Surat Diamond Firms Face Rs 500 Cr Cyber Fraud Charge

Surat : A number of diamond companies and jewellery firms in Surat, the world’s largest diamond cutting and polishing hub, have reportedly damaged the reputation of the Indian gems and jewellery sector. This follows the freezing of their bank accounts by the Mumbai police due to allegations of involvement in cyber fraud exceeding Rs 500 crore. 

Recent reports indicate that among around 50 companies, 29 from Surat’s diamond sector, along with several jewelers, have engaged in transactions with traders from Karnataka, West Bengal, and Kerala, who are buyers of diamond-jewelry products, in Maharashtra. Authorities from four states, including Mumbai, Karnataka, West Bengal, and Kerala, have raised suspicions regarding transactions linked to cyber fraud. They have taken action by seizing the bank accounts of 29 traders from Surat, along with the remaining 21 from other states, under specific legal provisions in Mumbai. With the bank accounts frozen, approximately Rs.500 crores belonging to diamond-jewellery companies are now inaccessible, leading to a flurry of activity among traders in Surat.

In a significant development, it has been reported that Rs.300 crores have been frozen in the bank accounts of diamond and jewellery companies based in Surat. Additionally, police from Karnataka, West Bengal, and Kerala have also frozen another Rs. 200 crores. 

The scam primarily involves smaller diamond and jewellery firms, with no prominent or well-known companies implicated. This situation has sparked numerous inquiries regarding the dominance of companies in Surat and the significant volume of transactions involved. 

Recently, several companies in Surat and Mumbai involved in diamond and jewellery manufacturing have faced serious allegations related to the overvaluation of diamonds and jewellery, as well as various forms of financial misconduct including bank fraud, customs and excise duty evasion, service tax evasion, income tax evasion, and the round-tripping of valuable diamonds. 

Several years back, a well-known diamond firm faced allegations from the Mumbai customs department regarding the inflated valuation of its diamonds. The scheme of overvaluation was amounting to crores of rupees. Nevertheless, the influence wielded by the diamond magnates led to the case being sidelined, with no inquiries conducted by the department. 

Leaders in the diamond sector have accused the Mumbai police of soliciting 10%-20% from diamond firms and jewellers in exchange for unfreezing their accounts. A formal complaint regarding this matter has been submitted to Union Jal Shakti Minister CR Paatil, who also serves as the Gujarat BJP chief. 

Frustration has escalated regarding the decision to freeze the bank accounts of diamond and jewellery firms in Surat.  The diamond industry is facing significant challenges as bank accounts have been unexpectedly frozen, leaving stakeholders in a state of uncertainty and concern. Conversely, there is a growing inquiry within the industry regarding the necessity of completing KYC prior to conducting financial transactions through banking. During that period, it became widely known within the diamond sector that it was essential to notify the bank accounts of Surat’s diamond industrialists, whose accounts had been frozen, about KYC requirements. Due to the financial dealings that have occurred via the bank. They are all engaged in the diamond trade, not involved in terrorism.