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While investigating terror funds in stock market, agencies discover money-laundering racket that deals in diamonds

asli maal ya nakli? Law enforcement agencies are not yet familiar with the modus operandi of diamond smuggling syndicates. representation pic

Officials of the Directorate of Enforcement (ED), while investigating terror funds in the stock market, have stumbled upon a syndicate of diamond dealers  involved in a multi-million dollar money-laundering racket.

The development assumes significance because investigations by the National Security Council had indicated that terrorists have invested heavily in the stock markets. In addition, terror groups are known to launder money in the form of diamonds.

Diamonds are often smuggled, as they have a high value and are easier to carry.

The problem is further compounded as law enforcement agencies are not yet familiar with the modus operandi of diamond smuggling syndicates.

Documents available with MiD DAY indicate that eight diamond dealers based in Mumbai and Belgium are
under the scanner of an investigation that involves governments of Great Britain, Switzerland and Mauritius.

The ED in a letter dated August 11 had sought documents from authorities in Switzerland in connection with investigations into unauthorised transactions in certain accounts maintained with UBS AG, in Switzerland and London.

Initial probe suggests that funds were pumped into the Indian stock markets through a Mauritius based fund called Pluri Emerging market fund. It is still unclear whether these traders were laundering money on their own or on behalf of other clients.

In the last few years, ED officials have uncovered huge investments in some IPOs during the stock market boom. When enforcement agencies kept track on flow of funds, they discovered that the money was transferred from Mauritius to accounts controlled by UBS AG. From there it was pumped in to the stock markets, and later it returned back to the source using the same route.

Transfer of funds
Diamond dealers move the funds by using Participatory Notes issued by various financial institutional investors authorised by the Reserve Bank of India and the Securities and Exchange Board of India. After making profits, the money is returned through the same route back to its source.