Tuesday, May 21, 2024
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Russian diamond impact of G7 sanctions

The Group of Seven (G7) nations recently imposed sanctions on Russian diamonds and diamond jewelry, effective March 1, marking a notable expansion of previous restrictions. Previously, only polished stones originating directly from Russia faced sanctions, while those processed in third countries like India remained technically permissible in the US. However, the new measures now extend to 1-carat and larger polished stones manufactured in third countries from Russian rough.

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To enforce these sanctions, US Customs and Border Protection has mandated importers to provide a self-certification statement confirming the diamonds’ non-Russian origin. While serving as a provisional measure, uncertainties persist regarding the long-term effectiveness and enforcement of these regulations.

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The diamond industry grapples with uncertainty regarding the practical ramifications of the ban, particularly concerning customs procedures and potential future requirements. Despite the current reliance on self-declaration statements, the industry anticipates the implementation of stricter regulations as authorities refine enforcement mechanisms.

Meanwhile, the Responsible Jewellery Council (RJC) advises its members to maintain documented proof of non-Russian origin before issuing attestations. Similarly, the Jewellers Vigilance Committee (JVC) emphasizes the importance for importers to possess evidence supporting claims of non-Russian sourcing.

Looking ahead, the Office of Foreign Assets Control (OFAC) intends to expand the scope of coverage to include diamonds as small as 0.50 carats from September 1, indicating ongoing efforts to tighten restrictions on Russian diamond imports.

While the European Union (EU) has outlined a comprehensive certification scheme to verify the non-Russian status of diamonds, the US has yet to introduce similar measures. However, there are indications that the EU hopes for international counterparts, including the US, to adopt comparable regulations to ensure the efficacy of the sanctions.

Amidst these developments, concerns arise regarding the potential concentration of diamond trade in specific regions, notably Belgium. The World Federation of Diamond Bourses (WFDB) advocates for the global availability of tracking technologies to enable governments to independently certify diamonds.

As the industry grapples with these intricate regulations, significant questions persist regarding the treatment of diamonds procured from Russia before the sanctions and the feasibility of exporting and reimporting such goods. These uncertainties underscore the ongoing challenges faced by stakeholders in the diamond trade amidst geopolitical tensions and regulatory shifts.

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