Sources are reporting that several leading diamantiares in Surat may face sanctions for exporting approximately $250 million worth of rough diamonds from Zimbabwe to India. Those diamonds are thought to be currently held in Dubai`s free trade zone.

Following an announcement by Kimberley Process (KP) that Zimbabwe was to resume its rough diamond export last month, the US and EU have both issued warnings to diamantaires in India and Dubai that those aiding and abetting such exports could find themselves on the list of Specially Designated Nationals (SDN) administered by the United States Department of the Treasury Office of Foreign Assets Control (OFAC).

A number of trade sources, speaking under anonymity are stating that a huge stock of rough diamonds is parked in Dubai`s free trade zone which belongs to Indian buyers who are alleged to have remitted money to Zimbabwe. These deals are reportedly being investigated by the U.S. and E.U. Supposedly, these diamonds are being stored in Dubai`s free trade zone awaiting KP’s permission to clear the goods for export to Surat, the world`s largest manufacturing hub.

Zimbabwean diamonds worth $160 million USD had been certified by KP Monitor Abbey Chikane in November 2010 just after the KP Plenary in Israel ended without giving any export clearance to Zimbabwe. Chikane was appointed as KP Monitor for Zimbabwe by Kimberly Process Certification Scheme (KPCS) to look after Joint Work Plan (JWP) agreed by Zimbabwe and KP.

Those found to be materially assisting those engaged in prohibited activities related to the Zimbabwe diamond trade could find themselves on the OFAC SDN List. U.S. persons engaging in transactions with those designated on such list face stiff penalties including up to $250,000 per transactions in fines and up to twenty (20) years imprisonment.

The author of this blog is Erich Ferrari, an attorney specializing in OFAC matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.