In a groundbreaking operation named "Gem Crusher," Hong Kong Customs and Excise Department has exposed a transnational diamond trading money-laundering case—the first of its kind. The government organization revealed last week that four individuals were arrested for their alleged involvement in a syndicate that falsely declared synthetic diamonds as natural, marking a significant financial fraud.
During December 19 and 20, customs conducted raids on eight locations across various areas in Hong Kong, encompassing both residential and business premises. Assets totaling HKD 8.2 million ($1.1 million) belonging to the detained individuals have been frozen by authorities.
The investigation began earlier this year when Hong Kong customs officials received information about the fraudulent scheme and initiated a financial probe. Collaboration with Indian authorities was crucial in uncovering the intricacies of the operation.
The crime syndicate, operating diamond-trading companies in both Hong Kong and India, executed a scheme involving the export of low-value lab-grown diamonds from Hong Kong to India throughout 2021. These synthetic diamonds were falsely declared as high-value natural stones. The primary objective was to facilitate the transfer of substantial amounts of suspicious funds from India to Hong Kong, authorities alleged. The syndicate is believed to have laundered approximately HKD 500 million ($64 million).
During the raids, customs seized a substantial quantity of suspected synthetic diamonds, a smaller quantity of natural diamonds, around HKD 1 million ($128,055) in cash, as well as mobile phones, computers, company seals, checkbooks, bank cards, and various trading documents.
The four arrested individuals, considered the masterminds and ring leaders of the syndicate, face charges of dealing with property known or reasonably believed to represent proceeds of an indictable offense. The investigation is ongoing, with authorities indicating that further arrests may follow as they delve deeper into the complex case.