Wilmington, Del. (February 23, 2024) - Russia is the largest diamond producer in the world, earning €4 billion in the diamond trade in 2023. The global natural diamond jewelry market is approximately $87 billion. Alrosa, which is 33% owned by the Russian government, is the world's largest producer, by volume, of natural diamonds, and produces almost all Russian diamonds.

On December 6, 2023 the G7 leadership issued a statement ("G7 Leader's Statement") banning Russian non-industrial diamond and diamond jewelry trade imports. The G7 countries make up 70% of the world's non-industrial diamond market. The G7 initiative required that all G7 members implement a direct ban on diamonds exported from Russia by January 1, 2024.

The European Union agreed in December 2023 to ban the import of Russian diamonds in its 12th sanctions package against Russia, which went into effect on January 1, 2024. The ban restricts imports on non-industrial diamonds, which are mined, processed, or produced, in Russia. As of March 1, 2024, Russian diamonds processed/polished in a third country are also banned in the EU. The initial ban is also based on weight, and applies to diamonds equal to or above 1.0 carats per diamond. On September 1, 2024, the ban will be expanded to include lab-grown diamonds, jewelry, and watches containing diamonds. The second phase is also regulated by weight and applies to weight equal to or above 0.5 carats or 0.1 grams per diamond.

With the ban comes increased attention to enforcement, and the EU will implement a traceability-based verification and certification mechanism for rough diamonds that will be established within the G7. India has been a major player in the third-party processing of Russian diamonds, accounting for approximately 90% of the market. G7 sources indicate that cooperation by India will be crucial to this enforcement effort.

The EU's 12th sanctions package also prohibits the provision of services and financing related to the Russian diamond ban. It is illegal to provide services, including technical assistance and brokerage services, in relation to the diamond trade. These restrictions include the provision, manufacture, maintenance and use of those goods subject to the import ban. There is an exemption for the personal use by natural persons and their immediate family members travelling to the EU as long as those diamonds are not intended for sale. The applicable enforcement authorities of each member state can also authorize the transfer or import of cultural goods that are on loan as part of a formal cultural cooperation program with Russia.

President Biden placed restrictions on the diamond trade as early as March 11, 2022 as part of the expansion of the national emergency declared in Executive Order 14024 of April 15, 2021, which was a direct response to the Russian incursion into the Ukraine. President Biden signed an executive order on December 22, 2023 that amended the earlier March 2022 executive order. The March 2022 executive order banned Russian diamonds, but allowed the export of diamonds that originated in Russia but were processed in a third country. The amendment is consistent with the G7 Leader's Statement and eliminated the "substantial transformation," loophole, which allowed diamonds polished in third nations to enter America legally. Diamonds are now included in a list of products that are banned "notwithstanding whether such products have been incorporated or substantially transformed into other products outside of the Russian Federation."

On February 8, 2024, the U.S. Office of Foreign Assets Control ("OFAC") issued two determinations prohibiting the importation of certain categories of diamonds mined in Russia. OFAC's determinations included two bans on the import of diamond jewelry and unsorted diamonds exported from Russia, similar to the EU ban. OFAC implemented the ban on non-industrial diamonds mined in Russia, without regard to whether they came directly from Russia or were processed in an intermediary country. OFAC also followed the EU timing of the G7 policy: the ban is effective on March 1, 2024 for non-industrial diamonds with a weight of 1.0 carat or greater; and on September 1, 2024 for non-industrial diamonds with a weight of 0.5 carats or greater. OFAC noted that it intends to issue additional public guidance regarding these diamond ban determinations.

Japan moved quickly to implement the diamond ban. The Ministry of Economy, Trade and Industry announced the initiative on December 15, 2023, and Japanese sanctions were revised to introduce prohibitions on the import of non-industrial Russian diamonds effective January 1, 2024. Canada also implemented measures to ban Russian diamonds in late 2023 shortly after the G7 announcement. On December 5, 2023, Canada amended its Special Economic Measures (Russia) Regulations to prohibit the import of diamond and diamond-related products originating from Russia consistent with the G7 agreements. Canada also amended their existing luxury export ban and import ban in their Russia Regulations to coordinate with the new G7 diamond prohibitions.

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