Peru, the world's sixth biggest gold exporter, is cracking down on illegally mined gold and expects a 25% reduction in overall gold exports in 2014 due to the measures.
Reuters, citing government officials, reported the country's crackdown on illegally mined gold has nearly frozen gold shipments from shell companies.
In 2013, the country produced 140 million grams of gold and shipped an estimated $8bn (£4.9bn, €5.9bn) worth of gold. Nearly a quarter of the shipments were likely from companies that acquire ore from illegal sources to evade taxes, sources told the news agency.
They noted that the country's stricter export rules, confiscations and criminal investigations would cut down the illegal gold shipments in 2014.
"Right now (illegal gold exports) are nearly frozen, the market is practically paralyzed," a customs official said. "This year we should see gold exports drop 25%."
However, the country is not targeting established mining companies, whose shipments have continued as usual.
Daniel Urresti, a high-ranking Peru official charged with tackling illegal mining, told Reuters that Peru's tighter export standards would reduce gold exports by about 25%. Due to strict laws, black market price of gold declined substantially recently, he added.
"No one is buying illegal gold because they know they can't export it anymore," Urresti said.
Since December, Peru has seized about a tonne of gold from 19 companies, who were suspected of asset laundering, according to the customs official. The companies include C.G. Koening, a supplier of Canadian miner Dynacor.
Dynacor said in January it complies with all regulations in Peru and is suspending its purchase from suppliers because of the crackdown.
The South American country is also the world's top producer of coca and cocaine. However, illegal gold mining is regarded as a bigger business than drug trafficking there, according to some accounts.
According to a recent report by international labour watchdog Verité, over 20% of the gold being mined in Peru is produced illegally.
The government led by President Ollanta Humala has drafted stricter rules for gold exports that will be introduced in coming weeks, according to the customs source.
The rules will require export companies to substantiate their gold sources, and to undergo lab tests for purity of the gold to be exported.
The country will also make sure that illegal gold producers do not find other ways to move the precious metal to foreign markets, Urresti said.