Diamonds trade is subject to considerable money laundering and terrorist financing vulnerabilities and risks. NGOs like Global Witness, and governments around the world revealed a relationship between the illicit trade in diamonds, civil conﬂicts, and terrorist organizations. Diamonds are difficult to trace, anonymity can therefore be achieved in its transactions.
Diamond laundering involves the use of diamonds as proceeds from transactions instead of the usual financial instruments for payment such as cash, cheques etc. Proceeds from crime are laundered here through trade in diamonds. The diamonds are transported as small- sized diamond stones around the world at a high value to facilitate their concealment.
SL is one of Africa’s leading diamond producers by value, thereby making the nation susceptible to money laundering via Diamond trade. The nation’s richest diamond mine is located in Koidu town. The mine started out as a state-owned operation. It however fell into the hands of South African mercenaries between 1991- 2002, and has become a private enterprise as Koidu Limited, owned by a company- OCTEA, having parent company as Beny Steinmetz Group Resources ‘BSGR’, with BS as the owner. Steinmetz is largely linked to many corruption-related offences including undervaluing exported diamonds and has since been under investigation.
It was discovered sometime in 2012-2015, that OCTEA exported more than $330 million in rough diamonds, selling $350 per carat, yet in debt of over $150 million. All these, just to give off the notion that the company is struggling financially while it exploits diamonds.
Effects of Diamond Laundering in SL
According to Transparency International, in a bid to expand the diamond mine in Koidu, many settlers have been displaced, agreements were made against the community by the chiefs and the OCTEA, promises made to build hospitals, schools, houses, develop the community were all not met with.
Also, it was reported that some members of Al Qaeda network purchased large quantities of diamonds from rebels in SL in advance of September 11. Thereby linking SL to the attack.
SL has so far adopted a volume of laws and regulations in relation to it’s mining sector, so as to develop a more comprehensive legal framework for its extractive industries to guide investors on environmental standards, health and safety hazards, tax, waste disposal, community relation, prohibition on laundering, terrorist financing, shipping requirements, etc. required of those interested in investing in its extractive industries.