The Indian Customs 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 Special Economic Zone (SEZ) 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.
The collaborative bust comes close on the heels of recently concluded Global Conference of Cooperation in Enforcement Matters (GCCEM) organised by Indian Customs and Directorate of Revenue Intelligence (DRI), with the theme of ‘It takes a network to fight a network’.
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. The importing entity was also found to be exporting jewellery studded with diamonds at a very inflated value to Hong Kong and few other countries.
Interestingly, while most of the declared inflated value of the imports was remitted out of the country through banking channels, the remittances received for the exports was seen to be only marginal at around 0.2%, indicating that this trade has been a cover to launder money outside.