Why further Russian diamond sanctions could be coming

Rob Bates

On Feb. 24, the one-year anniversary of Russia’s invasion of Ukraine, G7 leaders vowed to take action to decrease sales of Russian diamonds.

Given the significant revenues that Russia extracts from the export of diamonds, we will work collectively on further measures on Russian diamonds, including rough and polished ones, working closely to engage key partners,” said a G7 (Group of Seven) statement, issued by the White House. G7 consists of the United States, Canada, France, the United Kingdom, Germany, Italy, and Japan.

The statement was not as strong as some expected, and it did not advocate specific measures against Russian diamond exports.

However, the Jewelers Vigilance Committee (JVC) wrote in a bulletin issued Monday [February 27] that “forthcoming sanctions will likely address” the current provisions that allow Russian diamonds cut and polished elsewhere to enter the United States.

There is not yet any specific guidance available for U.S. businesses to implement,” the bulletin concluded. “However, JVC has received information that restrictions are likely to specifically target Russia-mined diamonds, regardless of where they are cut and polished.

Any suppliers abroad who are still purchasing diamonds from Alrosa should begin segregating those goods to ensure they do not reach the U.S. market and should be prepared to begin making Customs declarations that their goods do not contain Russia-origin diamonds.”

JVC deputy general counsel Sara Yood tells JCK that future regulations will probably not be specifically targeted at companies that buy Alrosa diamonds—and, in fact, could require all importers to make declarations any shipments don’t contain Russian-mined goods.

However, current Alrosa customers “are the most at-risk for enforcement because they are still purchasing supply from Alrosa, and they absolutely need to be segregating goods to prepare for this,” she says. “And as far as we know, they aren’t.”

Alrosa no longer publicly lists its “Alrosa Alliance” members, but a pre-invasion list published at the end of 2021 can be seen here.

At least two companies on that list—connected to U.S. retailers Signet and Tiffany—have said they will no longer buy Alrosa goods.

The JVC bulletin concludes, “Until these sanctions are developed and implemented, U.S. businesses should be reviewing their sourcing protocols, discussing requirements with suppliers, and evaluating supply chains using due diligence guidance.

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Source JCK Online