U.S. Expands Sanctions to Russian Gold

Washington—The U.S. Department of the Treasury has expanded its sanctions on Russian imports, this time including gold of Russian origin.

The Treasury announced Tuesday, June 28, that gold of Russian Federation origin cannot be imported into the United States, effective immediately, unless otherwise licensed or authorized by the Office of Foreign Assets Control (OFAC).

Excluded from this latest round of sanctions is gold of Russian origin shipped out of Russia before the sanctions were announced.

“Today’s actions .... strike at the heart of Russia’s ability to develop and deploy weapons and technology used for Vladimir Putin’s brutal war of aggression against Ukraine,” said the Treasury.

Even prior to the new sanctions, certain gold-related transactions involving Russia were sanctionable under an executive order as well as other Russia-related sanctions, noted the Treasury.

In updated guidance sent to members Wednesday, the Jewelers Vigilance Committee made the same point about pre-existing sanctions.

JVC also noted a change to OFAC’s FAQ section in regard to Russian gold. The update states that Russian gold that is “substantially transformed” in another country is not subject to sanctions, the same exception applied to Russian diamonds when they were sanctioned earlier this year.

“An example of substantial transformation of gold would be taking 24-karat gold bullion and making it into 18-karat wire,” explained Sara Yood, deputy general counsel at JVC.

“An example of an act that would likely not be viewed as substantial transformation would be putting findings onto a chain to make it a necklace,” she added.

JVC is advising businesses to proceed with caution.

“Businesses regularly importing gold from countries not listed above [meaning Russia] should be sure to talk to their suppliers about this new restriction and ensure they are not unknowingly importing Russian gold into the United States.”

Companies should also search the London Bullion Market Association’s “Good Delivery List,” said JVC, a list of vetted bullion suppliers that follow the association’s responsible sourcing guidelines.

Jewelers of America also has resources and guidance regarding Russian goods available to members on its website.

“From very early in the crisis, Jewelers of America has been adamant in advising JA members to cease the purchase of goods used in jewelry that have emanated from Russia and benefit the Russian government,” JA President and CEO David Bonaparte told National Jeweler.

“The latest ban reinforces the need for jewelers to place heightened scrutiny into where diamonds, precious metals, and precious gemstones originate.”

The latest sanctions on Russia follow the meeting of world leaders at the recent G-7 summit in Munich, where the U.S., Canada, France, Germany, Italy, Japan, the United Kingdom, and the European Union met to discuss, among other topics, the war in Ukraine.

Several leaders agreed on an import ban on new gold from Russia in an attempt to hinder the flow of revenue funding the war in Ukraine.

The U.S., Canada and Japan are joining the U.S. in the ban.

The export of gold garners tens of billions of dollars for Russia, President Joe Biden said in a tweet.

The United States has imposed unprecedented costs on Putin to deny him the revenue he needs to fund his war against Ukraine.

Together, the G7 will announce that we will ban the import of Russian gold, a major export that rakes in tens of billions of dollars for Russia.
— President Biden (@POTUS) June 26, 2022
 

Secretary of the Treasury Janet Yellen said the ban “reaffirm[s] our commitment to working alongside our partners and allies to impose additional severe sanctions in response to Russia’s war against Ukraine.”

The sanctions also apply to an additional 70 Russian entities and 29 Russian individuals said to be critical to the country’s defense, industrial, technology, and manufacturing sectors.

“Broad multilateral commitments and actions by G7 members this week further cut off the Russian Federation’s access to technology that is critical to their military,” said Yellen.

“Targeting Russia’s defense industry will degrade Putin’s capabilities and further impede his war against Ukraine, which has already been plagued by poor morale, broken supply chains, and logistical failures.”

This is the latest round of sanctions against Russia to affect the jewelry industry.

The Treasury Department first sanctioned Russian diamond miner Alrosa and its CEO in February.

In March, President Biden banned the import of Russian diamonds to the U.S. via executive order.

In April, the U.S. government put Alrosa on the Specially Designated Nationals list, effectively preventing U.S. companies from doing any business with Alrosa.

Alrosa accounts for 90 percent of Russia’s diamond mining capacity, according to the Treasury, and the Russian government holds a 33 percent stake in the company.

It mined 32.4 million carats in 2021, making it the largest producer by volume and accounting for nearly 30 percent of global supply, with sales topping $4 billion.