Are luxury watches used for money laundering in Türkiye-based crime groups?

Türkiye's luxury watch market has seen an unprecedented boom, with the country surpassing many wealthier nations in Swiss timepiece imports.

According to the Swiss Watch Industry Federation (Fédération de l’industrie horlogère suisse), from January to July 2024, Türkiye imported luxury watches worth a staggering $170.1 million.

This surge in demand places Türkiye ahead of countries like Qatar, Canada, Austria, Ireland and Kuwait – nations with higher per capita incomes but smaller populations.

Why are luxury watches, which can cost more than a house in some cases, becoming so popular?

The answer lies not just in a growing appreciation for Swiss craftsmanship but in the darker world of illicit finance.

The gang was busted by German police (AFP Photo)

Dark side of luxury: A tool for money laundering

Transnational criminal networks have discovered that these watches are not just status symbols but also effective tools for laundering money. A recent case in Türkiye has revealed how a criminal gang used luxury watches to launder illicit funds by exploiting airport security and the fragmented gray market.

Case of call center scam

• Background: A criminal gang based in Germany, operating a call center in Izmir, Türkiye, was recently put on trial. The gang, posing as police officers, defrauded elderly individuals in Munich, collecting money and valuables.
• Money laundering method: The gang transported the stolen money to Türkiye by smuggling luxury watches through airports. They wore these high-value products, each worth millions, on their wrists, easily passing through airport customs without raising suspicion.
• Final destination: Once in Türkiye, these watches were sold at local jewelers, converting the illicit funds into legitimate money – a classic case of money laundering.

Only 6 people in the world have that watch, including Cristiano Ronaldo. (via Haber 7)

Ronaldo watch in money laundering operation

In a drug money laundering operation for five cities in Istanbul, a million-dollar watch, one of only six ever produced and owned by Cristiano Ronaldo, was seized. The operation also revealed connections to Joseph Johannes Leidekkers, one of Europe's most wanted fugitives, through Türkiye.

Former Brazilian President Jair Bolsonaro was implicated in a similar scandal (Photo via Euronews)

Global reach of watch laundering

This method of laundering money through luxury watches is not unique to Türkiye. It’s part of a global network where criminals, corrupt officials, and even some organizations have used high-end timepieces to move funds across borders.

• Hezbollah: In 2015, the DEA uncovered a Hezbollah operation where the group purchased €14 million worth of luxury watches in Europe. These were smuggled into Lebanon and sold for cash, effectively bypassing international financial monitoring.
• Bolsonaro’s controversy: Former Brazilian President Jair Bolsonaro was implicated in a similar scandal, where he allegedly sold a Rolex and a Patek Philippe gifted by Saudi Arabia. The watches were transported to the U.S. and sold for $68,000, which was then likely repatriated to Brazil.

How is money laundered through watches?

Luxury watches are ideal for laundering money because of their high value-to-weight ratio and the ease with which they can be transported across borders. Here’s how it works:

• Step 1: Purchase luxury watches in one country using illicit funds.
• Step 2: Smuggle the watches to another country by wearing them or carrying them in luggage.
• Step 3: Sell the watches at local jewelers or on the gray market, converting them back into cash or integrating the money into the financial system.

These steps are relatively easy to execute, making watches a preferred method for laundering large sums of money.

The lack of oversight in the watch market, especially in the gray market, further facilitates this illicit activity.

Luxury-Watches-as-Tools-of-Money-Laundering (Photo via AEU)

The bigger picture: Why watches?

Watches have become a popular medium for money laundering because of the following factors:

• Portability: A luxury watch worth millions can be easily transported without drawing attention.
• Market demand: High demand for luxury watches ensures that they can be quickly sold for cash.
• Lack of regulation: Unlike vehicles or real estate, watches are not subject to stringent regulations, making it easier to buy and sell them anonymously.

This combination of factors has made luxury watches a key tool in the world of illicit finance.

Well over $100k in Rolex Watches (Photo via James Duffrey)

A glimpse into future

As international law enforcement agencies become more aware of this trend, we can expect increased scrutiny of the luxury watch market. However, the challenge remains significant, given the global nature of the trade and the high level of demand for these watches.

Without stricter regulations and better tracking mechanisms, luxury watches will likely continue to be used as instruments of money laundering, allowing criminals to move their ill-gotten gains across borders with ease.

September 04, 2024 07:54 AM GMT+03:00