OFAC Final Rule Adds New Requirements for Rough Diamonds
The Office of Foreign Assets Control has issued a final rule, effective May 21, 2008, which adds two requirements designed to enhance the collection of statistics related to importations and exportations of rough diamonds subject to the Kimberly Process Certification Scheme (KPCS).1
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Informal Entries No Longer Allowed
The final rule adds a new Note 4 to 31 CFR 592.301 which states that, effective May 21, 2008, any diamond, regardless of value, that is described in Harmonized Tariff Schedule (HTS) subheadings 7102.10, 7102.21 or 7102.31 and is imported into the U.S., may only be released from U.S. Customs and Border Protection's (CBP's) custody through the formal entry for consumption process, as defined under 19 CFR 141.0a(f).
New Annual Report for Imports and Exports
The final rule also adds a new 31 CFR 592.502 which requires all persons who import or export rough diamonds during the reporting period (January 1 - December 31) to file an annual report by April 1 of each year covering the preceding calendar year to the Office of the Special Advisor for Conflict Diamonds at the Department of State.
However, the first annual report, covering the period January 1 - December 31, 2007, must be filed by September 1, 2008.
Required information. The report does not need to be in any specified format but must include the following information:
(1) The contact information of the U.S. importer or exporter, including name, address, telephone number, fax number, and e-mail address;
(2) Identification of total import and/or export activity for each of the three HTS classifications of rough diamonds during the reporting year, including: (a) total amount of carats of each classification of rough diamonds imported and/or exported; and (b) total of all shipments of each classification of rough diamonds imported and/or exported.
(3) Information on stockpiles of rough diamonds, if any, for each of the three HTS classifications, as of the end of the reporting year, reported in both total carats and approximate total value. (Stockpiles are defined as the amount of rough diamonds held unsold at the end of the reporting period.)
Failure to report. Any importer or exporter who fails to file a required report will be subject to the penalties set forth in 31 Part 592, Subpart F of the Rough Diamonds Control Regulations. (These include civil penalties up to $10,000 per violation; and penalties for willful violations up to $50,000 and/or imprisonment up to 10 years.)
1The purpose of the KPCS is to prevent the import and export of "conflict diamonds" which are rough diamonds used by rebel movements or their allies to finance conflict aimed at undermining legitimate governments.
(See ITT's Online Archives or 05/16/08 news, 08051620, for BP summary of CBP notices on these expected changes by OFAC.
See ITT's Online Archives or 10/24/07 news, 07102415, for BP summary of CBP notice on faxing the KPCS certificate to Census.
See ITT's Online Archives or 08/06/03 and 09/28/04 news, 03080610 and 04092820, for BP summaries of OFAC's interim final rule on rough diamonds and final rule, respectively.
See ITT's Online Archives or 11/07/06 news, 06110720, for BP summary of GAO report which sources cite as the motivating force behind these new requirements.)
OFAC contact - Assistant Director for Policy (202) 622-4855
OFAC final rule (FR Pub 05/21/08) available at http://edocket.access.gpo.gov/2008/pdf/E8-11318.pdf
CBP CSMS message 08-000089, dated 05/21/08, available at http://apps.cbp.gov/csms/viewmssg.asp?Recid=17097&page=&srch_argv=08-000089&srchtype=&btype=&sortby=&sby.
State Department press release (dated 05/21/08) available at http://www.state.gov/r/pa/prs/ps/2008/may/105110.htm.