Australian Institute of Criminology

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The illicit market in diamonds

Media Release

24 January 2002

24 January 2002

Diamonds have always held an enormous fascination and attraction for many people. Today diamonds are increasingly being seen as attractive commodities that may be used in connection with illegal trade, and are one of the new currencies for illicit goods. As small, durable, high-value items, diamonds offer obvious attractions to criminals. There is growing evidence of organised crime syndicates becoming involved in the international diamond trade.

The Australian Institute of Criminology today released a paper "The Illicit Market in Diamonds" by Research Analyst, Rebecca Tailby, which examines the nature of illicit activity in the diamond industry internationally, and reviews Australia's experience with diamond-related crime.

Releasing the report, AIC Director, Dr Adam Graycar said "trade in illicit diamonds is reputed to be linked with money-laundering, arms and drug trades, civil war and even to international terrorism and people-smuggling."

He noted that the diamond industry in Australia is a major contributor to the economy and to government revenue - in 2000 the Argyle Diamond Mine in Western Australia contributed over $200 million to the State's revenue. As such, Dr Graycar pointed out, losses from illicit activity within the diamond industry accrue not just to the industry, but also to governments in terms of lost royalties and taxation revenue and costs of investigation.

The diamond industry, the report notes, is vulnerable to illicit dealing at all stages of the production of cut diamonds, from the mine through to ultimate sale to consumers. Vulnerabilities include: theft from legitimate mines, stone substitution, or conflict mining in rogue states; illicit trading of stolen diamonds on the black market, or via insertion of illegally obtained goods into the legitimate pipeline; illicit cutting and polishing of stones; and sales of illicit diamonds on the legitimate or black markets. During all stages of the production pipeline (including transit between stages) there is also the opportunity for employee theft of the product, which may be organised or opportunistic.

Criminal threats are not unique to the diamond industry and there is evidence that other natural resources in Australia are also being targeted as criminal commodities. Any response, therefore, needs to cover Australia's range of natural resources to prevent organised crime groups moving from one commodity to another.