‘$500m bogus diamond trading syndicate’ smashed

The Standard 29 Dec 2023

Hong Kong and India Customs have smashed a syndicate that laundered over HK$500 million of cheap synthetic diamonds passed off as natural diamonds to India.

The Customs arrested four men, aged 30 to 56, including the alleged mastermind and core members.

The Hong Kong-based syndicate allegedly exported bogus diamonds, weighing between 200 to 500 carats, to India about 130 times between January and October in 2021. Three of them are non-Chinese and are listed as company director, manager and assistant while the other is a 56-year-old Hong Kong man.

The syndicate falsely claimed that the synthetic diamonds – worth about HK$5 million – were authentic natural diamonds worth up to HK$500 million.

The department found that the company had bank accounts that frequently transferred money back and forth, unlike an ordinary trading company.

“It is the first time Customs department has detected a money-laundering case through diamond transactions in Hong Kong,” Yeung said.

Officers said the case was difficult to crack because the synthetic diamonds were small, making them easier to transport and harder to discover.

“Natural diamonds are 100 times pricier than synthetic diamonds, and normally people can’t tell the difference with their naked eye,” said Yeung.

Bureau divisional commander Chan King-wai said: “The money-laundering syndicate targeted diamonds as they are easily portable with low transportation costs but high in value.

“They used synthetic diamonds that almost resembled genuine, high-value natural diamonds as a means to continuously launder illegal funds,” Chan added.

Officers raided eight premises last week, including four offices in Tsim Sha Tsui and residences.

They seized a large quantity of suspected synthetic diamonds, a small number of natural diamonds, around HK$1 million in foreign currency, electronics, and related documents.

The suspects are currently on bail and their accounts of HK$5.7 million have been frozen. Customs is seeking to freeze a commercial property worth HK$2.5 million.

According to the Organized and Serious Crimes Ordinance, convicted individuals in money laundering could face a maximum sentence of HK$5 million fine and imprisonment of 14 years.