Ban on Russian diamonds one carat or larger

Summary#

These are final changes to the Regulations Amending the Special Economic Measures (Russia) Regulations (SOR/2024-39) that ban certain Russian diamonds from entering Canada. The new rules, in force as of March 1, 2024, bar the import, purchase or acquisition of some diamonds of 1.0 carat or larger that were mined in Russia but exported or processed through a third country, and tighten prohibitions on assisting in banned activities.

What it does#

• Creates a new ban on importing, buying or acquiring natural diamonds of 1.0 carat or more that were mined in Russia, even if they were exported or processed in a third country (listed in Part 1 of the new Schedule 12).
• Keeps a separate ban on diamonds and diamond-related goods imported directly from Russia (listed in Part 2 of Schedule 12). Part 2 covers items such as smaller diamonds, synthetic diamonds, and jewellery incorporating diamonds.
• Adds a broader rule that makes it illegal for people in Canada or Canadians abroad to knowingly do anything that helps or facilitates activities already prohibited by the regulations (an expanded “assisting” prohibition).
• Exempts personal effects carried into Canada by an individual for their own or immediate family use.
• Removes some previously listed luxury-import items to keep the rules consistent, and provides specific Harmonized System codes (HS codes) for the affected diamond goods.
• Allows customs officers to ask importers for extra documents (for example, Kimberley Process Certificates, traceability paperwork, G7 certificates or other proof of non-Russian origin) and encourages use of a G7 certification node in Antwerp for non-Russian diamonds.

Who's affected#

• Diamond importers, wholesalers, jewellery manufacturers and retailers in Canada. They may need extra paperwork to prove diamonds are not of Russian origin.
• Small businesses in the diamond and jewellery supply chain. The government estimates an administrative burden cost of about $14,781 (in 2012 dollars) for some record-keeping and attestations.
• Diamond producers and trading hubs abroad (including some African producers and exporters) that sell into Canada and other G7 markets, because G7 demand will shift away from Russian supply.
• The Russian state-linked mining sector, including Alrosa, which already faces other sanctions.
• Government and enforcement bodies, including Global Affairs Canada, the Canada Border Services Agency (CBSA) and the Royal Canadian Mounted Police, who will administer and enforce the ban.
• Travellers are generally not affected for personal jewellery they bring into Canada for their own use (the rules explicitly exempt personal effects).

Note: Canada’s direct imports from Russia were already very small after earlier measures (about $4.1 million in 2021, $327,224 in 2022, and $13,440 for the first eight months of 2023). Total Canadian imports in the HS categories targeted for the indirect ban were $373.3 million in 2023, with no direct Russian shipments reported for that year.

Why it matters#

• The move is designed to cut a source of revenue for Russia’s war in Ukraine by closing a route for Russian diamonds to reach G7 markets after processing in third countries.
• For businesses, it means more checks and paperwork at the border and possible higher costs if they must buy non-Russian diamonds instead.
• For consumers, it could affect availability and prices of some diamonds and diamond jewellery over time as markets adjust.
• The change is part of coordinated G7 action (the direct import ban among G7 countries took effect on January 1, 2024, and further indirect bans are planned globally for later dates such as September 1, 2024) and signals continued international pressure on Russia.
• Breaking the rules can carry penalties, including fines (up to $25,000) and possible imprisonment under the Special Economic Measures Act.