The World Federation of Diamond Bourses (WFDB) presidents’ meeting, after a special session on blockchain technology and supply source traceability, has decided to take steps to further improve transparency in diamond transactions.
The decision came after a debate on the conclusions of a panel discussion on traceability, provenance and blockchain technology.
The panel included several industry stakeholders, including the likes of De Beers Group's Feriel Zerouki, Namdia's Kennedy Hemutenya, London Diamond Bourse president Alan Cohen and Alrosa international relations head Peter Karachiev, among others.
WFDB president Ernie Blom on Monday said “the fragmented nature of the industry means that there is a dearth of information available about the gems and jewellery companies”.
He added that recent incidents of fraud had also made banks and financial institutions wary of the diamond industry, leading them to demand more transparency within the industry.
“As part of its compliance towards anti-money-laundering, each stakeholder in the industry is required to do and maintain a proper customer due diligence . . . for each of its customers and suppliers, with adequate supporting documents and regular updates to the information,” he elaborated.
The diamond trade is traditionally a business-to-business segment, with the bulk of transactions between a given set of customers. A diamond changes hands between seven and eight times before it is finally sold to the consumer, Blom explained.
“For the WFDB, this makes the need for a common platform even more pressing, so as to bring about more transparency in the industry,” he argued.
At the panel discussion on this subject, he said it had become “abundantly clear” that consumers cared about what they were buying, and that they wanted assurances that their purchase was making a positive contribution and that diamond companies should be providing those assurances.
He further said the technological revolution would not happen overnight, and “comes at a difficult time”, characterised by credit being squeezed, non-existing profit, rough and polished prices trending downward, and little money for marketing and sustainability projects.
Cohen, who participated in the panel, called for new technologies to be embraced, and said “there is no miracle formula to counter the changes that are on the way. It will be a choice between jumping on the train or missing it”.
“The WFDB has accepted and embraced the fact that blockchain is here to stay, but it has to be practical and available to each and every member who wants it, not just a select few,” Blom stated.
The WFDB has decided to reach out to a shortlist of blockchain experts to assist in the development of a solution that could benefit all WFDB members.