Diamond Companies Sanctioned, Dealers Charged With Money Laundering

Washington, DC—The US Department of the Treasury’s Office of Foreign Assets Control has announced a new round of sanctions that impact the diamond industry, this time tied to securely the US has deemed a “global terrorist” who’s been under sanctions for nearly four years.

Announced Tuesday, the sanctions encompass 52 individuals and companies OFAC said helped Nazem Said Ahmad evade US sanctions and launder money in order to fund Hezbollah and his “luxurious lifestyle.”

Lebanon-based Hezbollah, also spelled Hizballah, is an Iran-backed political party and militant group believed to be responsible for numerous terrorist attacks.

It has been designated by the US as a Foreign Terrorist Organization since 1997, and a Specially Designated Global Terrorist since October 2001.

Ahmad, a diamond and art dealer with both Lebanese and Belgian citizenship, has been on OFAC’s Specially Designated Nationals list since December 2019 for allegedly laundering money and evading taxes.

The 52 entities designated in this latest round of sanctions—which OFAC described as a “complex network” of Ahmad’s family members, business associates and companies spread across eight countries—used shell companies and fraudulent schemes to disguise the sanctioned Ahmad’s role in financial transactions involving diamonds and works of art, which he frequently shares on his Instagram page.

OFAC said Ahmad’s network took advantage of the “permissive nature” of the global diamond, gemstone, and art markets to buy and move around luxury goods.

It also mentioned the Kimberley Process specifically, noting that Ahmad’s network allegedly coerced both “witting and unwitting” participants into creating fake KP certificates to manipulate diamond prices and taxes and make their businesses look legitimate.

The full list of sanctioned companies and individuals is available on the OFAC website and includes diamond companies based in South Africa, the Democratic Republic of Congo, Antwerp, and Dubai.

The sanctions bar people and companies in the US from doing business with any of the named entities as well as any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons.

In an alert sent to members Thursday afternoon, Jewelers Vigilance Committee CEO and General Counsel Tiffany Stevens and Deputy General Counsel Sara Yood recommended US businesses with automated OFAC software run their customer and supplier lists through their software program to ensure they’re not doing business with any sanctioned entities.

For companies doing manual checks, Stevens and Yood said they should cross-check the OFAC list against their lists of suppliers and customers.

Businesses without compliant anti-money laundering (AML) programs can find more information about implementing one on the JVC website.

The Treasury Department announced the sanctions the same day federal prosecutors in Brooklyn, New York, unsealed an indictment charging Ahmad and eight others with orchestrating a “long-standing” scheme to evade US sanctions, defraud the US and foreign governments, and launder money.

According to the 50-plus-page indictment, filed under seal March 29, after the US sanctioned Ahmad in December 2019, entities controlled by him or operating for his benefit made more than $400 million in financial transactions, importing $207 million worth of goods into the US and exporting more than $234 million, all the while hiding the fact that Ahmad was involved.

Those imports and exports consisting primarily of diamonds and artwork, the indictment states.

For diamonds specifically, the indictment noted the defendants worked together to utilize grading services from a US-based diamond grading company, identified in court documents only as “Diamond Grading Company-1” with a facility in New York.

The services were secured through multiple entities operating for Ahmad’s benefit and were valuable to all parties because the “cut, color and clarity grades assigned by the company, as well as the certification of the stone’s carat weight, affected the price at which a diamond could be sold.”

All told, the defendants and other conspirators submitted 482 diamonds to the lab after Ahmad was sanctioned in December 2019, totaling about 1,546 carats with a value of more than $91 million, the indictment states.

The US Attorney’s Office for the Eastern District of New York is handling the prosecution, as goods were shipped in and out of New York’s John F. Kennedy Airport in Queens.

As of Tuesday, the office said one person had been arrested in connection with the scheme—The New York Times reported it was Ahmad’s accountant, who was arrested in Britain—while the others, including Ahmad, reside outside the US and remain at large.