DCA Ethical Sourcing & Trade Regulations 3 — Questions and Answers
Question 1: Which industry initiative requires companies in the diamond pipeline to provide written warranties on invoices stating diamonds are conflict-free?
- The World Diamond Council System of Warranties (Correct answer)
- The Responsible Jewellery Council Certification
- The CIBJO Blue Book Warranty Program
- The GIA Conflict-Free Diamond Registry
Correct answer: The World Diamond Council System of Warranties
The World Diamond Council System of Warranties requires all buyers and sellers along the supply chain to include conflict-free warranty statements on invoices.
Question 2: What is the primary limitation critics identify in the Kimberley Process Certification Scheme?
- It only applies to diamonds over 1 carat in size
- It narrowly defines 'conflict diamonds' as rebel-funded stones, excluding human rights abuses by state actors (Correct answer)
- It requires too much paperwork for small miners
- It does not apply to diamonds traded within a single country
Correct answer: It narrowly defines 'conflict diamonds' as rebel-funded stones, excluding human rights abuses by state actors
Critics note that KPCS only addresses rebel-funded conflict diamonds, excluding abuses committed by government forces or state-sanctioned operations.
Question 3: A retailer selling lab-grown diamonds must disclose their origin under which U.S. regulatory authority's guidelines?
- The Securities and Exchange Commission
- The Federal Trade Commission Jewelry Guides (Correct answer)
- The Consumer Product Safety Commission
- The U.S. Food and Drug Administration
Correct answer: The Federal Trade Commission Jewelry Guides
The FTC Jewelry Guides require retailers to clearly disclose when a diamond is laboratory-grown to prevent deceptive trade practices.
Question 4: The Dodd-Frank Act Section 1502 requires U.S.-listed companies to report on 'conflict minerals.' Which of the following is NOT one of the minerals covered by this regulation?
- Tin (cassiterite)
- Tantalum (coltan)
- Diamond (Correct answer)
- Gold
Correct answer: Diamond
Section 1502 of Dodd-Frank covers tin, tantalum, tungsten, and gold (3TG) originating from the DRC region, but does not include diamonds.
Question 5: When a jeweler purchases polished diamonds from a supplier, the supplier's invoice should include a System of Warranties statement. What happens if the jeweler re-sells the diamonds?
- The original supplier's warranty automatically transfers to the buyer
- The jeweler must include a new conflict-free warranty statement on their own invoice (Correct answer)
- No warranty is required for polished diamonds
- The jeweler must obtain a new KP certificate from the government
Correct answer: The jeweler must include a new conflict-free warranty statement on their own invoice
Each participant in the polished diamond supply chain must include their own conflict-free warranty statement on invoices when selling to the next buyer.
Question 6: Which African nation was at the center of the blood diamond crisis that prompted the creation of the Kimberley Process?
- South Africa
- Botswana
- Sierra Leone (Correct answer)
- Namibia
Correct answer: Sierra Leone
Sierra Leone's brutal civil war in the 1990s, funded largely by diamond revenues by the RUF rebel group, was the primary catalyst for creating the Kimberley Process.
Question 7: Canada's diamond mining industry uses which tracking system to verify the provenance of diamonds mined in the Northwest Territories?
- The Nanook Diamond Certification Program
- CanadaMark and similar Canadian government-backed origin programs (Correct answer)
- The Arctic Diamond Warranty System
- The KPCS Enhanced Tracking Protocol for Developed Nations
Correct answer: CanadaMark and similar Canadian government-backed origin programs
CanadaMark and similar programs provide laser-inscribed, government-backed provenance tracking for diamonds mined in Canada's Northwest Territories.
DCA Ethical Sourcing & Trade Regulations 3
Which industry initiative requires companies in the diamond pipeline to provide written warranties on invoices stating diamonds are conflict-free?