“More Surprises” in Sanctions on Russian Diamonds

In recent months, the G7 and the European Union have been developing relevant sanctions to prevent the trade of these diamonds, and on March 1st, one of those sanctions came into effect: the import of loose diamonds mined in Russia of 1 carat or more. At that time, many wondered how this control would be carried out, and although the U.S. Customs and Border Protection (CBP) communicated the procedure to follow, more doubts remain.

So far, there is only one commonality: on March 1st, all G7 countries (United States, United Kingdom, Canada, Japan, France, Germany, Italy) and the European Union (a “non-enumerated” member of the G7) prohibited the import of loose diamonds mined in Russia of 1 ct. and above, even if they were cut and polished elsewhere. The issue is that there are significant differences in how each country asks traders to prove they are not shipping sanctioned products.

Importers must submit a paper declaration on company letterhead confirming that their shipment does not contain Russian diamonds, according to the new rules from Customs and Border Protection (CBP). For importers of diamond jewelry, the declaration only needs to state that no diamond in the jewelry was exported directly from Russia.

For now, the United States does not require supporting evidence for these declarations, although this is expected to change in the coming months. In fact, a notice from the UK Department for Business and Trade stated that self-certification “may” be acceptable, but added that:

as they require importers to provide information on the origin of all diamonds of 1 ct. and above. For this, they must present a single Kimberley Process certificate of origin. (Mixed parcels will not be allowed, although De Beers’ “Botswana Sort” will qualify as single origin even though it aggregates production from four countries). Customs agents may request additional documentation, including a declaration form, invoice and packing list, as well as transport documentation.

Furthermore, importers of polished stones must submit a declaration confirming that none of their diamonds have been mined in Russia, along with evidence that could range from a customs form or invoice, to a packing list, transport documentation, proof from traceability systems, or a laboratory grading report.

Canada and Japan also enacted bans on Russian polished diamonds, but their statements contained few details on implementation.

These sanctions will be valid during the so-called “sunrise period“, which ends next August 31st. Starting in September, the size threshold will drop to half a carat and diamonds will require a G7 certificate, a system that, as stated by Leanne Kemp, CEO of Everledger, would have already issued its first certificates, as part of a pilot with selected manufacturers and miners. This system could also mean that all diamonds of at least half a carat will have to pass through Belgium, where the certification system will be headquartered.

We also recall that, traceability tools are, for some G7 members, the best option to control the provenance of each diamond. This would be a further step towards sustainability and transparency in the industry. For example, De Beers, which does not foresee any disruption in its diamond supply, issued a statement affirming its “preparedness” for the new restrictions, and added that it recently signed a term sheet for a collaboration between Tracr, its diamond tracking platform, and Sarine Technologies, with the aim of strengthening trust in diamond provenance. This collaboration will focus on recording the traceability of diamonds from rough to polished, technologically secured. Tracr and Sarine technology is open to users across the industry and will focus on making digital access to diamond information available to G7 officials.