Ethical Sourcing & Industry Standards Flashcards

A supplier's invoice includes the World Diamond Council System of Warranties statement. What does this statement primarily do?

Answer: It affirms the diamonds were sourced in line with responsible sourcing and Kimberley Process commitments

The System of Warranties is a seller's written assurance on invoices that carries Kimberley Process and responsible-sourcing commitments down the chain past the rough stage.

Which U.S. law puts the Kimberley Process Certification Scheme into effect for rough diamond imports and exports?

Answer: Clean Diamond Trade Act of 2003

The Clean Diamond Trade Act of 2003 requires rough diamonds entering or leaving the U.S. to carry a valid Kimberley Process certificate.

Under the FTC Jewelry Guides, which condition does NOT on its own require a gemstone treatment to be disclosed?

Answer: The treatment was performed outside the United States

16 CFR 23.22 requires disclosure when a treatment isn't permanent, needs special care, or significantly affects value; where it was done doesn't matter.

Under the OECD Due Diligence Guidance for minerals, what comes right after 'identify and assess risks in the supply chain'?

Answer: Design and implement a strategy to respond to identified risks

The OECD five steps are: management systems, identify and assess risk, respond to risk, independent audit, then annual public reporting.

A jeweler wants to call a lab-grown diamond 'cultured' in an advertisement. Under the 2018 FTC Jewelry Guides, what is required?

Answer: 'Cultured' may be used only if immediately followed by a qualifier such as 'laboratory-created'

The FTC allows 'cultured' for lab-grown diamonds only with a clear, nearby qualifier like 'laboratory-grown' so consumers aren't misled.

Which group writes the 'Blue Book' standards that set international gemstone, diamond, and pearl nomenclature?

Answer: CIBJO (World Jewellery Confederation)

CIBJO publishes the Blue Books, the main international trade standards for naming and disclosing gems, diamonds, pearls, and precious metals.

A dealer sold $60,000 in loose gemstones last year and wants to know its federal AML duties. Which law requires dealers above this threshold to keep an anti-money-laundering program?

Answer: USA PATRIOT Act (via FinCEN rules)

Under the USA PATRIOT Act, FinCEN rules require dealers who buy and sell more than $50,000 in covered precious stones, metals, or jewels a year to keep an AML program.