The Financial Intelligence Unit (FIU) of the Netherlands has published an article detailing the important ways in which financial criminals use luxury watches to conduct ML. This information is important because luxury watches form a cash-heavy sector. Thus, these so-called ‘status symbols’ have become important means of payment or collateral in organized crime since they help conceal illicit funds. Watches are seen in the reports of various institutions with FIU-mandated reporting obligations, such as Customs, jewelers, and banks.
Customs reports indicate that watches exported outside the EU allow reclamation of VAT. In many cases, watches are deliberately not declared to Customs, because it is easier to carry one or more valuable watches across borders than cash. Meanwhile, in the jewelry sector, intermediaries regularly make large cash payments to jewelers. FIU data has revealed that these intermediaries are often connected to criminal circles. Unfortunately, jewelers do not always record the denominations in which they receive a cash payment. Most of the transactions that jewelers report are above the objective threshold of €20,000 cash payment. However, jewelers can also subjectively report transactions of €10,000 or more, if they have reasonable suspicion of ML.
Banks should also be submitting subjective reports to the FIU when there are cash deposits by a jeweler. Still, the number of reports by financial institutions about jewelers is relatively low. This suggests that even though jewelers deposit cash, they do so in a non-suspicious manner. Thus, banks must play their part in preventing ML by considering cash deposits and large denominations as important red flags to investigate the origins of deposited funds.
Source: Financial Intelligence Unit, Netherlands
