The World Federation of Diamond Bourses (WFDB) decided at its recent Presidents Meeting to reach out to a shortlist of Blockchain experts to seek their assistance in the development of the technology to make it “practical and available to each and every member (of the industry) who wants it, not just a select few”.

The step follows the discussions at a special session on blockchain technology and supply source traceability held during the meeting, and is part of the effort to ensure “increased transparency in diamond transactions”, according to a statement released by WFDB.

The panel on traceability, provenance and blockchain technology at the Presidents Meeting included De Beers Group's Feriel Zerouki, NAMDIA's Kennedy Hemutenya, London Diamond Bourse President Alan Cohen, Alrosa's Head of International Relations Peter Karachiev, James Bernard, Director of Sales for the DMCC and Iris Van Der Veken, Executive Director of the Responsible Jewellery Council. It was moderated by Peter Meeus, Honorary Chairman of the Dubai Diamond Exchange. 

During the discussion, it became abundantly clear that consumers do care about what they are buying, and they want to be assured that their purchase is making a positive contribution and that diamond companies should be providing those assurances.

Alan Cohen, President of the London Diamond Bourse 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. We must embrace the new technologies.”

WFDB President Ernie Blom said, “As 98% of all diamonds sold are below 7 pts., this technological revolution will not come overnight.  From the midstream which is the World Federation of Diamond Bourses with its 30,000 members worldwide, this new development comes at a difficult time.”

At a moment that credit is squeezed, profit non-existing, rough and polished prices downward, there is little money for marketing and sustainability projects, he added.

Elaborating on the background to the decision to discuss the use of Blockchain, Blom said, “The fragmented nature of the industry means that there is a dearth of information available about the gems and jewellery companies. Recent frauds, perpetrated by a few rotten apples, have also made banks and financial institutions mistrust the industry. They have also been demanding more transparency within the industry.”

As part of its compliance towards AML, each stakeholder in the industry is required to do and maintain a proper CDD (this is typically also known as Know Your Customer (KYC) or Know Your Supplier, or Know Your Counterparty) for each of its Customers and Suppliers with adequate supporting documents and regular updates to the information.

Blom also pointed out that on an average, 80% of information in any KYC is common. If 10 member establishments are selling to the same customer and they each maintain their own separate individual KYC for that Customer, then their customer will have to fill 10 KYC Forms, most of which will repeat information (80-90%) and unique information (10-20%).

Further, he pointed out, the diamond trade is traditionally a B2B segment with the bulk of transactions between a given set of customers. It is estimated that a diamond changes hands 7-8 times before it is finally sold to the consumer.

“For the WFDB, this makes the need for a common platform even more pressing, so as to bring about more transparency in the industry,” Blom argued.