The Kimberley Process Certification Scheme for Legal Diamond Sales [KPCS]

What is the KPCS?

In December 2000, the General Assembly of the United Nations unanimously passed a resolution calling for the establishment of a procedure which would certify that rough diamonds traded internationally had not been sold in order to finance armed conflict. Rough diamonds sold to finance armed conflict became known as "conflict diamonds" or "blood diamonds". The KPCS, implemented in January 2003, was the international response to the United Nations resolution.

The KPCS is designed to provide assurance to the ultimate purchaser of a diamond, as well as those intermediaries such as diamond cutters, diamond dealers and selling organizations, that by purchasing a particular diamond they have in no manner contributed to armed conflict in the diamond's country of origin or anywhere else. The KPCS is therefore meant to provide a chain of assurance stretching from the miner of a particular rough diamond to the ultimate purchaser of a faceted stone.

The KPCS requires a Kimberley Process Certificate (the "Certificate") to be prepared and which must accompany each export shipment of rough diamonds. Each Certificate must state the country of origin of the diamonds being shipped, the issuing authority for the Certificate, the date of issue of the Certificate, the identification of the exporter and the importer, the number of carats in the parcel and the value of the diamonds. All diamonds shipped in accordance with the KPCS must be in tamper and forgery resistant containers. Validation of the Certificate by the authorized Exporting Authority (the "Exporting Authority") is required. No participant country can export to, or receive diamonds from, a non-participant country. The KPCS, therefore, seeks to create a closed system for legitimate diamond trading, from which conflict diamonds are excluded.

Who Participates in the KPCS?

 Some 47 countries, known as Participants, have agreed to participate in the KPCS, including Canada, Brazil, the European Union, the Central African Republic, the United States, Botswana and South Africa. Each Participant in the KPCS has undertaken to establish a system of internal controls designed to eliminate the presence of conflict diamonds, to designate an Importing and Exporting Authority, to amend or enact appropriate laws or regulations to implement and enforce the KPCS, to maintain dissuasive and proportional penalties for transgressions and to maintain and exchange a database with other Participants.

Participants are encouraged to ensure that all diamond mines are licensed and to allow only those mines so licensed to mine diamonds. In addition, Participants are encouraged to require prospecting and mining companies to maintain effective security standards to ensure that conflict diamonds do not contaminate legitimate production. The KPCS recommends that all diamond buyers, sellers, exporters, agents and courier companies involved in carrying or handling rough diamonds, be registered by each Participant's relevant authorities.

How are Diamonds Imported and Exported under the KPCS?

Regarding the export process, the KPCS recommends that an exporter should submit a rough diamond shipment to the relevant Exporting Authority which will require the exporter to provide a declaration that the rough diamonds being exported are not conflict diamonds. The Exporting Authority is expected to have sufficient expertise and knowledge of the exporter's operations to evaluate the correctness of the exporter's declaration.

Rough diamonds for export should be sealed in a tamper resistant container together with the Kimberley Process Certificate or a duly authenticated copy. The Exporting Authority should then transmit a detailed e-mail message to the relevant Importing Authority containing information on carat weight, value, country of origin, importer and the serial number of the Certificate. The Importing Authority should receive the e-mail message from the Exporting Authority either before or upon arrival of a rough diamond shipment. The Importing Authority should open and inspect the shipment to verify that the seals and the container have not been tampered with and that the export was performed in conformity with the Certification Scheme. The Importing Authority should then send the return slip or import confirmation coupon to the relevant Exporting Authority. All participants are recommended to maintain a statistical database of diamond imports and exports which data are to be made available for analysis by the Participants and other interested parties.

KPCS and Brazil Diamond Exports [for Example]

For Example - In the case of the export of diamonds from Brazil, the Brazil Kimberley Process Certificate or Certificado do Processo de Kimberley is issued by the Departamento Nacional do Producao Mineral (DNPM) which is a department of the Ministerio do Minas e Energia. The Brazil Certificate certifies that the unpolished diamonds in the consignment have been handled in accordance with the provisions of the KPCS for rough diamonds. The Certificate describes the number of carats in the shipment, their value, the country of origin, the purpose of the shipment, the importer and exporter, the number and date of issue and expiry of the Certificate. Finally, the Certificate is signed by both the Director-General of the DNPM and the Head of the DNPM in the district from where the diamonds were mined.

In the case of a shipment of diamonds say from Brazil to Canada, the Brazil Kimberley Process Certificate is stamped on arrival in Canada by the Canada Border Services Agency and the appropriate Excise and Goods and Services Taxes are paid by the importer.

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