Specie Custody, Lloyd\'s All-Risk & Tri-Party DACA
Physical collateral security protocols for high-value precious metals. Audits LBMA accredited vaulting networks, integrates Lloyd\'s of London specie all-risk insurance coverage, enforces perfected UCC Article 9 security interests via Tri-Party DACAs, and establishes compliant Regulation D Rule 506(c) syndication boundaries.
Four Pillars of Institutional Collateral Perfection
Physical commodities carry custody and title risks that require ironclad institutional controls before capital can be safely advanced against physical inventory.
1. LBMA Accredited Secure Vaulting
PHYSICAL POSSESSIONPhysical metal must reside in accredited commercial vault facilities operated by tier-1 global security logistics firms (such as Brink\'s, Loomis, Malca-Amit, or Via Mat).
- Allocated vs Unallocated Storage: Borrowing base eligibility requires 100% Allocated bailment. Bullion bars must be physically segregated, identifiable by unique refiner serial numbers, bar weights, and fineness stamps.
- Dual-Control Access: Depository facilities enforce strict dual-custody access rules with biometric access, continuous video monitoring, and tamper-evident vault seals.
- Independent Weight & Assay Verification: Depository receipts must be accompanied by third-party umpire weighing certificates matching the refiner\'s official packing list.
2. Lloyd\'s Specie All-Risk Insurance
BALANCE SHEET DE-RISKINGComprehensive specie insurance underwritten by leading Lloyd\'s of London coverholders provides 100% replacement or cash par value against physical casualty.
| Policy Dimension | Standard Commercial Policy | Lloyd\'s Specie All-Risk Protocol |
|---|---|---|
| Covered Perils | Fire, limited storm damage | All-Risk: Theft, Robbery, Transit, Fidelity |
| Loss Payee | Borrower / Operator | Lender named as First Sole Loss Payee |
| In-Transit Coverage | Often excluded or low sub-limits | Full armored air & ground transport cover |
| Advance Rate | 35%–45% Uninsured Haircut | 75%–85% Insured Borrowing Base |
3. Tri-Party DACA & Perfected Liens
LEGAL PERFECTIONEnforces priority security over cash proceeds generated from refinery deliveries and commercial off-take agreements.
The Deposit Account Control Agreement (DACA) is executed with an FDIC-insured commercial bank. Under a "Springing Dominion" structure, the borrower operates the collection account normally until an event of default, at which point exclusive control shifts instantly to the senior lender.
4. Institutional Syndication & Reg D Rules
SECURITIES ARCHITECTUREWhen debt facilities against mining collateral are syndicated to family offices, private credit funds, or institutional investors, securities exemptions must be meticulously preserved.
1. Rule 506(c) Compliance: General solicitation permitted only when all participating purchasers undergo verified accredited investor checks (tax returns, CPA letters, or broker verification).
2. Alternative Exemptions: Rule 506(b) for closed private circles; Regulation S for non-US institutional lenders.
3. Clear Scope Separation: UnyKorn LLC conducts independent technical and legal audit reviews. UnyKorn LLC is not a broker-dealer, underwriter, or custodian and never holds investor funds.
The 5-Step Collateral Perfection Sequence
How senior lenders establish unchallengeable legal and physical dominion over physical bullion collateral.
| Step | Execution Milestone | Governing Legal Document | Perfection Standard |
|---|---|---|---|
| Step 1 | Bailee Notice & Custody Agreement | Tri-Party Vault Storage Agreement | Vault acknowledges lender\'s sole release instruction |
| Step 2 | UCC-1 Financing Statement | Security Agreement & UCC-1 Form | Filed in borrower jurisdiction of formation |
| Step 3 | Specie Insurance Endorsement | Lloyd\'s Certificate of Insurance | Lender issued First Sole Loss Payee endorsement |
| Step 4 | Cash Waterfall Control | Tri-Party DACA with FDIC Bank | Springing dominion over refinery off-take account |
| Step 5 | Facility Drawdown & DvP | Credit Agreement & Borrowing Base HUD | Capital dispatches upon vault electronic confirmation |
Ready to review your physical vault and DACA documentation?
Submit warehouse receipts, specie policies, and account control agreements for audit.