New Report on Money Laundering: Treat Diamonds as Cash

Economy
14/07/2015 17:21

In an extensive report on money laundering, "Why is Cash Still King? A Stategic Report on the Use of Cash by Criminal Groups as a Facilitator for Money Laundering", Europol recommends that diamonds should be treated as cash and that all controls on cash should be applied. Such risk reducing in terms of money laundering is already actively implemented in Belgium, with AML legislation that exceeds EU norms, for instance by requiring diamond dealers operating in the country to identify and verify their clients in all their business transactions, be it cash or bank transactions. In addition, specific AML and counter-terrorist financing controls are applied at the Belgian Diamond Office, coordinating all imports and exports of diamonds in and out of Antwerp, for which it is officially recognized by the Financial Action Task Force (FATF).

"Another reason that attracts criminals to the purchase of high value goods is that certain items, such as gold or precious stones, are readily liquid and moveable asset classes which can be traded globally. As these items have a very high value, just like high denomination notes they offer criminals the opportunity to shrink bulky cash holdings into discrete and portable holdings of gold or diamonds, for example. These items can be smuggled across borders and thereafter sold. As mentioned before, these items are not captured under European cash control regulations, and as such have an added advantage in that they need not be declared."

Recommendation: "IV.I. PRECIOUS METALS AND STONES: Assets such as gold and diamonds represent high value items which enable criminals to smuggle values across borders. Only Cyprus reported that gold is covered under its domestic cash control regulations. Consideration should be given to extending the scope of cash control regulations in order that they apply to gold, precious stones and metals."