In a significant development, the Directorate of Revenue Intelligence (DRI), in collaboration with Hong Kong Customs, has unraveled a massive money laundering network involving diamond traders. The illicit operation revolved around the import of synthetic diamonds into India, with the syndicate misdeclaring them as natural diamonds and conducting remittances at significantly inflated valuations.
Eight individuals, four in India and four in Hong Kong, have been apprehended in connection with the case. The Hong Kong authorities, during their searches, seized assets worth $1 million.
Last week, Hong Kong Customs conducted a major operation, revealing a transnational laundering syndicate that had laundered approximately $65 million through diamond trade. The DRI confirmed the arrest of four suspects connected to the case and the freezing of $1 million in assets.
According to the DRI, an Indian SEZ-based firm played a central role in orchestrating the money laundering racket, while the mastermind operated from Hong Kong. The modus operandi involved importing inexpensive synthetic diamonds into India, falsely declaring them as natural diamonds with valuations marked up by 100 times. The syndicate then remitted substantial foreign currency out of India through banking channels.
“The entity was found to be exporting jewelry studded with diamonds at a very inflated value to Hong Kong and few other countries. Interestingly, while most of the declared inflated value of the imports was remitted out of the country through banking channels, the remittances received for the exports were seen to be only marginal at around 0.2%, indicating that this trade has been a cover to launder money outside the country,” stated the DRI.
Investigations also revealed the involvement of several shell companies in channeling money into the accounts of the SEZ-based firm in India. This firm subsequently laundered the ‘proceeds of crime’ from this single bank account to overseas suppliers in Hong Kong under the pretext of payment towards the import of diamonds.
As the DRI continues its probe, the case highlights the intricate methods employed in money laundering activities within the diamond trade.
