World Federation of Diamond Bourses (WFDB) President Avi Paz has warned members of 29 affiliated bourses not to buy Venezuelan diamonds after the country recently pulled out of the Kimberley Process.
Last week Venezuela agreed to withdraw from the KP process for two years.
Earlier this month, several NGOs called for the expulsion of Venezuela from the Kimberley Process due to noncompliance and continued refusal to allow teams from KP members countries to inspect the country's diamond industry.
Paz said that the WFDB and its member bourses have a cast-iron rule that rough diamonds can only be traded when they are companies by KP certificates. The WFDB provides a legal framework and convenes to enact regulations for its 29 member diamond bourses.
Any bourse member who trades in rough diamonds without KP certification is liable for explusion from his bourse, which in all practical terms means the exclusion from the entire diamond business community, he added.
Small-scale miners comprise the bulk of Venezuela's diamond mining sector which is based in Bolivar State. However, a report by Partnership Africa Canada (PAC) claimed that a combination of high taxes, ineffective currency controls, and bureaucratic ineptitude has driven Venezuela's diamond dealers underground.
PAC asserts that diamond dealers allegedly funnel hundreds of thousands of carats annually from Venezuela through Boa Vista in Brazil, to Georgetown, Guyana. Human rights NGOs claim that a significant fraction of Venezuelan production left the country complete without cover of Kimberley Certificates, straight to buyers in Europe and the United States.
The country annually produces an estimated 150,000 carats of diamonds, but has not officially exported any diamonds since 2005.