MILAN (Reuters) - Italy’s tax police have carried out a seizure order for more than 700 million euros ($794 million) as part of a probe targeting the country’s top four banks over alleged fraudulent diamond sales, two sources close to the matter said on Tuesday.
Milan prosecutors have been investigating two diamond brokers and four banks — Banco BPM with its Aletti unit, Intesa Sanpaolo, Monte dei Paschi and UniCredit — over sales of diamonds to customers as an investment.
All four banks declined to comment.
Diamond brokers have been using Italian banks to sell high-quality investment diamonds in a business that totaled at least 300 million euros in sales in 2015, according to broker data.
The sources said the seizure order concerned Banco BPM and Aletti for 83 million euros, Monte dei Paschi for 35 million euros, UniCredit for 32 million euros and Intesa for 11 million euros.
The banks were placed under investigation as part of the fraud probe due to an Italian law that renders companies liable for the actions of their employees, one of the sources said.
Banco BPM is being investigated also for alleged obstruction of regulators, the source added.
A TV report in 2016 first shed light on alleged mis-selling of diamonds to the public.
Consumer associations also said they had received complaints. In several cases, people have told Reuters that diamonds they had bought as an investment were valued at a much lower price than they paid for them.
Diamond sales have taken off amid negative interest rates which have curtailed bank revenues and made several other investments unattractive for clients.
Banks make a one-off commission of at least 10 percent on diamond sales, in return for putting the diamond brokers in touch with their clients, between whom the contract is signed.
The business usually accounts for no more than 2 percent of a lender’s total fees.
Additional reporting by Gianluca Semeraro and Valentina Za; Editing by Edmund Blair