21 August 2017
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Diamond Industry Strategies to Combat Money Laundering and the Financing of Terrorism

Chaim Even-Zohar's recent book, ‘Diamond Industry Strategies to Combat Money Laundering and the Financing of Terrorism', gives players in the diamond industry a head-start in understanding the complex subjects of money laundering and financing terror, and how these very serious issues affect the diamond sector.

The 190-page book explains what the issues of money laundering and terrorist financing are, and how they have become a significant concern for the diamond sector. The disparities in the legislation of relevant diamond countries are detailed in the book, which offers strategic solutions for tackling this issue head-on.

The English version of the book, which contains the latest research in these areas, was commissioned by ABN AMRO Bank especially for their diamond industry clients, while the Israel Diamond Institute has sponsored the Hebrew language version of the book.  Click HERE to learn about the Hebrew version.

Why is AML Relevant?

The legal landscape and the business environment in which we all operate seem to be in perpetual motion. New threats and challenges arise fast on the horizon and often we don't have the time to thoroughly familiarize ourselves with their ramifications on our business.

After September 11, 2001, the worldwide banking community was moved into the forefront of the war against the financing of terrorism, as banking regulations and money laundering legislation were either enacted or amended to impose on financial institutions comprehensive anti-money laundering and anti-terrorist financing compliance and reporting requirements.

When the banking system became less accessible to terrorists, they reverted to trade-based financing mechanisms. In order to counter that threat, presently, in some 130 countries in the world, diamond and jewelry dealers are in the process of being legally designated as "financial institutions" for the purposes of money laundering and anti-terrorist financing compliance rules.

To put it bluntly, diamond and jewelry customers have become semi-policemen in this most serious threat that civilized society is facing in the 21st century. As many of these diamond industry specific rules are still being written, there are still opportunities for the industry to enter into a dialog with government in order to implement programs that are effective from a government perspective and workable from an industry perspective. An early understanding of the issues widens the scoop for our own participation in shaping our compliance destiny.

The diamond industry is unique and so are our problems. Every year, between US$2-3 billion of rough diamonds is procured in cash-based "weak governance" countries, which often don't have effective financial institutions to serve as an alternative to the cash business. On the other end of the pipeline, there are purchasers of our product located in countries that have high import duties or excise taxes, and where some goods move through parallel channels. These are all situations that make compliance difficult, but at the same time, it is these very same situations that make effective compliance so exceedingly important if we are to preserve consumer (and governmental) confidence in the diamond product.




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