Kimberley Process Certification Scheme

The Kimberley Process Certification Scheme is the process established in 2003 to prevent "conflict diamonds" from entering the mainstream rough diamond market.
The scheme was established under United Nations General Assembly Resolution 55/56, following recommendations in the Fowler Report of March 2000. The process was set up "to ensure that diamond purchases were not financing violence by rebel movements and their allies seeking to undermine legitimate governments".
In order for a country to be a participant, it must ensure that any diamond originating from the country does not finance a rebel group or other entity seeking to overthrow a UN-recognized government, that every diamond export be accompanied by a Kimberley Process certificate and that no diamond is imported from, or exported to, a non-member of the scheme. This three-step plan is a simple description of the steps taken to ensure a chain of countries that deal exclusively with non-conflict diamonds. By restricting diamond revenues to government-approved sources, the Kimberley Process is neutral towards different governments.
The effectiveness of the process has been brought into question by organizations such as Global Witness and IMPACT, claiming it has failed in its purpose and does not provide markets with assurance that the diamonds are not conflict diamonds. Human Rights Watch has also argued that the Kimberley Process is too narrow in scope and does not adequately serve to eliminate other human rights concerns from the diamond production chain.
Administration and funding of the KPCS has been an ongoing question. Until 2011, there was no formal funding mechanism for KPCS administrative expenses, with some expenses borne by member countries and others borne by the country holding the chair position in a given year. In 2011, the KPCS Administrative Support Mechanism was approved to handle administrative tasks, supported by four industry organizations. In 2022, members voted to make Botswana the host of the Permanent Secretariat for KPCS, with costs shared by Botswana, as well as the World Diamond Council and KPCS member countries.

History

United Nations

The United Nations imposed sanctions against UNITA in 1998 through United Nations Security Council Resolution 1173; however investigators led by Robert Fowler presented the Fowler Report to the UN in March 2000, which detailed how the movement was able to continue financing its war efforts through the sale of diamonds on the international market. The UN wished to clamp down on this sanctions-breaking trade, but had limited powers of enforcement; the Fowler report therefore set out to name the countries, companies, government and individuals involved. This led to a meeting of diamond-producing and trading states from around the world in Kimberley, Northern Cape in May 2000. A culminating ministerial meeting followed during September in Pretoria, from which the KPCS originated.
In December 2000, the United Nations General Assembly adopted Resolution A/RES/55/56, supporting the creation of an international certification scheme for rough diamonds, and this was followed by support from the United Nations Security Council in its Resolution 1459 passed in January 2003. Every year since, the General Assembly has renewed its support for the KP – most recently in March 2018.

World Diamond Council involvement

The World Diamond Council is an industry trade group representing the diamond supply chain including representatives from diamond mining, manufacturing, trading and retail. It was established in response to concerns about blood diamonds. It was established in July 2000 in Antwerp, Belgium, after a joint meeting of the World Federation of Diamond Bourses, representing all the world's significant diamond trading centres, and the International Diamond Manufacturers Association, representing significant manufacturers. Its stated purpose is "to represent the diamond industry in the development and implementation of regulatory and voluntary systems to control the trade in diamonds embargoed by the United Nations or covered by the KPCS".
By November 2002, negotiations between governments, the international diamond industry and civil society organisations resulted in the creation of the KPCS. The KPCS document set out the requirements for controlling rough diamond production and trade.
The KPCS is credited as being instrumental toward dramatically reducing "conflict diamonds" to less than 1% of the world's diamond production today.
The World Diamond Council created a System of Warranties for diamonds, which has been endorsed by all KPCS participants. The Council has representation on all the Kimberley Process's working groups and is influential in determining its implementation and future reform.

Exclusions

In 2004, the Republic of the Congo was removed from the scheme because it was found unable to prove the origin of its gems, most of which were believed to have come from the neighbouring Democratic Republic of the Congo. For countries economically dependent on diamond exports, this can be a substantial punishment, as it disallows trade with much of the rest of the world. The Republic of the Congo's membership in the KPCS was reinstated at the scheme's plenary meeting in 2007.
In 2005, trade in diamonds from Côte d'Ivoire was prohibited. Ivorian diamonds and cocoa are considered conflict resources.
In 2008, Venezuela voluntarily removed itself from the KPCS, after it had been in non-compliance for several years. The nation ignored several attempts to communicate from Kimberley working groups, finally responding to an Angolan ambassador in 2007. Venezuela invited Kimberley officials to visit the nation, but this required authorization, and the deadline expired without further correspondence. Finally, Venezuela agreed to remove itself from the KPCS and work toward strengthening its infrastructure.
Côte d'Ivoire and Venezuela are still considered Kimberley Process members, but not Kimberley Process participants. As explained in the FAQ section of the Kimberley Process website, "Participants in the Kimberley Process are states or regional economic integration organisations that have met the minimum requirements of the Kimberley Process Certification Scheme and are, therefore, eligible to trade in rough diamonds with one another. The KPCS prohibits participants from trading with non-participants. Therefore, while the aforementioned countries still retain membership in the KPCS, they do not fulfill the requirements for participation, and thus cannot be called "participants".
In 2022, members debated whether Russian diamonds were conflict diamonds.

Compliance

System of warranties

Under the World Diamond Council's System of Warranties, all buyers and sellers of both rough and polished diamonds must make the following affirmative statement on all invoices:
It is considered a violation of the KPCS to issue a warranty declaration on a sales invoice unless it can be corroborated by warranty invoices received for purchases. Each company trading in diamonds must also keep records of the warranty invoices received and the warranty invoices issued when buying or selling diamonds. This flow of warranties in and out must be audited and reconciled on an annual basis by the company's auditors.
Industry self-regulation is built into the scheme, and the diamond industry organizations and their members have adopted the following principles of self-regulation:

to trade only with companies that include warranty declarations on their invoices;
to not buy diamonds from suspect sources or unknown suppliers, or which originate in countries that have not implemented the Kimberley Process Certification Scheme;
to not buy diamonds from any sources that, after a legally binding due process system, have been found to have violated government regulations restricting the trade in conflict diamonds;
to not buy diamonds in or from any region that is subject to an advisory by a governmental authority indicating that conflict diamonds are emanating from or available for sale in such region, unless diamonds have been exported from such region in compliance with the Kimberley Process Certification Scheme;
to not knowingly buy or sell or assist others to buy or sell conflict diamonds;
to ensure that all company employees that buy or sell diamonds within the diamond trade are well informed regarding trade resolutions and government regulations restricting the trade in conflict diamonds.

Failure to abide by these principles exposes the member to "internal penalties set by industry", or expulsion from industry organizations.

Working procedure

The working procedure of the KPCS is done by the chair, elected on an annual basis at a plenary meeting. A working group on monitoring, works to ensure that each participant is implementing the scheme correctly. The working group reports to the chair. Other working groups include the technical working group which reports on difficulties in implementation and proposes solutions, and the statistics working group, which reports diamond trading data.
While the process has been broadly welcomed by groups aiming to improve human rights in countries previously affected by conflict diamonds, such as Angola, some say it does not go far enough. For instance, Amnesty International says " welcome the Kimberley Process as an important step to dealing with the problem of conflict diamonds. But until the diamond trade is subject to mandatory, impartial monitoring, there is still no effective guarantee that all conflict diamonds will be identified and removed from the market." Canadian aid group One Sky concurs with Amnesty's view saying "If effectively implemented, the Kimberley Process will ensure that diamonds cannot be used to finance war and atrocities... However, without a system of expert, independent and periodic reviews of all countries, the overall process remains open to abuse." Fatal Transactions campaign's founder Anne Jung in 2008 criticized KPCS for not being a legally binding agreement and suggested a revision of the scheme.
Another form of criticism by the African Diamond Council is whether the Kimberley Process is realistically enforceable. There are many factors that can jeopardize the "officialdom of certificates and paperwork" from lack of enforcement on the ground to the secrecy in the diamond trading centers such as Antwerp. Human Rights Watch has also found that there is little independent monitoring of compliance with the Kimberley Process, and few penalties for violations.