New World Diamond Council Warranty Rules Take Effect

(IDEX Online) - The World Diamond Council (WDC) has introduced a revised System of Warranties that now includes a due-diligence process and broadens its remit to cover human rights, labor rights, anti-corruption and anti-money laundering.

The System of Warranties is a voluntary self-regulatory system first introduced in 2002 to extend the Kimberley Process's conflict-diamond safeguards beyond rough diamonds crossing international borders, covering transactions in polished diamonds and diamond jewelry as they move through the supply chain.

Companies buying or selling diamonds use the system's warranty declaration on invoices and memos when diamonds change hands, providing an assurance about their origin and the business practices involved in the transaction.

The registration and self-assessment process is digital, while the warranty declaration remains part of the commercial transaction documentation, appearing on paper or electronic invoices and memos when diamonds change hands.

The original declaration was primarily intended to assure the next buyer that the diamonds came from legitimate sources and were not being used to finance conflict.

The revised system keeps that transaction-level declaration but adds a due-diligence process and requires companies to commit to broader standards covering human rights, labor rights, anti-corruption and anti-money laundering.

There is also a practical change in what companies must do before they can use the revised declaration.

Under the old system, the principal requirement was to include the warranty statement on the transaction document.

Under the revised system, a company must register on the dedicated WDC System of Warranties website and complete an online self-assessment covering its compliance with the WDC guidelines. The assessment is repeated annually. Companies that complete it receive a unique identification number that can be included on their invoices and memos.

The revised system was introduced because the WDC said the industry needed a broader form of self-regulation that addressed human rights, labor rights, anti-corruption and anti-money laundering, as well as conflict diamonds. The review began in 2017 and resulted in the upgraded system being introduced in September 2021.

The five-year transition ended September 21. Companies trading rough or polished diamonds or diamond jewelry are expected to update invoice templates and internal documentation and ensure that suppliers and business partners use the revised declaration.