Jewellery Value Manipulation in TBML

Key Highlights: Jewellery Value Manipulation in TBML

Jewellery value manipulation is a trade-based money laundering technique that’s achieved through over-invoicing or under-invoicing precious metals and jewellery items.
The red flags include excessive buyer turnover, unusual prices, and inconsistent data from suppliers.
Jewellery value manipulation can be detected using RapidAML’s features like name screening, KYC, customer risk assessment, and transaction monitoring.

Definition: What Is Jewellery Value Manipulation in AML/CFT?

Jewellery value manipulation is the over-invoicing or under-invoicing of jewellery items for money laundering. It’s one of the trade-based money laundering (TBML) techniques utilised by criminals to launder money.

The overpricing of jewellery helps in injecting illegal cash into the financial system, and the under-pricing discrepancy when resold to the market covers up the origin of the difference.

Key Risks, Red Flags & ML/TF Typologies Involving Jewellery

The heavy dependence on a complex foreign structure, the use of non-disclosed or anonymous third-party buyers, and cash purchases that conceal the beneficial owner are all high-risk pointers of jewellery value manipulation.
The TBML is explicitly linked to the physical movement of jewellery, primarily used as a non-currency value transfer mechanism. It bypasses traditional banking regulations and standard currency controls.
Over-invoicing and under-invoicing are often involved in the inconsistent resale of an item at dramatically different prices.
Fraudulent value representation involving non-existent grading certificates, or conflicting appraisals, inconsistent, falsified or unverifiable documents.
Activities like high-end auction houses, luxury jewellery traders and gold trading hubs that operate in high-value transactions require enhanced due diligence.

Best Practices for Preventing and Monitoring Jewellery Value Manipulation

Compliance teams must compare the transactional price against the fair market value to detect signs of under-invoicing or over-invoicing.
Conduct mandatory staff training on how to spot red flags around jewellery value manipulation.
Focus on verifying the source of funds, mainly for high-risk customers, by implementing rigorous EDD and KYC.
Implement a dual review for documentation and end-to-end provenance checks of all high-value export/import documentation to prevent TBML via manipulated invoices.
Monitoring rules critical to the unusual payment methods, watching for structure, sudden spikes in activity, or the luxury goods risk profile.

How RapidAML Software Helps Detect Jewellery Value Manipulation

RapidAML software detects transaction patterns and flags suspicious transactions.
The software performs constant automated customer screening of transactions against politically exposed persons (PEPs), adverse media matches, databases and global sanctions lists.
Our transaction monitoring engine runs on next-gen technology to catch suspicious transactions and uses customisable rules specifically curated to look after heavy cash purchases that are inconsistent with a known profile.
RapidAML software instantly flags the riskiest customers that are subject to major risk scoring based on complex corporate structure and cash usage for enhanced due diligence (EDD).
RapidAML provides a complete audit trail to meet compliance obligations and simplifies the timely submissions of Suspicious Activity Reports (SARs) to the FIU.

Jewellery Value Manipulation FAQs

1. Why is jewellery commonly used in money laundering?

It is because they are highly portable, making it easy for cross-border movement, are of high value and store wealth in a compact form and lack a globally verifiable price, making their valuation easy to manipulate and subjective.

2. What makes jewellery pricing susceptible to manipulation?

Jewellery’s value is determined by rarity and craftsmanship, which go beyond its materialistic value. This makes a way to introduce forged valuations, which justifies over-invoicing.

3. How do authorities identify over- or under-valuation schemes?

By comparing independent expert valuations against declared values, customers’ known financial profiles, and market benchmarks.

4. What controls should high-value dealers implement?

Risk-centred transaction monitoring, independent valuation checks, and sophisticated, robust AML programs to counter high-value goods manipulation.

5. How does jewellery value manipulation relate to TBML?

A primary TBML mechanism, over-invoicing or under-invoicing, is used to move illicit value across borders.