For those who maintain that the jewellery business should not be burdened with anti-money laundering regulations, the following article from the New York Times suggests otherwise.
“I have never hated a man enough to give his diamonds back.”
- Zsa Zsa Gabor
If you are not interested in receiving the “Articles of Interest” e-newsletter from ManchesterCF, please reply to this message and write in the subject heading “Remove Subscription”. Your e-mail address is never provided to outside third-parties. If you wish to forward this message, please include all contents of this message to the receiver. The contents of this electronic message are confidential and are intended for the recipient only. If you have received this message in error, please contact the sender and delete the message. All contents of this electronic message are protected by copyright where appropriate – © Copyright ManchesterCF 2009
http://cityroom.blogs.nytimes.com/2009/03/20/high-value-low-weight-perfect-for-laundering-money/?pagemode=print
High Value, Low Weight. Perfect for Laundering Money.
By JENNIFER 8. LEE
Diamonds are a criminal’s best friend, or so argue federal investigators. The Treasury Department’s auction of 605 diamonds on Friday was part of a larger series of auctions of items seized as part of investigations.
“For a transparent sales method, they like auctions,” said Rick Levin, whose firm handled the diamond auction.
This is one of the rare times that his firm has handled a diamond auction, Mr. Levin said; usually, the treasury auctions involve “cars, boats, planes, Rolexes and Ferraris,” he said.
But investigators seize an eclectic set of items. In the last two years, Mr. Levin has auctioned horses in Arizona, cab medallions in Boston and 54,000 pounds of smoked frozen scallops in Baltimore on behalf of the federal government. This auction was held in New York in part because of the diamond district, where the diamonds were originally seized as part of an investigation into a Colombian drug cartel.
Diamonds provide a popular means for laundering money because they have high value, low weight and no odor. In addition, the fractured, decentralized nature of the diamond industry means they are difficult to trace. A 2003 General Accounting Office report on terrorist financing [pdf] discussed at length how diamonds had been used for financing in drugs and arms dealings.
As a result, the Internal Revenue Service requires jewelry retailers to comply with anti-money laundering regulations.
New York’s diamond district, as one of the centers of the industry, has been involved in a number of criminal investigations. In August 2003, a 76-year-old New York diamond jeweler, Yehuda Abraham, was indicted on charges of conspiring to operate an unlicensed money remittance system that would be used in the purchase of a shoulder-fired missile.
These diamonds were from a case where Roman Nektalov, a diamond district dealer, was arrested in 2003 and later convicted as part of a Colombian drug investigation called Operation Meltdown. His son, Eduard Nektalov, was also indicted , but he was assassinated on a busy New York Street before he went to trial.
In the money-laundering scheme that was the target of Operation Meltdown, drug traffickers and money brokers exchanged cash for gold and diamonds that were smuggled to Colombia by couriers or in cargo, according to prosecutors. Once there, goods were sold for Colombian pesos, which were then delivered to the narcotics dealers.
Diamonds also pop up in national security contexts, such as terrorist financing and war. The General Accounting Office report suggested a connection between Hezbollah and a part of the Lebanese diamond trading network in West Africa. It also noted that Al Qaeda first set up diamond mining and trading companies during the 1990s in Kenya and Tanzania, though they were never fully developed.
The diamonds that were auctioned on Friday are relatively modest in size, ranging from half a carat to two carats. The are not particularly rare or remarkable (unlike others). “Not huge, but hopefully affordable,” Mr. Levin said. They might make a nice engagement ring for someone who is looking for a bargain, he said. “Something for everyone.”
The proceeds from the sale will go to the Department of the Treasury’s Asset Forfeiture Fund and the Criminal Investigations Division of the Internal Revenue Service.
Copyright 2009 The New York Times Company Privacy Policy NYTimes.com 620 Eighth Avenue New York, NY 10018
MARCH 20, 2009, 5:26 PM
Posts
