(Bloomberg) -- A Swiss precious metals and gems trader stands trial on Thursday accused of knowingly buying diamonds worth $750,000 on behalf of Italian criminals to help them launder the proceeds of a $35 million tax scam.

C., as he can only be named under local reporting restrictions, knew or should have known that the money used to buy the stones was linked to Italian organized crime, Swiss federal prosecutors wrote in their January indictment.

At the time of the diamond purchases, his three alleged Italian accomplices had already been convicted and sentenced to prison in 2011 for running a VAT tax-fraud scheme that issued fake tax receipts. The case dubbed “Cambio Veloce” -- Italian for Quick Exchange -- by prosecutors has been run out of Lugano, an Italian-speaking financial hub in Switzerland.

The case sheds light on how criminals are turning to gems and bullion as tougher ‘know-your-customer’ rules make Swiss banks more wary of accepting large deliveries of cash, simultaneously sparking a boom in unregulated safety-deposit box businesses.

Read more: Italy’s Tax Dodgers Hide in a Swiss Loophole

Lugano, an hour’s drive from Milan, grew rich over the decades as a hub for Italians looking to park their money outside of their home country. But the city has fallen on harder times amid an Italian crackdown on tax evasion. The number of banks in Ticino, Switzerland’s Italian-speaking canton has dropped by more than 40% over the past 15 years.

A lawyer for C. said he will seek his client’s acquittal.

While penalties under Swiss law are considered lenient by the standards of many other western countries, Switzerland has been toughening its stance on money laundering given the more than $2 trillion dollars of offshore assets stashed there.

Failing to prevent money laundering because of criminal negligence can be punished by up to a year in prison. C. is also accused of active money laundering, which could mean three years in prison if convicted.

C. bought the diamonds through an Israeli diamond exchange outside Tel Aviv to launder the Italians’ illicit gains, prosecutors say. The man is also accused of selling 10 kilograms of gold without sufficient due diligence on the buyer, or the proper authority from Switzerland’s financial regulator.

The trial is scheduled to open Thursday and run for two days.

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