Restricting the Importation of Russian Diamonds

The Regulations Amending the Special Economic Measures (Russia) Regulations (SOR/2024-172), registered on August 30, 2024, under the Special Economic Measures Act, aim to strengthen Canada’s response to Russia’s actions in Ukraine. The Governor in Council has determined that Russia’s activities constitute a serious breach of international peace, prompting these amendments to further restrict the importation of Russian diamonds and related products. Specifically, the regulations prohibit any Canadian individual or entity from importing, purchasing, or acquiring certain diamonds from Russia, as outlined in a revised version of Schedule 12. The restrictions notably apply to diamonds weighing half a carat or more that were exported from Russia after September 1, 2024, as well as diamonds weighing one carat or more that were exported after March 1, 2024. The regulations categorize various types of diamonds, specifying distinctions for unsorted and non-industrial diamonds. Importantly, these restrictions also encompass diamonds processed or polished in third countries, in line with commitments made by G7 nations.
The impetus for these amendments is rooted in the ongoing conflict in Ukraine, which escalated following Russia’s invasion on February 24, 2022. The international community, particularly the G7 and EU, acknowledges that revenue from diamond exports plays a significant role in funding Russia’s military operations. As the world’s leading diamond producer, Russia generated over $5 billion from diamond exports in 2023. In response, the G7 has adopted a unified approach to counter this financial support for Russian aggression through coordinated sanctions initiated in early 2024. The existing sanctions, however, have not sufficiently curtailed Russia’s diamond revenue, necessitating these regulatory changes to eliminate loopholes and strengthen enforcement against Russian diamonds, especially those that might be exported via third countries.
A critical consideration within these amendments is the treatment of legacy diamonds, which refers to those diamonds acquired before the enforcement of the new restrictions. Recognizing that many diamonds of Russian or unknown origin had already entered the market before the sanctions were implemented, the regulations provide for exemptions under specific conditions. Diamonds imported into third countries before the established deadlines can be brought into Canada without violating the new restrictions, thus alleviating financial burdens on the diamond industry.
The objectives of these amendments are clear: to reduce Russia’s financial resources available for military operations in Ukraine, to prohibit imports of diamonds mined or produced in Russia and subsequently processed elsewhere, to maintain unity with G7 partners in implementing consistent sanctions, and to address legacy diamond concerns to avoid economic impacts on legitimate trade.
By specifically targeting the diamond trade—one of Russia’s key revenue sources—these amendments aim to limit financial support for military operations while balancing the interests of the Canadian diamond industry.
Canada (SOR/2024-171) September 11, 2024