Following recent events in Ukraine, Brian nelson, Under Secretary of the Treasury for Terrorism and Financial Intelligence explained the implementation of a new sanction targeting Russian diamond imports. “These actions… reflect our continued effort to restrict the Kremlin’s access to assets, resources, and sectors of the economy that are essential to supplying ad financing Putin’s brutality.”
The US executive order to sanction the imports will have minimal economic impact because jewels are purchased by India, which is a primary source of diamonds in the United States. Without the ability to trace stones, the sanctions are mere lip service.
Before the Invasion of Ukraine, gem tracing was a critically important component of the precious stone industry. Leading the charge on the high-tech front is Sarine Technologies, an Israeli conglomerate listed on the Singapore Exchange.
The company has a global fleet of specialized scanners that pairs with its online blockchain system. The distributed ledger records data from each scanned jewel, including the mined source and every exchange along the way to the customer. The information is securely stored in the cloud and a proof of provenance report is available to retailers and customers.
Stones tracked by the Sarine system cannot be swapped out with illegal products because the 3D scanners detect a rock’s unique structural identifiers. The measured elements are used to create a digital fingerprint of the object, and the linkage to the company’s blockchain can be thought of as the footprint.
Slipping illegal rough gems into the supply chain is a common tactic used by illegal regimes and unsustainable mines, channeling the revenue to fuel corruption, bloodshed and unethical labor practices. Awareness of this issue was heightened by the 2006 movie Blood Diamond, starring Leonardo DiCaprio.
Amid the sanctions controversy, members of the industry standards consortium, The Jewelry Sustainability Group (JSG), began leaving the organization in protest of continued Alros participation .
The Russian company finally suspended its membership. Luxury jewelry giants Chopard, Richemont, Kering, Signet, Pandora, and others, announced that they have discontinued Russian sourcing in response to the invasion of Ukraine.
Signet, owner of the Zales and Kay Jewelers chains, released a statement which did not mince words. “Signet has… halted all trade… from such sanctioned Russian sources, and you are therefore requested to stop supplying the same to Signet even though the country [sic] in which you operate may not have imposed sanctions on Russian precious metals and diamonds.”
This was a bold and symbolic move because at the time of the announcement, the US government only specified a ban on rough product sourced in Russia.
Signet’s CEO Gina Drosos, aligns sustainability values with the company’s brands, and therefore took action according to the spirit of the sanctions, and not the strict letter of the law.
Sarine’s diamond tracing technology is an essential tool for companies and customers concerned about verifying the source and journey of a gemstone; even when it passes through many hands. The solution demonstrates how blockchain computing can be useful in establishing a chain of custody for things beyond the virtual world.