Indian, Hong Kong customs unearth trade-based money laundering case

Investigations revealed that cheap synthetic diamonds were being mis-declared as natural diamonds and overvalued more than 100 times and being imported from firms based in Hong Kong to an SEZ in India.

New Delhi: The Indian and Hong Kong Customs have unearthed a major case of Trade-Based Money Laundering (TBML) involving Hong Kong-based exporters and Indian importers located in a Special Economic Zone (SEZ), the finance ministry said on Friday.

In an exemplary case of bilateral cooperation and exchange of information, this crackdown showcases investigation and enforcement actions taken by both administrations under their respective laws to expose an international cartel.

DRI had unearthed a case of Trade-Based Money Laundering from a SEZ, wherein cheap synthetic diamonds were being imported into India in the guise of natural diamonds, to remit foreign currency out of India.

Investigations revealed that cheap synthetic diamonds were being mis-declared as natural diamonds and overvalued more than 100 times and being imported from firms based in Hong Kong to SEZ in India.

During the investigation, it was also observed that some real diamonds were imported but replaced with synthetic diamonds and smuggled outside the SEZ, it said.

Investigations also indicated that the inflow of money into importing entity's bank account took place through bank transactions by various dummy firms in India and then the said money was transferred (laundered) from this single bank account to overseas suppliers in Hong Kong; under the pretext of payment towards import of 'diamonds'.

The gathered evidence also indicates that the mastermind of this trade-based money laundering was based in Hong Kong, it added.

Further investigations resulted in the 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 added.