By: Sara E. Yood, Esq.
On Friday, February 24, 2023, the G7 leadership announced that they would be working on an additional package of restrictions on diamonds of Russian Federation origin. This announcement was significantly timed in conjunction with the first anniversary of the illegal Russian invasion of Ukraine and subsequent unjustified war.
These forthcoming sanctions are likely to address the Customs “substantial transformation” pathway that still allows Russia-origin diamonds to enter the U.S. legally if cut and polished in another country.
The relevant text of the announcement reads: “[g]iven 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.”
There is not yet any specific guidance available for U.S. businesses to implement. 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.
While it may take a few months for the exact specifications of the restrictions to be developed and implemented, JVC encourages members now to utilize their AML/KYC framework to step back into the supply chain and ensure they fully understand the scope of their diamond sourcing. U.S. businesses should be reviewing their sourcing protocols, discussing requirements with suppliers, and evaluating their supply chains using due diligence guidance. JVC will continue to update members with further developments on this as it progresses.
