Diamond Smuggling

By repeatedly moving diamonds across borders, misdeclaring shipments, and reselling them in different jurisdictions, criminals create multiple transactional layers that obscure any direct link between illicit proceeds and their criminal source.

Criminals exploit cross-border vulnerabilities by moving diamonds through jurisdictions with weak customs controls or poor AML oversight. They forge or omit Kimberley Process Certificates, misdeclare shipments, and route diamonds through free trade zones or trans-shipment points with lax enforcement. These actions obscure the true origin and destination of the gems, making it difficult for authorities or financial institutions to link proceeds back to their illicit source.

• Contains official records of cross-border movements of goods, including item descriptions, declared values, shipping routes, and customs forms.
• Allows investigators to detect inconsistencies in declared diamond shipments, identify unusual trans-shipment points, and verify if shipments bypass or misdeclare customs controls.

• Highlights jurisdictions with weak controls, including free trade zones commonly exploited for the transshipment of illicit diamond consignments.
• Supports risk-based prioritization of suspicious shipping routes or business relationships in high-risk areas.

• Provides real-time and historical market pricing for diamonds, enabling scrutiny of declared values in trade documentation.
• Assists in identifying suspiciously undervalued diamond shipments that deviate significantly from prevailing market rates.

• Maintains records of currency conversions, including timestamps, exchange rates, trading parties, and settlement details.
• Identifies repeated or structured foreign exchange transactions used to layer proceeds from smuggled diamonds across multiple currencies, thwarting investigative traceability.

• Authenticates official documents, such as Kimberley Process Certificates, detecting forgeries, altered certificate numbers, or missing signatures.
• Supports direct verification of diamond provenance claims, which is crucial for uncovering fraudulent shipping or licensing documents.

• Includes bills of lading, invoices, and certificates of origin, capturing commodity classification details and declared valuation.
• Helps expose misdeclared or under-invoiced diamond shipments and verify the authenticity of Kimberley Process Certificates.

• Contain verified customer identities, beneficial ownership details, and transaction histories.
• Facilitate the detection of customers with no legitimate involvement in the diamond sector or whose transaction patterns contradict their stated business activities.

• Contains records of diamond purchases, sales, or exchanges, including transaction dates, parties, quantities, valuations, and references.
• Allows investigators to confirm whether declared transactions align with legitimate commodity trading patterns, assisting AML detection in trade finance scenarios.

• Covers cross-border payment flows, detailing sending and receiving institutions, involved countries, amounts, and settlement timelines.
• Helps reveal potential layering of smuggled diamond proceeds through multiple jurisdictions or financial institutions.

• Provides entity incorporation data, shareholder details, directorship information, and changes in beneficial ownership.
• Enables identification of shell intermediaries, front companies, and cross-jurisdictional ownership networks used to obscure the origins of diamond smuggling proceeds.

Require thorough verification of diamond dealers and their supply chain, including independent confirmation of Kimberley Process Certificates, investigation of mine ownership or exporter backgrounds, and focused checks on cross-border movements involving high-risk jurisdictions. This ensures early identification of smuggling or forged documentation attempts.

Continuously analyze financial flows involving diamond-related entities for large or structured transfers that lack legitimate shipping or customs documentation. Employ advanced analytics to flag rapid, high-value cross-border wires linked to known smuggling corridors or suspicious origin points.

Regularly screen diamond exporters, importers, and associated carriers against conflict diamond watchlists, specialized sanction lists, and high-risk jurisdictions. Immediately review flagged or potentially restricted entities to prevent transactions with designated parties and ensure compliance with conflict diamond regulations.

File threshold-based cash transaction reports specifically referencing diamond purchases, particularly when sourcing originates from high-risk or unregulated suppliers. Cross-reference CTR data with diamond shipment information to identify potential smuggling-related cash inflows or outflows.

Cross-check shipping routes and valuations against publicly available trade data, databases of licensed diamond traders, and Kimberley Process records. Closely examine any discrepancies in certification authenticity or declared origins to detect signs of smuggling or misrepresentation.

Coordinate with domestic and international authorities, including Kimberley Process bodies, customs, and law enforcement, to exchange data on suspicious diamond shipments, known smuggling routes, and counterfeit certification. This joint intelligence approach helps detect and disrupt transnational diamond smuggling networks.

• Limit or deny trade finance, letters of credit, or other banking products for diamond shipments that lack reliable provenance or valid certificates.
• Restrict services to entities operating in high-risk diamond-exporting regions unless detailed documentation and background checks confirm legitimacy.

Implement specialized monitoring for cross-border diamond transactions by verifying consignment details, invoice values, and accompanying Kimberley Process Certificates. Cross-check declared diamond values against market benchmarks to quickly detect undervaluation or misinvoicing and ensure that the shipment aligns with legitimate supply chain routes.

• 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 physical cash to purchase illegally sourced diamonds from private mines or unregulated sellers, preventing a traceable transaction record.
• By relying on bulk cash, they evade formal financial scrutiny, making it difficult to link the initial funds to a criminal origin.
• The anonymity and lack of documentation associated with physical cash transactions enable criminals to obscure their identities and the ultimate source of the money used to acquire the diamonds.

• Misdeclare diamond shipments under generic commodities or undervalued invoices to avoid detection.
• Use trans-shipment routes in jurisdictions with lax controls to mask the origin or destination of smuggled diamonds.
• Forge or omit required certificates, including Kimberley Process documentation, complicating traceability.

• Enables preparation and submission of shipping documents, invoices, and certificates, which criminals can falsify to conceal actual value or origin.
• Forging or omitting Kimberley Process Certificates allows illicit diamonds to enter legitimate supply chains undetected.

• Streamlines cross-border transportation and customs processes, creating opportunities for criminals to bury illicit diamond shipments under legitimate cargo flows.
• Provides services for handling declarations and documentation, which can be manipulated or forged to hide true shipment contents or valuation.

• Criminals convert proceeds from diamond sales into multiple currencies, obscuring the trail of funds.
• Repeated or structured exchanges across different jurisdictions create layering that hinders law enforcement tracking.

• Facilitates creation of shell intermediaries that hide the real owners of assets derived from smuggled diamonds.
• Allows distancing illicit proceeds through offshore accounts, preventing investigators from linking revenues to criminal sources.

Illicit operators engage in diamond smuggling by:

• Concealing rough diamonds and moving them across borders through undeclared shipments or falsified documentation.
• Acquiring diamonds with untraceable cash from high-risk sources.

These actions disrupt financial institutions' ability to identify and trace the funds linked to illicit diamond transactions, undermining customer due diligence and transaction monitoring controls.

Cash couriers physically transport proceeds from diamond smuggling across borders, using undeclared or under-the-radar cash movements. This mechanism circumvents financial institution record-keeping, making it harder for banks and other entities to detect and trace illicit funds tied to diamond transactions.

Shell or front companies receive or move proceeds derived from smuggled diamonds by:

• Layering ownership structures to obscure true beneficiaries.
• Representing high-value diamond transactions as legitimate commercial activities.

These tactics prevent financial institutions from easily pinpointing the ultimate owners or the source of funds, complicating beneficial ownership checks and transaction monitoring.

Dealers can be exploited to buy, sell, or trade smuggled diamonds by:

• Misrepresenting the stones’ quality, value, or origin.
• Inserting illicit diamonds into legitimate markets with minimal documentation.

Their involvement affects financial institutions handling funds from these diamond sales, often masking the illicit nature of transactions.