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The OFAC Book of Why: Rough Diamonds Control Regulations

This is a sanctions program without a single listed SDN (Specially Designated National)…. how can that be?

SDN programs sanction a list of known bad actors. The rough diamond regulations basically say that anyone who isn’t a known “good guy” is a “bad guy,” so it doesn’t fit into the typical sanctions screening program.

Here’s the history: the US and 47 other countries signed the Interlaken Declaration on November 5, 2002. This committed the signatories to only importing or exporting rough diamonds between themselves (and anyone else who became a participant in the scheme), and only through a strict process called the Kimberley Process Certification Scheme (KPCS).

The Clean Diamond Trade Act was then signed on April 25, 2003, requiring the President to take steps to implement what was agreed to. Finally, Executive Order 13312, issued on July 29, 2003, implemented the rough diamond control regulations.

The regulations implements a number of controls. FIrst, there’s the restriction to only trade diamonds between participants. Second, each imported rough diamond shipment must be accompanied by a Kimberley Process Certificate, which is in a tamper-resistant container. Certificates bear the following information:

  • The title “Kimberley Process Certificate”
  • The statement, “The rough diamonds in this shipment have been handled in accordance with the provisions of the Kimberley Process Certification Scheme for rough diamonds”
  • Country of origin for shipment of parcels of unmixed origin
  • unique numbering with the Alpha 2 country code, according to ISO 3166-1
  • Date of issuance
  • Date of expiry
  • Name of issuing authority
  • Identification of exporter and importer
  • Carat weight/mass
  • Value
  • Number of parcels in shipment
  • Harmonized Commodity Description and Coding System
  • Validation by the exporting authority

.

If the shipment as multiple origins, the country of origin field has asterisks in it.

FInally, the importation must be reported back to the exporting authority within 15 days, including validation details like the Certificate number, the number of parcels and total weight, as well as the import and exporter.

For exports, the Kimberley Process Certificate can be requested electronically through the the Census Bureau.

The fines for violating the Clean Diamond Trade Act are pretty light – criminal penalties up to $50 thousand and up to 10 years in jail for individuals. Civil penalties max out at $10 thousand.

However, the sanctions flyer makes it clear that there may be other laws that may be broken in addition to the Clean Diamond Trade Act – and they have some pretty stiff fines:

18 U.S.C. 3571 provides that organizations or individuals convicted of violating a criminal statute may be fined the greater of the amount specified in the statute, or twice the pecuniary gain or loss from the violation, or $500,000 for felonies and that individuals may be fined $250,000 for felonies. Finally, 18 U.S.C. 1001 provides for five years’ imprisonment and a $10,000 criminal fine for knowingly making false statements or falsifying or concealing material facts with respect to any matter within the jurisdiction of the executive, legislative, or judicial branch of the Government of the United States.

Categories: Sanctions Programs

eric9to5

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