On Thursday, February 24, 2022, Russian forces invaded Ukraine, resulting in heavy civilian casualties and serious breaches of international law. In response, the United States and other Western governments have strongly condemned Russia’s actions and sanctioned Russian individuals and entities.  President Biden issued an Executive Order on March 11, 2022 (the “March 11 EO”), that, among other things, prohibited the importation of non-industrial diamonds from Russia to the U.S. The March 11 EO also bans U.S. citizens, lawful permanent residents, corporations, or any other person physically present in the U.S. from exporting, reexporting, selling, or supplying luxury goods such as watches and jewelry to anyone in Russia. These prohibitions apply to both direct and indirect transactions.

The March 11 EO adds to earlier Executive Orders that placed certain Russian individuals and entities on the Treasury Department’s Office of Foreign Assets Control (“OFAC”) “Specially Designated Nationals and Blocked Persons List” (the “SDN List”).  U.S. persons are generally prohibited from any dealings with individuals and entities named on the SDN List. These prohibitions further extend to unlisted entities in which blocked individuals or entities hold 50% or more of the ownership interest.

The March 11 EO and the related OFAC actions significantly increase the risk of conducting business with Russian counterparties. Because the March 11 EO includes a prohibition on indirect trading, transacting with third parties who deal with potentially sanctioned Russian individuals and entities also carries heightened risk. Further, OFAC sanctions regimes prohibit the “facilitation” of transactions with blocked persons, a term that OFAC has interpreted broadly in the past. Jewelers of America therefore recommends that members exercise heightened diligence in their dealings to ensure that they are not violating sanctions.

Additional Considerations & Impact

Russia’s unprovoked war on Ukraine has mobilized the U.S., NATO and other Western countries to support Ukraine through harsh sanctions. Further, the media focus on the war in Ukraine has highlighted Russia’s targeting of civilians in its attempts to take over a sovereign nation. This has prompted consumers in the U.S. to reject products of Russian origin, from vodka to diamonds – regardless of the legality of the importation of those products.

Jewelers of America is therefore urging members to take steps that go beyond current sanctions until the current crisis has ended and peace and sovereignty are restored in Ukraine.

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