India's Diamond Trade Being Used For Money Laundering

By siliconindia | Monday, 03 February 2014, 10:10 Hrs

"The case presented by India exposes how through over-valuation diamonds were shipped at a value that was tens of millions of USD higher than the real value.

"This kind of over-valuation cannot be done in goods with a fixed or even relatively fixed price," the FATF report on "money laundering and terrorist financing through trade in diamonds" stated.

These instances were also reported from four other countries -- Israel, Belgium, Canada and the US. China and India are major markets where diamond trade is done on a large scale, the report said.

The report cited an unidentified case where some Indian importers, based in Surat and Mumbai, imported diamonds from Hong Kong and China by "grossly overvaluing these diamonds to $544.8631 per carat".

This case shows the level of manipulation which may be conducted through the diamond trade due to its specific characteristics, such as the very high value and the lack of known and stable prices which allow for the manipulation of price, the report stated in the Indian context.

Source: PTI