1. Black money: Diamond trade under lens for suspected terror financing

Black money: Diamond trade under lens for suspected terror financing

India to be one of the 5 countries along with Israel, Belgium, Canada and the US where trade accounts of diamond business have been used to launder illegal funds...

By: | New Delhi | Published: March 17, 2015 2:59 PM
Black money, diamond trade, terror financing

India to be one of the 5 countries along with Israel, Belgium, Canada and the US where trade accounts of diamond business have been used to launder illegal funds. (Reuters)

Trading of diamonds especially with a gulf country has come under the lens of intelligence agencies here for suspected terror financing and money laundering.
The matter of suspected terror financing and money laundering was red flagged by the Cabinet Secretariat and discussed during a recent high-level meeting between top government official and revenue intelligence sleuths, official sources said.

The officials discussed a report collaborated by Paris- based Financial Action Task Force (FATF) and Egmont Group of Financial Intelligence Units highlighting that diamond trade was allegedly being used for routing of finances for terror activities, they said.

During the meeting, discussion on the report raised some eyebrows as it cited overvaluing of exports of diamonds in absence of any stable price in India and highlighted record increase of trade of the precious stones and minerals with United Arab Emirates (UAE), they said.

The Central Economic Intelligence Bureau (CEIB) has been examining the inputs from other intelligence agencies in this regard, the sources said, adding, that Financial Intelligence Unit (FIU) has been asked to find out different typology and sharing of Suspected Transaction Reports (STRs) with other agencies to check it.

The CEIB is also considering to form an inter-ministerial team of officials from intelligence agencies, Commerce and Finance Ministries, among others, they said.

Intelligence agencies are also relying on the findings of the report that claimed India to be one of the five countries along with Israel, Belgium, Canada and the US where trade accounts of diamond business have been used to launder illegal funds, the sources said.

The report mentioned instances where diamond prices were overvalued for purposes of laundering and suspected terror financing as there were no set standards of diamond pricing in India.

It cited an unidentified case where some Indian importers based in Surat and Mumbai imported diamonds from Hong Kong and China by grossly overvaluing them, they said.

A commodity wise analysis of imports into India from the UAE has found that pearls, precious stones, metals, mineral fuels and oils are the major commodity of imports which accounted for about 63 per cent of total imports in 2000-01 and increased to 90.4 per cent in 2012-13.

Whereas, mineral fuels and oil which alone accounted for 38 per cent of total imports from the UAE to India during the same period, was exceeded by pearls, precious stones and metals accounting more than half of India’s import i.e. 52.4 per cent, the sources said citing the report.

With regard to India’s export to UAE, it was also found that the group of pearls, precious stones and metals constituted more than half of the total exports in 2012-13. Since 2007, there has been a near three-fold increase in bilateral trade, particularly due to rise in both exports and imports from the UAE of the precious metals and stones group, rather than the oil, they said.

The report suspected ’round tripping’ (which can be referred to a deal or transaction that returns to the place from where it had started) in diamond trade between the Indo-UAE bilateral trade as a reason for the emergence of UAE as the largest trading partner, the sources said.

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