate viable pathways toward formalization.
Yet reality on the ground is far more gradual. Some organizations partially comply, have advanced certain instruments, operate in authorized areas, and maintain dialogue with authorities, but cannot yet demonstrate full compliance. Without a mechanism that recognizes and manages this intermediate state under clear standards, these organizations remain in a gray zone that discourages investment, limits access to finance, and keeps gold flows within illicit markets, some of which are captured by criminal groups.
The challenge, therefore, is not to relax regulation, but to build a structured framework that makes progressive compliance viable. What is needed is a tool capable of identifying minimum conditions of legitimacy, measuring critical risks, establishing verifiable improvement plans, and generating structured reports usable by both mining authorities and market actors. An infrastructure that does not replace regulation but helps structure the pathway toward compliance.
That is precisely the role the CRAFT Code can play.
Photo: Alliance for Responsible Mining. Series of training workshops for mining organizations in Honduras.
CRAFT as Transition Mechanism
The CRAFT Code was designed to operate in the intermediate space between informality and full formalization. Aligned with the OECD Due Diligence Guidance, it is not a certification label of excellence nor a substitute for State regulation. It is a risk management framework that allows stakeholders to structure, document, and monitor the progressive improvement process of artisanal and small-scale mining organizations.
Its primary function is to introduce structure and measurable accountability in an environment where opacity often prevails. CRAFT establishes clear criteria to determine minimum conditions of legitimacy, identify critical risks such as links to armed conflict, serious human rights abuses, corruption, or tax evasion, and require concrete mitigation measures.
Through structured modules, it enables the evaluation of organizational performance, the definition of action plans, and the generation of standardized reports that can be shared with authorities and buyers.
This is essential. The transition toward formalization requires clear guidelines and objective evidence of progress. Without verifiable reporting mechanisms, public authorities cannot distinguish between rhetoric and real progress. Nor can companies seeking to establish responsible commercial relationships do so without assuming undue risk.
CRAFT introduces three structural elements that facilitate the transition toward formality:
- Differentiation: It separates legitimate informal mining from illegal mining through clear technical criteria, avoiding generalizations that penalize actors genuinely progressing toward compliance.
- Risk-based approach aligned with international standards: In contexts such as Colombia, classified as conflict-affected and high-risk areas by the European Union and the OECD, enhanced due diligence is not optional. CRAFT provides a methodology aligned with international practices that documents risk mitigation efforts and enables access to high-value markets.
- Conditional support for progressive improvement: Commercial relationships are not predicated on full compliance from the outset, but on verifiable progress and clear action plans. This creates incentives for formalization without requiring instantaneous transformation, which is often financially unviable.
CRAFT doesn’t grant mining rights, replace environmental licenses, or authorize commercialization. Its value lies in structuring the pathway toward these regulatory milestones. In other words, it transforms formalization into a measurable and transparent process rather than a binary leap.
For authorities, this means access to systematic information on the organizational performance of actors in transition. For large-scale mining companies with processing and purchasing capacity, it means applying due diligence supported by documented evidence. For mining communities, it provides a clear framework to demonstrate legitimacy and differentiate themselves from illegal actors while completing regulatory requirements.
The CRAFT Code can serve as the technical infrastructure connecting territory, regulation, and markets within a coherent transition framework.
The Collaborative Governance Model Required to Test CRAFT
If the challenge is to build a functional transition framework, the next step is operational rather than legislative. Colombia does not need a new law to pilot progressive formalization mechanisms. It needs structured pilot initiatives that allow for evaluation, learning, refinement and scaling.
Facilitating the pilot implementation of CRAFT does not imply delegating regulatory functions or replacing State authority. It means recognizing that formalization is a gradual process that can benefit from technical standards aligned with international best practices.
The transition toward formality cannot rest on a single actor. It requires a collaborative framework in which each party plays a defined role:
- The State maintains regulatory authority, recognizes CRAFT as a transition mechanism, and facilitates its implementation through technical support and institutional coordination.
- Intermediary companies apply due diligence and create economic incentives for small-scale mining organizations to process and sell minerals through their commercial channels and processing plants under full technical, environmental, and tax compliance.
- ARM structures and monitors the technical implementation of the transition mechanism based on the CRAFT Code and the OECD Due Diligence Guidance.
- Mining communities adopt internal controls and implement improvement plans within agreed timelines.
In an international context where traceability and due diligence requirements are increasing, countries that can demonstrate effective transition mechanisms will gain a strategic advantage. If Colombia enables structured testing of CRAFT as a transition mechanism, it will send a clear signal to investors, buyers, and international organizations: the country does not ignore informality; it manages it through standards, evidence, and progressive improvement.
A Strategic Decision for the Country
Artisanal and small-scale mining is not a marginal phenomenon. It is a structural actor within Colombia’s mining production system, contributing approximately 70% of the gold produced in the country. Ignoring it will not make it disappear; excluding it will not reduce systemic risk. As a country, we face the challenge of making formalization viable in complex, high-risk territories where institutional capacity remains uneven.
Demanding full compliance without offering a transition mechanism may lead to exclusion rather than formalization. By contrast, enabling structured mechanisms that differentiate, monitor, and support this transition creates conditions for the progressive integration of those actors genuinely willing to comply.
The CRAFT Code is not a magic solution nor a replacement for regulation. It is a technical tool aligned with OECD standards that can organize the pathway toward formalization through evidence, improvement plans, and structured monitoring. Facilitating its testing does not weaken State authority; it strengthens it by introducing systematic information where gray zones currently prevail, often exploited by illegal groups.
At ARM, we stand ready to work alongside authorities, companies, and mining communities in implementing pilot initiatives that measure progress toward formalization through verifiable evidence and shared institutional learning.