India, Hong Kong Bust Trade-Based Money Laundering Syndicate, 4 Held
DRI was the first to break the ring, which involved the import of inexpensive fake diamonds to an Indian Special Economic Zone (SEZ) for the purpose of remitting foreign cash overseas.
With the arrest of four people, the Indian Customs and its Hong Kong equivalent have uncovered a huge case of Trade-Based Money Laundering (TBML) involving Hong Kong-based exporters and Indian importers, according to an official statement issued by Union Ministry of Finance. The syndicate laundered around $65 million by importing cheap synthetic diamonds falsely labelled as genuine gems.
The Directorate of Revenue Intelligence (DRI) was the first to break the ring, which involved the import of inexpensive fake diamonds to an Indian Special Economic Zone (SEZ) for the purpose of remitting foreign cash overseas.
During the probe, it was also discovered that some genuine diamonds were imported but were later swapped with synthetic diamonds and smuggled outside the SEZ. The importing business was also discovered to be exporting diamond-studded jewellery to Hong Kong and a few other nations at exorbitant prices. Surprisingly, while the majority of the claimed inflated value of imports was sent out of the nation through banking channels, remittances received for exports were relatively negligible at about 0.2%, showing that this commerce was used to launder money outside the country.
Investigations also revealed that money was transferred (laundered) from the importing entity's bank account to overseas suppliers in Hong Kong under the guise of payment for the import of 'diamonds'. According to the information gathered, the mastermind of this trade-based money laundering was located in Hong Kong.
"Further investigations resulted in arrest of four persons in India under the provisions of the Section 104 of the Customs Act, 1962. The Indian Customs issued Show Cause Notice (SCN) for seized goods, wherein Hong Kong based entities were also made notices, who however refused to respond and present themselves in front of Indian Customs. It is pertinent to note that in almost all cases offenders of TBML operate through front companies overseas in a bid to escape enforcement action in India," reads the official statement.
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