International Law Advisory - OFAC Adds Requirements to the Rough Diamonds Controls Regulations

On May 21, 2008, the Department of the Treasury, Office of Foreign Assets Control (“OFAC”) issued a notice amending the Rough Diamonds Control Regulations (31 C.F.R. Part 592) to add new requirements aimed at enhancing the collection of data on trade in rough diamonds. See 73 Fed. Reg. 99 at 29433-29434 (May 21, 2008).  Accordingly, importers and exporters of rough diamonds are advised to ensure that related documentation is correctly and completely declared, required reports are timely filed, and appropriate compliance measures are implemented.

The Rough Diamonds Control Regulations (the “Regulations”), promulgated on August 4, 2003 (and amended on September 23, 2004, to revise certain reporting requirements), implement Executive Order 13312 (“E.O. 13312”) of July 29, 2003. E.O. 13312 was issued to implement the Clean Diamond Trade Act (the “Act”; Pub. L. 108-19), which states that the multilateral “Kimberley Process Certification Scheme” for rough diamonds must be followed.  The Kimberley Process was launched in 2003 to control and monitor the trade in rough diamonds and counter the trade in diamonds linked to armed conflict and the activities of rebel movements aimed at undermining or overthrowing legitimate governments.

Governments that are party to the Kimberley Process must collect and publish data relating to actual mining and international trade in diamonds, and member countries are required to officially submit statistics that can be verified through audit. They must also submit to the Kimberley Process’ Peer Review mechanism, a key component of which is the submission of an annual report. 

Today’s amendments further those efforts and the broader goal of monitoring rough diamond trade by:

1. adding a new note to Section 592.301 of the Regulations, explaining that U.S. Customs and Border Protection (“CBP”) will not release a shipment of rough diamonds unless the import paperwork conforms with the CBP’s formal entry for consumption requirements, as defined in the CBP regulations (see 19 CFR 141.0a(f)); and
2. amending the Regulations to add a new section 592.502, which requires all importers and exporters of rough diamonds to file an annual report with the Department of State detailing their import, export and stockpile information.

Please contact Ed Krauland at 202.429.8083 or ekrauland@steptoe.com in our Washington, DC office if you have any questions regarding these changes to the Rough Diamonds Control Regulations.