Australia evaluates tightening anti-money laundering regulations

Australia is weighing up the strength of its anti-money laundering regulations, after a financial watchdog highlighted that illicit cash might be finding its way into the country via the purchase of precious stones, according to a Reuters report.

 The Paris-based Financial Action Task Force (FATF), which monitors a country’s ability to stymie illicit financial flows, highlighted Australian authorities’ lack of scrutiny in the property and precious stones sectors. The FATF is concerned that the laundered money might be used to fund extremists.

 According to existing Australian regulations, individual foreign nationals can spend unlimited amounts on precious stones – without having to identify themselves or the source of their funds.

 There is concern that an increasing number of wealthy Chinese, who are looking for investments outside of China due to stock market volatility, the governmental crackdown on bribery and the devaluation of the yuan, are buying up significant amounts of pink diamonds.

 Although the stones only make up 0.01 percent of the world diamond market, Australian mines produce 90 percent of that figure.

 “Rich Chinese are coming to Australia to buy pink diamonds,” said Rami Baron, president of the Diamonds Dealers Club of Australia, “only the finest and rarest of pinks are mined here.” He added that the industry was under no obligation to ask where a purchaser’s funds originated from.

 Prices for pink diamonds have nearly doubled in the last five years, with one carat reportedly costing AUD$1 million ($690,000).