Investment vs. Money Laundering. Part 2. Diamonds

The same as gold, diamonds are valuable, portable and compact way of investment – and that of money laundering as they can be easily hidden and transported.

However, diamonds are, in a way, more complex than gold. Individual diamonds may cost much more than an equivalent weight of gold, but diamonds are unique, so, there has to be a buyer for each individual diamond. Also, a diamond cannot simply be cut in half, to make two diamonds worth half its prise each. The valuation of diamonds is a much more complicated process than the valuation of gold as requires a specialist and does not guarantee a sale.

Diamonds do not leave paper trail like cash, which can both law-abiding citizens and money launderers feel comfortable. Although some diamond companies claim that diamond resource are quite scarce, there is an abundant, unmonitored supply of them.

The same as gold, the simplest way of money laundering through diamonds is a direct purchase with criminal proceeds. Then, diamonds can be used for trading activities, for instance, purchasing of gaming chips at casinos, retail foreign exchange transactions, forged invoicing, etc. It is supposed that in some countries terrorist groups use diamonds to finance their operations.

This year US government reported that diamonds are one of products which let money launderers beat the American system. The US Money Laundering Threat Assessment (MLTA) is the US analysis that pointed out money laundering vulnerabilities across new techniques that criminals use. The first new technique the MLTA named was smuggling conflict diamonds, which was followed by the black market Peso exchange, online payment systems and stored value cards.

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