Conflict diamonds’ entry to India raises money laundering fears


A customs report has alerted the government that conflict diamonds are finding their way into India for processing, and then exported to the U.S. and European markets. More than 48,000 carats of conflict diamonds were seized in Surat and Mumbai in the past year.

Investigations revealed that the diamonds were of Zimbabwean origin and were smuggled into India via Kenya. These diamonds were not supported by the Kimberley Process and could be a conduit for money laundering as well. 

The report was part of a dossier prepared for discussion at the recently concluded meeting of chief commissioners and directors general of customs and central excise in the national capital. The report says, “Even as rough diamonds are not subject to any duty, there is a need to remain alert to thwart the possibility of conflict diamonds being smuggled into the country.” 

The import of low-quality rough diamonds and their subsequent export at grossly inflated values has been purposefully used to disguise the origin and movement of funds, as well as the origin and movement of goods by using multiple levels of firms, bank accounts, paper sale and purchase.” 

Customs authorities have raided traders in Surat and Mumbai and seized more than 48,600 carats of diamonds worth more than Rs 10 crore without carrying any certificates.

India processes most of the rough diamonds — it cuts almost 10 out of 11 diamonds sold across the globe — said an official. The total diamond imports were pegged at $15 billion in 2011, while exports were to the tune of $23 billion. 

Customs official say diamond trade is highly susceptible to money laundering activities as in addition to being a zero-duty item; the stone is of high value, thus allowing huge transfers of funds with minimal number of transactions unlike other traded commodities.

Source Rapaport