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UNITED STATES OFFICE OF FOREIGN
ASSETS CONTROL AND THE JEWELRY INDUSTRY
US OFAC and the Jewelry Industry
April 5, 2021
By agreement with the United States Department of the Treasury Office of Foreign Assets Control, I regularly publish an edition of our newsletter to inform and advise the U.S. jewelry and gemstone industry regarding OFAC regulations against U.S. gemstone and jewelry dealers aiding and abetting enemies of the United States through dealing with sanctioned countries. Sanctioned countries are those deemed to be a threat to the United States and assisting those countries and/or certain citizens of those countries is prohibited to all U.S. citizens no matter where they live.
According to the U.S. Treasury website:
U.S. persons must comply with OFAC regulations, including all U.S. citizens and permanent resident aliens regardless of where they are located, all persons and entities within the United States, all U.S. incorporated entities and their foreign branches. In the cases of certain programs, foreign subsidiaries owned or controlled by U.S. companies also must comply. Certain programs also require foreign persons in possession of U.S.-origin goods to comply. U.S. Treasury Department FAQ
The rules and penalties for violation of OFAC Regulations are governed by the United States Code of Federal Regulations, Title 31, Subtitle B, Chapter V, Part 501.701. This is also known as the Trading With the Enemy Act:
§501.701 Penalties.
(1) Persons who willfully violate any provision of TWEA or any license, rule, or regulation issued thereunder, and persons who willfully violate, neglect, or refuse to comply with any order of the President issued in compliance with the provisions of TWEA shall, upon conviction, be fined not more than $1,000,000 or, if an individual, be imprisoned for not more than 20 years, or both. Trading With the Enemy Act
These regulations cover both direct violations and indirect violations of the regulation.
An example of a direct violation of the Trading With the Enemy Act is seen below with the apparent direct assistance being provided to businesses in Iran by U.S. citizen Jeffery Bergman of Eighth Dimension Gems of Bangkok, Thailand through the GEMKISH conference in Iran.
From the JewelleryOutlook publication of 2018, U.S. Citizen Jeffery Bergman is seen at the GEMKISH show and conference in Iran. Mr. Bergman was a presenter at the conference to advise and assist Iranian gem dealers.
Mr. Bergman uses his standing as Vice President, Emeritus of the International Gem Society (IGS) as well as his standing with the Accredited Gemologist Association as Accredited Senior Gemologist to assist the gemstone export industry of Iran. This is clearly covered in:
OFFICE OF FOREIGN ASSETS CONTROL IRANIAN TRANSACTIONS REGULATIONS (31 C.F.R. PART 560)
United States persons, wherever located, are prohibited from providing services to persons in Iran or the Government of Iran or where the benefit of such services is otherwise received in Iran. Order, § 1; ITR, §§ 560.204, 560.410.
Mr. Bergman’s actions are well documented in an article by Jewellery Outlook publication of November 2018: Iran’s GEMKISH Showcases. In addition to the article’s photographs and coverage of Bergman's apparent acts of “trading with the enemy” as defined by the OFAC, below is an additional picture of Bergman in Iran, presenting a lecture to the Iran business community at the GEMKISH convention.
An example of indirect violation should be noted for all U.S. dealers working with gemstones that could originate from Myanmar (Burma). This involves recent sanctions leveled against dealing with certain gemstone producing companies connected to a military coup in the nation of Myanmar (Burma). These sanctions prohibit all U.S. citizens and companies from dealing with gemstones from the companies. They further prohibit owning or dealing in gemstones in the United States with inventory obtained from outside the U. S. from third party dealers. The story of these sanctions was recently covered by the Jewelers of America in their article: Legislative Update: Sanctions Hit Burma
Summation
The regulations of the United States Department of the Treasury Office of Overseas Assets Control apply to all United States Citizens regardless of where they live. The penalties for violation of these regulations can be severe. These can even apply to a U.S. company that trades with businesses in countries who are not on the OFAC sanctions list but trade with those countries. We urge everyone to be cautious when dealing with gemstones from unknown sources. We make even stronger caution to those who offer direct financial and business assistance to countries on the OFAC Sanctioned Country List, such as Iran seen above, as the penalties include not only monetary fines but also time in a Federal Prison.
Here is the list of official sanctioned countries with links to the sanctions. Any U.S. citizen or company dealing with these countries or specific entities on the list are subject to OFAC regulations and the U.S. Trading With the Enemy Act penalties, and are subject to fines and prison.
ACTIVE SANCTIONS PROGRAMS: PROGRAM LAST UPDATED:Balkans-Related Sanctions 02/03/2017
Belarus Sanctions 12/23/2020
Burma-Related Sanctions 03/25/2021
Burundi Sanctions 06/02/2016
Central African Republic Sanctions08/07/2020
Chinese Military Companies Sanctions03/14/2021
Countering America's Adversaries Through Sanctions Act of 2017 (CAATSA)
Counter Narcotics Trafficking Sanctions03/03/2021
Counter Terrorism Sanctions 03/25/2021
Cuba Sanctions 12/21/2020
Cyber-Related Sanctions 03/02/2021
Democratic Republic of the Congo-Related Sanctions 03/10/2021
Foreign Interference in a United States Election Sanctions 01/11/2021
Global Magnitsky Sanctions 03/25/2021
Hong Kong-Related Sanctions 03/17/2021
Iran Sanctions 03/05/2021
Iraq-Related Sanctions 12/23/2020
Lebanon-Related Sanctions 07/30/2010
Libya Sanctions 08/06/2020
Magnitsky Sanctions 12/10/2020
Mali-Related Sanctions 02/06/2020
Nicaragua-Related Sanctions 12/21/2020
Non-Proliferation Sanctions 03/02/2021
North Korea Sanctions 12/08/2020
Rough Diamond Trade Controls 06/18/2018
Somalia Sanctions 07/10/2020
Sudan and Darfur Sanctions 08/11/2020
South Sudan-Related Sanctions 02/26/2020
Syria Sanctions 12/22/2020
Syria-Related Sanctions 12/22/2020
Transnational Criminal Organizations 07/22/2019
Ukraine-/Russia-Related Sanctions03/02/2021
Venezuela-Related Sanctions 03/31/2021
Yemen-Related Sanctions 03/02/2021
Zimbabwe Sanctions 08/05/2020
Anyone seeking more information can access the United States Department of the Treasury Frequently Asked Questions here: OFAC FAQ.
I personally urge caution to anyone with business connections to those known to violate US OFAC regulations and provide assistance to those who support and perpetrate terrorism to the world