Money laundering and terrorist financing through trade in diamonds

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The FATF and the Egmont Group of Financial Intelligence Units collaborated on a typologies research project to identify the money laundering and terrorist financing (ML/TF) vulnerabilities and risks of the “diamond pipeline”, which covers all sectors in the diamond trade: production, rough diamond sale, cutting and polishing, jewellery manufacturing and jewellery retailers.

The report concludes that the diamonds trade is subject to considerable vulnerabilities and risks. The closed and opaque nature of the diamonds markets and the high value of diamonds combined with a lack of expertise in this area on the part of the authorities have left this industry susceptible to abuse by criminals.

The report has revealed that India is one among five countries where the trade accounts of the diamond business are used to launder illegal funds amounting to millions of dollars.

"The case presented by India exposes how through over-valuation diamonds were shipped at a value that was tens of millions of dollars higher than the real value. This kind of over-valuation cannot be done in goods with a fixed or even relatively fixed price,"

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