The export of rough diamonds to Mauritius have reportedly triggered a rigorous investigation by the Directorate of Enforcement (ED) and the Reserve Bank of India (RBI).
According to Indian media, the focus of this inquiry is a suspected hawala scam believed to involve well-known diamond companies situated in Surat and Mumbai.
The investigation was set in motion following revelations of an intricate manoeuvre where a series of diamond enterprises were discovered to be conducting significant shipments of rough diamonds to Mauritius, a development that has raised concerns within the financial regulators.
The Blunt Times reported that these diamond companies allegedly exported rough diamonds without undergoing the customary cutting and polishing processes.
“However, rather than receiving legitimate dollar payments in their bank accounts, the diamond companies allegedly found alternate channels for these transactions. This has given rise to suspicions that the companies might be channeling money through illicit means, potentially participating in a hawala racket,” it reported.
Hawala is an informal method of transferring money without any physical money actually moving. It is described as a “money transfer without money movement.” Hawala is used today as an alternative remittance channel that exists outside of traditional banking systems.
Diamond Hubs
As of June 2023, some 2,281 consignments of rough diamonds have allegedly been shipped to Mauritius from the bustling diamond hubs of Surat and Mumbai.
The Blunt Times claimed that the strategic choice of Mauritius as the destination for these exports isn’t accidental, “given its reputation as a tax haven.”
“It appears that the diamond companies saw an opportunity to capitalise on the lax financial regulations of the island nation and possibly engage in hawala transactions.”
Adding to the intrigue, the Customs department has expressed concerns that the owners of these diamond companies might be operating an illicit hawala network as a response to the ongoing recession within the diamond industry.
“One of the most perplexing aspects of this case is the export of diamonds to Mauritius, a country with minimal presence in the diamond cutting and polishing industry,” the newspaper claimed.
While the diamonds are being exported to Mauritius, it is alleged that payments are being channelled through intricate pathways, bypassing direct deposits into the accounts of the diamond companies.
The complex financial trail has prompted the RBI to heighten its scrutiny of the bank accounts controlled by the diamond exporters, with the aim of uncovering the true nature of these diamond exports.
Sources close to the investigation have reportedly disclosed that the diamonds are being shipped to Mauritius under three distinct Harmonized System Nomenclature (HSN) codes, further emphasising the intricate and meticulous nature of the operation.
Source: The Blunt Times
