US freezes fund transfers worth Rs 2.6 crore by Indian diamantaires

The Office of Foreign Assets Control (OFAC), a US government body, has frozen fund transfers worth Rs 2.6 crore by offshore firms belonging to Indian jewellers for the import of rough diamonds mined in Russia.

The move has majorly impacted the UAE subsidiaries of Indian diamond houses. The dollar payments by these UAE firms were stalled amid suspicions that their suppliers have Russian origin or have connections with Russian miners, according to a report in The Economic Times (ET).

The OFAC administers trade sanctions against countries, regimes, and terrorists based on American foreign policy.

The US authorities told banks to hold the nostro accounts of the suppliers' banks, and thus, rough diamond sellers did not receive payments.

The diamond trade across the world is trying to put across its point, according to the ET report.

Ministry of Commerce, Indian Embassy roped in

Vipulbhai Shah, chairman of the Gem and Jewellery Export Promotion Council (GJEPC), an Indian government agency, said, "We have taken up the matter with the ministry of commerce and industry and the Indian embassy in the UAE because the payments for imports were made by the UAE subsidiaries of Indian diamond companies. Around Rs 2.6 crore, involving about a dozen payments, are stuck."

He added that the GJEPC is trying to explain to the OFAC that the payments were made to non-sanctioned entities and even to some Russian entities before the sanctions came into place and that it involved little direct import of diamonds from Russia.

Talks with G7 nations for diamond supply

Kirit Bhansali, the vice-chairman of GJEPC, said that the Indian government would hold talks with G7 nations for ease of rough diamond supply while ensuring that the interests of the US government are protected.

Bhansali said that some of the Dubai-based importers, who made remittances through banks there, have not received payments for almost six months.

"The UAE government and the Dubai Multi Commodities Centre have taken up the matter with the OFAC," Bhansali said.