Hong Kong authorities busted a large-scale money-laundering syndicate operating through the transnational trade of synthetic diamonds falsely declared as natural diamonds.

Four persons were arrested in connection with the case – the first of its kind detected by the Hong Kong Customs and Excise Department (CED). A total of HK$8.2 million (around US$1.1 million) in assets held by the suspects have been frozen.

CED said the group laundered around HK$500 million (approximately US$64 million) in 2021 via transactions carried out by diamond trading companies established in Hong Kong and India. 

Under the scheme, they exported synthetic diamonds from Hong Kong to India but misdeclared these as natural diamonds to be able to transfer “suspicious funds,” added CED. 

The syndicate has been on the radar of Hong Kong customs, which initiated a financial investigation in early 2023, with the help of Indian customs. Operation “Gem Crusher” was mounted on December 19 and 20, 2023 where customs officers raided eight locations in the city, including four residential premises and four commercial units, and seized large quantities of suspected synthetic diamonds, some natural diamonds and foreign currency equivalent to about HK$1 million (around US$128,115), among others.