Israel Diamond Trade Faces Money Laundering Rules
By THOMSON DIALOG: NewsEdge Posted: 2/22/2006 3:41 PM
(Rapaport…Globes, ISRAEL) Sources inform Globes that the Ministry of Justice is planning measures to prevent money laundering in Israel’s diamond industry. The ministry is reportedly examining ways to apply anti-money laundering regulations to the diamond industry, which is considered an industry with a high risk of money laundering. The ministry is considering requiring diamond merchants to report cash transactions and identify customers, which will increase information obtained about money laundering.
Until now, rules designed to prevent money laundering have not applied to the diamond industry, where many transactions are conducted in cash. In some countries, anti-money laundering regulations were applied to the industry only a few years ago.
The Ministry of Justice is now considering how to implement international anti-money laundering regulations that apply to diamond merchants around the world, in Israel.
Israel’s diamond industry has a turnover of $5.5 billion a year. Israel has become an international diamond trading center in recent years, even as its importance as a diamond polishing center has declined, due to competition in polishing prices from countries where labor is cheap, chiefly India and Russia. Over half of the world’s rough diamonds now pass through Israel.
The World Federation of Diamond Bourses (WFDB) and International Diamond Manufacturers Association (IDMA) recently decided to hold the 32nd World Diamond
Congress in Israel in June 2006.
Former Ministry of Industry, Trade and Labor supervisor of diamonds Udi Sheintal told Globes that diamond merchants had an industry-wide arrangement with the Israel Tax Authority, under which merchants paid a tax rate of 1 percent of turnover. He said at the time that this arrangement was the only way to levy taxes on such a complicated industry, because it was difficult to assess the value of diamonds.
Copyright C 2006 Globes