Many offshore firms owned by Indian jewellers have come under the scrutiny of the Office of Foreign Assets Control (OFAC). In recent months, the OFAC has frozen about $26 million (approximately Rs 215 crore) worth of fund transfers of these firms.
According to a report by The Economic Times, this measure has been focused on entities dealing in rough diamond imports, sourced from Russia. The OFAC is a financial intelligence and enforcement agency, under the US Treasury Department. It oversees the economic and trade-related sanctions on countries, terrorists, and regions based on US’s national security and foreign policy objectives.
The subsidiaries of Indian diamond houses based out of the United Arab Emirates (UAE), have specially been affected by the move. The dollar payments made by these firms were stalled on the suspicion of their suppliers’ alleged Russian origin or their connection with Russian miners, the report noted.
The Economic Times report further stated that banks were directed to hold the nostro accounts of the suppliers by the US authorities, leading to a failure of payments for the rough diamond sellers.
Now, the diamond community worldwide is trying to use it’s influence and connections to manage the situation and find a solution for it.
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Indian government agency Gem and Jewellery Export Promotion Council (GJEPC)’s chairman Vipulbhai Shah, noted, “We have taken up the matter with the Ministry of Commerce and Industry and the Indian embassy in the UAE because the payments for imports were made by the UAE subsidiaries of Indian diamond companies. Around Rs 2.6 crore, involving about a dozen payments, are stuck,” as quoted in the report.
He further said that the GJEPC is trying to clarify the jewellers’ point of view to the OFAC. He added that the payments made to non-sanctioned entities and some Russian entities were made prior to the sanctions and involved minimum direct import of diamonds from Russia.
GJEPC’s vice-chairman, Kirit Bhansali noted that the Indian government will contact G7 nations to ensure an easy supply of rough diamonds while protecting the US government’s interests.
Talking about the plight of the importers, Bhansali said that some Dubai-based importers have been waiting for their payments for almost six months now. “The UAE government and the Dubai Multi Commodities Centre have taken up the matter with the OFAC,” he added.
