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Trade Sanctions and Embargoes
Sanctions and Embargoes in the Diamond Industry
One of the key challenges for the diamond industry is that it operates in a sensitive and highly regulated environment. Traders continuously have to consider potential vulnerabilities and risks and comply with a wide array of legal obligations specific to the sector like the Kimberley Process Regulations to prevent conflict diamonds as well as Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) measures. Another challenge is the complex international supply chain and global market typical for the diamond sector, which entails another important trade compliance requirement to take into account: trade sanctions.
Russia's war against Ukraine has made compliance with sanctions more critical than ever. In response to Russia's military aggression, the G7 has implemented import bans that specifically target the diamond trade, significantly impacting the sector both directly and indirectly.
AWDC has developed a Sanctions & Embargoes Compliance Guide for the Diamond Industry. Its purpose is to provide an overview of how the diamond trade could be impacted by trade sanctions, what specific risks to look out for and which (preventive) action is required to trade in a compliant and safe way.
It is mandatory for all persons and entities to comply with the sanctions regulations which apply to them and thus also to diamond traders. AWDC has drafted this document to provide diamond traders guidance in how to ensure compliance with sanctions and embargoes regulations. This document is useful for Belgian diamond traders as well as financial institutions servicing the Belgian diamond industry.
You can find and download the Sanctions and Embargoes Compliance Guide at the 'interesting downloads' section on this page.
Trade Sanctions - Example
A diamond exporter in Belgium receives an order for a large shipment of diamonds from a customer based in a country that is subject to trade sanctions due to human rights violations. To ensure compliance with the sanctions, the exporter conducts a thorough due diligence by screening the customer, investigating their background, and verifying their connections to any sanctioned entities. During the investigation, the exporter discovers that the customer has indirect ties to a sanctioned individual. As a result, the exporter decides to decline the order to avoid potential legal and reputational consequences associated with violating trade sanctions. By adhering to the sanctions and conducting proper due diligence, the exporter upholds the integrity of the diamond industry and maintains compliance with the relevant legal requirements.
