Professional Jeweler Archive: Accusations of Terrorist Links Persist

August 2002


Accusations of Terrorist Links Persist

Meanwhile, the Kimberley Process diamond control system forges on toward a planned end-of-year launch, despite GAO criticism it will not be effective

Federal and international investigators say money from the al Qaeda terrorist network was long ago shifted out of bank accounts and into “untraceable gold and precious stones such as diamonds, tanzanite and sapphires,” The Washington Post reported in June. The United Nations said it’s investigating such allegations.

Though no conclusive evidence has yet come to light to back up these claims, the U.S. Treasury Department says it, too, is shifting its focus from bank accounts to “the means of financing terrorism outside of the mainstream financial system,” says Deputy Secretary Kenneth W. Dam.

In May, the Treasury Department met with jewelry industry representatives to find how the industry can comply with antimoney laundering programs. “Our industry is ready to assist in any way it can to fight potential exploitation of our products for illegal purposes,” says Cecilia Gardner, executive director of the Jewelers Vigilance Committee, which arranged the meeting.

The Treasury Department is considering implementing regulations that could affect the jewelry industry. Requirements could include development of internal policies and procedures, designation of a compliance officer, creation of employee training and independent auditing of companies’ antimoney laundering programs.

The U.N. and the World Diamond Council, the industry group working to regulate the international trade in diamonds, strongly urged that the Kimberley Process certification system go forward as quickly as possible to fight infiltration of the diamond trade by all criminal elements. The Kimberley system is expected to be implemented by the end of this year.

GAO Criticism

The General Accounting Office, the investigative arm of Congress, also released a report in June saying the Kimberley certification plan does not contain the controls necessary to ensure its effectiveness in stemming the flow of diamonds used for criminal purposes.

The report calls the proposed voluntary industry auditing system flawed. The program would requires all diamond-dealing companies – including retailers – to maintain audited records showing their diamonds have been warranted conflict-free at the beginning of the export process.

GAO also said the time between a diamond’s discovery in a mine or alluvial field and its point of first export is vulnerable. The agency says this is where conflict diamonds could enter the legitimate trade. Though the Kimberley system encourages its participants to license diamond miners and boost security, many of the countries where diamonds are mined lack governmental enforcement to ensure conflict diamonds aren’t smuggled in.

Congressional Action

Despite the GAO criticism, the Campaign to Eliminate Conflict Diamonds – a group of non-governmental humanitarian, human rights and religious organizations, along with the World Diamond Council – continued to pressure Congress and the Bush Administration in a joint memorandum in July to pass legislation needed to allow the U.S. to be a full partner in enacting the Kimberley system. The legislation would permit the import of diamonds and diamond jewelry only from countries that have conflict diamond controls in place.

– by Peggy Jo Donahue

Copyright © 2002 by Bond Communications