According to ThePrint, the Enforcement Directorate (ED) conducted searches at companies across India associated with the import and export of diamonds over the past month.
The investigation was reportedly centred around the trade of around $AUD500,000 in lab-created diamonds between July of 2023 and March of this year. The report claims that diamonds and jewellery were overvalued and misdeclared to an extreme degree.
The report explains how the money laundering operation works in detail.
“Import synthetic diamonds from overseas suppliers at 100 times their value, paid for by bank transactions made through various shell companies in India under the pretext of ‘payment towards import’, the report states.
“Use the diamonds to make jewellery, and then export it at inflated prices to show marginal profit, effectively turning black money into white. This is the classic modus operandi used to launder money by several diamond jewellery businesses that have now come under the scanner of federal agencies.”
According to the report, companies involved in money laundering import inexpensive lab-created diamonds from firms based in Hong Kong and Dubai and misdeclare the stones as natural diamonds.
The diamonds are overvalued by more than 100 times to send foreign currency out of India. In most cases, criminals operate through front companies overseas to evade enforcement action in India.
This report follows a series of arrests in Hong Kong as part of Operation Gem Crusher. Customs officers raided eight locations, seizing diamonds and cash. According to ThePrint, the syndicate is believed to have laundered more than $USD60 million.
The investigation was described as the first of its nature, with individuals accused of exporting lab-created diamonds from Hong Kong to India and misdeclaring the origins of the stones to be able to transfer ‘suspicious funds’.
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