Diamonds / Industry / Legal

OFAC Holding $26 Million in Payments Over Russia Sanctions: Report


Guidance from U.S. Treasury’s Office of Foreign Assets Control (OFAC) stopped $26 million worth of payments for diamond shipments because of suspicions they contained goods mined in Russia, according to a report in India’s Economic Times.

The diamonds were shipped by subsidiaries of Indian diamond companies based in the United Arab Emirates, the report said, and OFAC “had suspicions that their suppliers have Russian origin, or have investments and other connections with Russian miners and sanctioned entities.”

A source closed to the UAE government tells JCK the transaction “occurred in September 2022 involving a Belgian company called Grib Diamonds, which is the marketing arm of a Russian mine called AGD, which at the time [of the transaction] was not sanctioned.

“OFAC did not confiscate any diamond shipments. Instead, the banks involved in the transaction are holding a portion of the auction proceeds under the guidance of OFAC.”

Vipul Shah, chairman of India’s Gem and Jewellery Promotion Council, who was quoted in the original article, says that “the payments were flagged by U.S. banks, who then reported them to OFAC. OFAC has frozen the payments, which are approximately $26 million. We are currently working to resolve the situation. It is a long procedure. “

The U.S. Treasury press office did not respond to requests for comment by press time.

While it is currently legal to import Russian polished diamonds under the doctrine of “substantial transformation,” the United States imposed sanctions on Russian diamond miner Alrosa in 2022—which means that any company that does business in the United States cannot do business with the miner.

Officials of G7 nations have been talking with the industry for most of the year about a possible ban on Russian polished diamonds, which would start Jan. 1 of next year. Under the proposed new rule, importers would have to show proof their polished diamonds did not originate from Russia.

This article has been updated to clarify that no diamonds were seized.

(Photo: Getty Images)


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By: Rob Bates

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