Russia is circumventing sanctions through diamonds: how millions of euros go to the war in Ukraine.

According to inkorr.com: The Russian Federation continues to seek new ways to circumvent EU sanctions aimed at limiting its financial capabilities in the war.

Bypassing the bans

Starting from January 1, 2024, the EU will implement a ban on the import of Russian diamonds. At the same time, the USA, Canada, and the UK imposed sanctions against the 'Alrosa' corporation, which controlled 97% of Russian diamond production back in 2022.

To bypass the sanctions, 'Alrosa' created a shell company PBK, owned by a woman who previously worked at the company, to disguise the origin of Russian diamonds.

Arctida Investigation

Journalists from the Arctida project uncovered details of this scheme. Diamonds are initially sent to Armenia, where they are processed, thereby formally changing their Russian origin to Armenian.

After that, the diamonds are sold in India, the UAE, or China, and then land in Antwerp, the largest diamond industry center in the EU. The industry union AWDC in Antwerp assured that starting from January 2024, they will no longer trade in Russian gemstones; however, the Arctida investigation indicates that business there continues to thrive.

Financial Consequences

From January 2023 to March 2024, the PBK company will export diamonds worth €250 million. These revenues are taxed in the Russian Federation, contributing to replenishing the Russian military treasury.

It is worth noting that the loophole for bypassing diamond sanctions was left by the EU itself. Although a blockchain tracking system is planned to be implemented to control the origin of diamonds, currently only stones weighing less than 0.5 carats are subject to such control. All gemstones will start being monitored only from January 1, 2026.

Thus, the Russian Federation continues to use schemes to circumvent international sanctions, and new measures may prove insufficient to effectively combat this phenomenon. With the delayed introduction of the tracking system, the EU faces serious risks that may affect the results of fighting the funding of the Russian military machine.

The situation with diamond sanctions continues to require careful monitoring, as the unintended effects of inadequate control may escalate the conflict and lead to deeper economic ties between Russia and third countries.