The diamond industry is on the brink of substantial changes in 2024, triggered by new sanctions on Russia. The Group of Seven (G7) countries, including Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States, announced sanctions aimed at limiting Russia's ability to fund its illegal war. These measures specifically impact the diamond sector, requiring companies to prove their diamonds originated from non-Russian production if they intend to sell them in G7 countries.

The sanctions target Russia's diamond industry due to its contribution to the country's government revenue, supporting its war effort. Alrosa, the world's largest producer of rough diamonds, is 33% owned by the Russian Federation. The sanctions aim to reduce Russia's diamond revenue, thus diminishing its resources for the war against Ukraine.

While the US had previously banned diamond imports from Russia, the EU had delayed similar restrictions, fearing a disadvantage for Antwerp in its competition with other trading centers. The EU has now taken a leading role in coordinating diamond sanctions within the G7. The phased approach includes a ban on direct diamond imports from Russia, extending to diamonds above 1 carat sourced from Russian rough but polished in third countries. From September 1, restrictions will encompass lab-grown diamonds, jewelry, and watches containing diamonds above 0.50 carats.

A key challenge lies in verifying the origin of diamonds, leading to the establishment of a mandatory traceability-based verification and certification mechanism for rough diamonds. A pilot program for this system will commence on March 1. The concept involves creating a digital twin of the rough diamond and issuing a certificate of origin. This information will be entered into a centralized blockchain-based ledger, compatible with existing traceability solutions. Notable industry players with traceability programs include De Beers' Tracr, Everledger, iTraceiT, the Gemological Institute of America (GIA), and Sarine Technologies.