According to a report on the Israeli news site Hamodia, the country's tax authorities, following Israels commitments to the US and international organizations to apply a more stringent anti-money laundering policy, are targeting the Israeli diamond industry, generally considered the biggest offenders in this domain. Officials said that as of January 1st, the administration will go after tax fraud more agressively, implementing extended powers of investigation and enforcement.
"Uncertainity looms large over the world's largest diamond cutting and polishing industry in Surat following the scrapping of the old Rs 500 and Rs 1,000 currency note by the government," writes the Times of India (TOI) on the sudden currency ban.
Last week's surprise announcement that the Indian government was imposing a ban on denominations of Rs 500 and Rs 1000 notes has already has already started to unleash a profound impact on the diamond industry and beyond. On the one hand, industry insiders are saying that payments in Surat would come grinding to a halt for at least the next two to three months owing to paucity of cash funds, and defaults as such would rise.
In his latest Diamond Intelligence Briefing, "A Fraud in Progress... A Criminal Conspiracy to Default Hits Indian Exporters", industry insider Chaim Even-Zohar unravels a massive case of fraud perpetrated by a rogue diamond broker and US-based buyers against Indian diamond suppliers, currently estimated at $35-50 million.
Hong Kong Jewellery Magazine takes an in-depth look at the adjustments the diamond industry is, or should be, implementing in order to accommodate the changing economy and consumption habits in an environment where the diamond industry "at large is under the gloom of the stagnant economy that impedes buying sentiments in end consumers." With the assistance of three industry insiders - Erik Jens, head of the diamond and jewelry division at ABN AMRO Bank, Nissan Perla, founder of Olympic Diamond and the Diamond Registry, and Lawrence Ma, chairman of the Diamond Federation of Hong Kon
In the lastest installment of the Diamond Intelligence Briefing (DIB), diamond industry analyst Chaim Even-Zohar presents a searing indictiment of the rough diamond trade in the United States, "The world's most convenient and 'uncontrolled' rough transfer market", claiming that, "The main justification for the overwhelming bulk of the (U.S.) rough trade is pure transfer pricing*." This rough diamond 'stopover' in the U.S. also "endangers the integrity of the legitimate U.S.
JCK's Rob Bates reports on the Global Law Enforcement Diamond Forum held in The Hague, Netherlands at the end of June where members of the diamond industry mixed with agents from the FBI, Interpol and NGOs and heard presentations on one of the trade’s least favorite topics: are diamonds being used for money laundering and terrorist financing. "By the end, attendees came to two conclusions: First, the law enforcement attention on the diamond business is not going away. Second, that might not be so bad. Many in the trade didn’t always think that way.
Representatives of major law enforcement organizations and other groups from around the world, including the Federal Bureau of Investigation (FBI), Europol, Interpol, the Netherlands police, the U.S. State Dept., and the World Customs Organization, will be gathering in The Hague from June 28 to 29 for a two-day meeting on the role diamonds might play in money laundering and terrorist financing.
The European Central Bank (ECB) is making preparations to remove the most valuable European banknote - the €500 note - from circulation. The bills too often serve illicit purposes, says the bank. "We are actively considering the issue and will take a decision soon," said member of the ECB board Benoît Coeuré in French newspaper Le Parisien. "The competent authorities increasingly suspect that the notes are used for illicit objectives.
Belgian anti-money laundering legislation requires not only banks, but also diamond traders to identify their clients, verify their identity and conduct a risk analysis before proceeding to a transaction. In this regard, Belgium is stricter than other European Member States.
Australia is considering tightening its anti-money laundering regulations to include precious stone dealers and real estate agents following a warning from the Financial Action Task Force (FATF) over potential illicit cash entering the country. While strengthened rules would not target any particular country, Australian authorities are reacting "following a surge of cash from wealthy Chinese buyers looking for a safe haven away from the market turmoil of their home markets," Reuters reported.
Britain’s Financial Conduct Authority (FCA) has decided not to take action against HSBC, Britain's largest bank, whose Swiss arm helped clients to evade tax. HSBC was hit by a scandal last year when leaked bank account details showed how its Swiss unit helped wealthy customers to evade taxes by concealing assets and handing out cash to avoid the authorities. HSBC’s private banking clients, which also featured 2,000 diamond industry names, held more than $100 billion.
Meir Ohana convicted of whitewashing checks and creating fictitious accounts as well as moving cash abroad under the cover of importing diamonds without reporting any of it to the tax authorities. The business is estimated to have dealt with at least $100 million of business. In addition to the 10-year sentence, Ohana will also serve a two-year term on probation and pay a fine of one million shekels ($260,000).
"De-risking", according to the Financial Action Task Force (FATF), "refers to the phenomenon of financial institutions terminating or restricting business relationships with clients or categories of clients to avoid, rather than manage, risk in line with the FATF’s risk-based approach." The issue, which the FATF wishes to avoid by means of its risk 'management' approach, is that "de-risking may drive financial transactions underground, which creates financial exclusion and reduces transparency, thereby increasing money laundering and terrorist financing risks." Yet the evidence is growing -
New York jeweler Slavik Hayimov has pleaded guilty to laundering the proceeds of a nationwide jewelry theft ring and faces 20 years in prison when he appears in court for sentencing on February 26. Hayimov was arrested after the 2012 bust of a South American gang, which robbed at least 15 jewelry salespeople in seven states in a three-year spree that reportedly fetched around $5 million in goods. Hayimov was charged with buying goods for cash on at least 15 occasions at far less than market value knowing they were stolen.
The Basel Anti-Money Laundering (AML) Index report developed by the Basel Institute on Governance ranks countries according to their risk of money laundering and terrorist financing. The Basel AML Index overall score is derived from 14 indicators based on publicly available sources such as the Financial Action Task Force, Transparency International, the World Bank and the World Economic Forum. Finland’s financial system is the least likely to be used for money laundering or funding terrorism, followed by Estonia. Iran and Afghanistan are rated the worst at stopping money laundering.
As reported by Vinod Kuriyan, veteran industry analyst Chaim Even-Zohar writes in his latest issue of the "Diamond Intelligence Briefing" that Belgium's KBC Bank purposefully dismantled the Antwerp Diamond Bank in order to protect its secret history of corruption, money laundering and offshore accounts from prosecutors and U.S. banking regulators.
Israel Diamond Exchange (IDE) members met on Tuesday to debate the impact of an Anti-Money Laundering Law on the local diamond industry. The first part of the law, dealing with client identification, goes into effect on September 15. A month later, IDE members will be subject to supervision in the field of client identification by the office of the Ministry of Economy's Diamond Controller, Shmuel Mordechai. “At first we will help people to understand and adapt their business, but if we detect any irregularities, we will treat them severely,” Mordechai said.
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.
According to the Sunday Standard, a recent US State Department report on international narcotics trafficking cautions that Botswana may be sitting on major terrorism risks because of insufficient infrastructure to address money laundering and terrorism financing.
According to the the Balkan Investigative Reporting Network (BIRN), the arrested former diamond trader Serge Muller, wanted by Belgian authorities on charges of participating in a cocaine smuggling ring, having links to organised crime and money laundering, is the pivotal figure in alleged drug smuggling, money laundering and arms trafficking. BIRN reveals that the Montenegrin government sold its multimillion euro defence firm, Montenegro Defence Industry (MDI), to an Israeli-Serbian consortium; Belgrade-based CPR Impex and Israeli ATL Atlantic Technology Ltd for 680,000 euro.
The daily Het Laatste Nieuws reports that a leading Antwerp detective involved in the fight against diamond fraud has been arrested.The arrested detective is the head of Antwerp police's diamond unit.
The officer's home has been raided and gold, diamonds and cash were reportedly found.
Antwerp prosecutors have confirmed that house searches have taken place. Judicial police raided the offices of the federal police in Antwerp. The Diamond Unit that heads investigations into the city's important diamond sector was the focus of the raids.
The Antwerp World Diamond Centre (AWDC), today released a statement challenging the completeness of the annual report of the Antwerp Police which refers to money-laundering and conflict diamonds.
The EU has agreed to create national registers of the people who really own and control companies, in a bid to tackle corporate secrecy. The new regulations will make tracking organized crime and money laundering easier.
Four trade associations, along with the Richline Group, asked the Federal Trade Commission for an advisory opinion stating that jewelry composed of metals recycled in this country could be advertised as Made in the USA.
In addition to “symbolic” sanctions, such as taking away the 2018 World Cup from Russia, the EU is for the first time entertaining bans on luxury goods such as diamonds, caviar and vodka.