Diamond-based Trade Transactions

By forging import documents, rotating shipments of diamonds across multiple jurisdictions, and artificially inflating declared values, criminals create complex transactional chains that obscure the origin of illicit funds within legitimate diamond trade flows.

Diamonds' high portability and subjective valuation allow for swift conversion into cash or other assets. This provides criminals with readily transferable illicit funds that can be redeployed globally while minimizing detection risk.

Criminals exploit the subjective valuation, portability, and ease of re-exporting of diamonds as core vulnerabilities. By falsifying import documents, repeatedly inflating declared diamond values, and rotating the same parcels across borders, they obscure the true transaction amounts and origins. The opaque pricing inherent to diamonds enables continuous layering within trade finance and banking channels.

The technique leverages multiple global trading hubs and inconsistent AML regulations across jurisdictions to disguise the origin and flow of funds. Repeated cross-border movements and re-exports exploit variable oversight, further complicating due diligence and enforcement efforts.

• Contains official import/export data from border authorities, including declared valuations, shipping routes, tariffs, and inspection outcomes.
• Enables cross-referencing of declared diamond shipments against actual customs filings, helping to identify forged documents, undisclosed re-exports, and potential misdeclarations.

• Aggregates AML risk profiles of jurisdictions and legal frameworks.
• Assists in flagging diamond trade routes that pass through high-risk countries with lax AML controls.

• Offers market-based diamond pricing references.
• Supports AML by comparing declared diamond values against standard market rates to identify artificially inflated valuations.

• Includes detailed invoice and contract records tied to diamond shipments.
• Enables detection of inflated or fraudulent invoice values, corroborating repeated re-export or misdeclarations.

• Provides data on a business's commercial scale, revenues, and operational scope.
• Helps AML teams detect inconsistencies between declared diamond trading activities and actual business operations.

• Provides details on trade finance and credit instruments, including letters of credit issued for diamond shipments.
• Helps uncover repeated financing requests tied to the same parcels at inflated valuations without sufficient justification.

• Encompasses official shipping records, customs declarations, bills of lading, and certificates of origin.
• Enables detection of repeated exports or imports of identical diamond parcels and verification of declared shipments.

• Contains verified identity details, beneficial ownership, and customer background information.
• Supports detection of suspicious diamond transactions by checking if customers possess legitimate industry experience and a verifiable source of funds.

• Details commodity trades, including dates, parties, quantities, and transaction pricing.
• Aids AML by verifying frequent high-value diamond transfers or re-valuations indicative of layering.

• Details cross-border payments, correspondent banking arrangements, and involved jurisdictions.
• Helps identify high-frequency or repeated payments linked to the same diamond shipments, indicating potential layering.

• Provides location-based records of financial transactions, including origins and destinations.
• Facilitates detection of unusual diamond trading patterns involving high-risk or sanctioned jurisdictions.

• Contains formal records of entity ownership structures, shareholders, and ultimate beneficial owners.
• Helps reveal overlapping ownership or control of multiple diamond-trading entities lacking legitimate commercial rationale.

Require specialized verification of diamond sourcing, business licensing, and membership in recognized diamond trade associations. Confirm the authenticity of shipping, insurance, and customs documents for each transaction. Verify the legitimate backgrounds of beneficial owners in the diamond trade, including any history of inflated valuations or recycled parcels. By applying deeper scrutiny to high-risk diamond transactions, institutions can detect and mitigate forged documentation and artificially inflated values indicative of laundering.

Implement specialized transaction rules and alerts to flag large or repetitive trade finance requests for diamond shipments with unusually high declared values. Cross-reference payments with the client’s stated scale of diamond trading to detect discrepancies. Monitor abrupt changes in transaction counterparties, funding sources, or export routes that may signal illicit layering through diamond trades.

Leverage external industry references, recognized diamond price indices, and reputable trade databases to validate declared valuations and shipping routes. Cross-verify import/export documentation with public registers or third-party sources that track diamond trade flows. Confirm membership records in official diamond bourses or associations to identify unregistered, high-risk operators forging or tampering with shipping data.

Continuously update and reassess customer profiles based on new shipping documents, changes in diamond valuation data, and expanded trade routes. Promptly reconcile any discrepancies in declared value or shipping details, and escalate for enhanced reviews if the client’s diamond trading behavior deviates significantly from known industry practices or historical patterns.

Examine all diamond trade transactions for repeated re-exports of the same parcels, inconsistencies in customs declarations, or abrupt changes in shipping routes. Cross-check declared diamond values against recognized price references, requiring supporting documentation for extraordinary markups or unusual adjustments in declared value. Such detailed scrutiny of trade flows helps uncover layering tactics concealed through rotating diamond shipments across multiple jurisdictions.

• Forged shipping and customs documents for inflated diamond shipments secure letters of credit at inflated amounts.
• The guaranteed payment structure of letters of credit legitimizes large trades, helping criminals inject illicit funds into the financial system under the guise of legitimate diamond exports.
• Layering occurs as funds move through multiple banks honoring these inflated letters of credit.

• Criminals repeatedly re-export the same diamond parcels with inflated declared values to obtain multiple rounds of trade financing.
• Instruments such as bills of lading and shipping documents are manipulated to secure credit or payment guarantees.
• The layering process is reinforced each time new financing is raised on purportedly legitimate diamond transactions, obscuring the original illicit source.

• 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 issue inflated or falsified invoices for diamond shipments and present them as legitimate accounts receivable.
• By circulating these documents through multiple financial institutions, they secure trade financing or credit against overstated receivables.
• This repeated invoicing conceals the origin of illicit funds under ostensibly valid commercial transactions.

• Criminals submit falsified documentation through the banking system to claim payment for diamond shipments at inflated values.
• Recurrent manipulation of shipping and customs records complicates due diligence, allowing them to mask illicit transactions behind ostensibly legitimate trade paperwork.

• By presenting forged shipping and customs documents, criminals secure letters of credit for diamond transactions at inflated amounts.
• The guaranteed payment structure of letters of credit helps criminals validate large, seemingly legitimate trades while concealing the true source of funds.

• Criminals rotate small parcels of diamonds through multiple jurisdictions, using intermediaries to mask actual shipping routes and forging invoices or shipping documents.
• This repeated cross-border movement under various freight arrangements obscures the origin of funds and confounds regulatory and law enforcement monitoring.

• Criminals artificially inflate diamond shipment values and repeatedly re-export the same parcels to secure multiple rounds of trade financing, layering illicit proceeds under legitimate trade transactions.
• Falsified or exaggerated invoices lead financial institutions to extend credit or payment guarantees, effectively injecting illegal funds into the financial system.

• After inflating diamond shipment invoices, criminals integrate illicit proceeds by transferring funds across multiple remittance channels, especially where controls may be weaker.
• Layering is further facilitated by rapid fund transfers to and from different jurisdictions, making detection of the true transaction origin more difficult.

Trade finance institutions provide credit and guarantees for diamond shipments:

• Criminals submit inflated or falsified invoices to secure renewed lines of financing on repeatedly re-exported diamonds.
• This layering process integrates illicit proceeds under seemingly legitimate trade arrangements, challenging financial institutions' compliance efforts.

Import-export companies are used to handle cross-border diamond shipments:

• Criminals exploit these businesses to submit repeated or inflated invoices, re-valuing diamonds at each stage.
• Complex shipping routes and staged documentation obscure the origin of illicit funds, hindering financial institutions' due diligence.

Illicit operators orchestrate diamond-based trade transactions to launder proceeds:

• They repeatedly re-export parcels across multiple jurisdictions, inflating declared values at each step.
• They exploit opaque diamond pricing and combine these shipments with alternative remittance channels (e.g., hawala) to further obscure the origin of funds.
• Financial institutions struggle to detect or trace the layered transactions due to complex trade routes and forged documentation.

Document forgers enable this technique by:

• Creating or altering import, export, and shipping documents that inflate or misrepresent diamond values.
• Facilitating repeated re-exports of the same parcels under forged paperwork, deceiving trade finance providers and other financial institutions.

Shipping and logistics companies transport diamond parcels across multiple jurisdictions:

• Criminals exploit weak or falsified shipping records to hide the true routes and repeated re-exports.
• Reliance on client-provided documentation makes it harder for legitimate carriers to detect illicit activity, complicating oversight for financial institutions.

Informal value transfer system operators (e.g., hawala) facilitate cross-border transfers outside formal banking:

• Criminals combine diamond-based transactions with trust-based remittance channels to further conceal the source of funds.
• The lack of conventional recordkeeping or transparency makes it difficult for financial institutions to identify illicit layering.

Dealers in precious stones participate in the flow of diamonds:

• Criminals may collude with unscrupulous dealers to misrepresent or inflate the value of stones.
• Legitimate dealers can be unknowingly exploited when illicitly sourced or overvalued diamonds pass through their supply chain.
• Financial institutions face heightened risk assessing such transactions due to subjective pricing and inconsistent valuation practices.