Precious Metals & Gemstones

• Criminals directly convert illicit funds into gold or gemstones, exploiting minimal regulatory oversight in certain jurisdictions.
• High global demand and portability allow easy resale or cross-border transport, concealing the source of funds through repeated buy-sell cycles.
• Opaque or subjective pricing further hampers investigators’ ability to trace transactions, aiding in the layering and integration of illegal proceeds.

• Forged chain-of-custody or compliance documents (e.g., counterfeit Kimberley Process certificates) transform illicitly sourced gold or diamonds into seemingly legitimate assets.
• Criminals leverage bogus sector-specific paperwork to circumvent provenance checks and sell or transfer high-value items through formal markets.

Hot Transfer participants routinely use gold or other high-value metals to settle obligations across borders without interacting with formal banks. By physically transporting these commodities or trading them in unregulated markets, they mask the origins and destinations of funds, drastically reducing auditable records.

• Criminals may claim to trade high-value metals or gemstones, issuing fake export or shipping documents.
• Manipulated valuations and origins allow large sums of illicit money to be laundered under the pretext of legitimate trade in precious commodities.

• Criminals exploit the repeated import and export of high-value stones, especially diamonds, to create circular flows by artificially re-invoicing or re-shipping goods.
• The substantial value and cross-border nature of gemstone trades help in layering illicit proceeds, thereby hiding the true funding source.

• Criminals store valuable metals and gemstones (e.g., gold bars, diamonds) in safe deposit boxes to conceal them from traditional banking records.
• Because these assets are compact, high-value, and not easily traced, the deposit box environment helps obscure ownership and provenance.
• By paying box rental fees in cash and avoiding recordkeeping, criminals further reduce the likelihood of detection or asset tracing by authorities.

• Criminals inflate or conceal the true value of precious metals and gemstones by falsifying grading, purity, or weight documents.
• This manipulation enables them to launder significant sums through transactions that appear credible in the precious commodities market.

• Criminals resell raw or lightly processed gemstones (e.g., diamonds) or precious metals at manipulated values to disguise the true amount of illicit proceeds.
• Subjective or inconsistent appraisals, particularly for rough diamonds lacking a valid Kimberley Process Certificate, create opportunities for repeated layering across multiple jurisdictions.
• By avoiding standardized market checks or proper documentation, launderers shift and re-price these assets to obscure ownership chains and complicate audit trails.

• Criminals exploit the high value-to-volume ratio of items like diamonds to covertly transport these assets across borders, bypassing customs or duty requirements.
• Once smuggled, the stones can be sold or exchanged in other jurisdictions, effectively concealing the original criminal proceeds.
• Under-declaring or misrepresenting their value allows large amounts of wealth to be moved covertly, complicating authorities' efforts to link funds back to illicit activity.

• Diamonds, as a subset of gemstones, have a high value-to-volume ratio, making them easy to conceal and smuggle across borders.
• Criminals bypass or falsify Kimberley Process certificates to disguise the diamonds' illicit origin, then misdeclare shipment details or valuations.
• Once moved to another jurisdiction, the diamonds are resold or exchanged under legitimate channels, thereby distancing proceeds from their criminal source and complicating any paper trail.

• Criminals use illicit proceeds to buy gold, diamonds, or other precious stones and metals, often misrepresenting the nature or value of these commodities in documentation.
• Due to their high value-to-weight ratio, these assets are easily concealed in personal luggage or hidden compartments, minimizing detection risk at border checkpoints.
• Smugglers exploit weak customs oversight, under-/over-invoicing, and mislabeling of shipments to evade AML controls.
• Once in a jurisdiction with lax enforcement, they can be sold or used as collateral, allowing funds to enter legitimate financial channels with minimal traceability.

• Criminals purchase or directly smuggle these commodities using illicit funds, exploiting minimal identification requirements and the subjective pricing nature of metals and stones.
• Cross-border movement is facilitated by under- or misdeclaring value and origin, allowing criminals to blend illicitly sourced items with legitimate supply chains.
• Upon resale, the funds received appear to be legitimate proceeds from commodity trading, enabling both layering and integration.

• Criminals purchase physical gold bars or bullion (grouped under precious metals), often with minimal documentation.
• They reclassify high-purity gold as “scrap” for cross-border shipments to evade export controls and scrutiny.
• On resale, proceeds appear as legitimate funds from gold transactions, finalizing the layering and integration process.

• Criminals exploit the portable, high-value nature of diamonds—categorized under precious metals and gemstones—to move illicit funds across borders.
• By repeatedly re-exporting the same parcels at inflated values, they artificially amplify transaction amounts and disguise the true origin of proceeds.
• Subjective diamond valuations enable forgeable pricing and documentation, confounding due diligence and reducing traceability of the underlying funds.

• Criminals claim large overseas purchases of commodities like gold or diamonds but never actually ship or receive these items.
• The high value and global demand for precious metals and gemstones make it difficult for authorities to verify genuine physical transfers.
• This tactic disguises illicit funds as import-export payments for high-value commodities, obscuring their criminal origin.

• Diplomatic channels can covertly transport high-value items like gold or diamonds under the veil of sovereign privilege, bypassing customs checks.
• These assets hold significant value in small volumes, facilitating discrete placement and layering without detection.
• Diplomatic immunity makes it difficult for authorities to demand inspections or documentation, masking the true origin and ownership of these valuables.

• Criminals use counterfeit currency to purchase high-value items like gold or diamonds.
• By swapping forged cash for tangible assets, they convert worthless bills into goods that can be resold or traded worldwide.
• Limited verification practices in some dealerships enable acceptance of fake notes, obscuring the true source of the proceeds.

• Criminals specifically use bonded warehouses to store high-value items like raw diamonds under forged or repeatedly altered certifications.
• This allows launderers to 'layer' illicit funds by misrepresenting the precious commodities' value, origin, or ownership before arranging a final brokerage or sale.
• Minimal direct oversight within bonded facilities enables ongoing manipulation of documents, hindering the traceability of these regulated commodities.

• Trusted intermediaries discreetly transport gold or high-value stones across borders, bypassing formal banking altogether.
• Their dense value and ease of concealment make them ideal for crossing weakly monitored checkpoints, obscuring the movement of large sums in a physically compact form.
• Fixers can then liquidate or trade these assets in different jurisdictions, masking the origin of illicit proceeds.

• Criminals place high-value metals (e.g., gold, platinum) and gemstones (e.g., diamonds) into freeports under opaque corporate structures, shielding their identities from authorities.
• Freeports’ minimal disclosure requirements help conceal both beneficial owners and the true origin of the assets.
• Once stored, these items can be privately sold, traded, or physically transferred across borders without triggering standard customs checks or reporting, facilitating further layering of illicit funds.

• During layering, traffickers convert illicit funds into gold or other precious metals and gemstones, exploiting these assets' high portability and relative ease of transfer.
• Acquiring or trading precious metals in jurisdictions with weaker oversight enables criminals to integrate and move large values without attracting routine transaction scrutiny.
• Reselling or refining the metals into different forms makes the original source of funds exceptionally hard to trace.

• Criminals illegally extract precious metals (e.g., gold) and co-mingle them with legally sourced stock, exploiting minimal documentation or corrupt channels to disguise the illicit origin.
• These commodities retain high intrinsic value and can be sold domestically or exported abroad, making it straightforward to convert illicitly acquired output into ostensibly legitimate revenue.
• By merging unlawful and lawful supplies, criminals blur the source of funds, facilitating subsequent placement or layering of proceeds within regulated financial channels.