System of Warranties
The SoW requires professional buyers and sellers of rough diamonds, polished diamonds and jewelry set with diamonds to include a warranty statement on B2B invoices and memos each time a diamond changes hands, assuring the next buyer that it originated from sources in compliance with the Kimberley Process Certification Scheme (KPCS).
Warranty statements associated with the upgraded SoW, launched in 2021, requires compliance with the WDC SoW Guidelines, confirming KP-compliance and also that the diamonds were handled in accordance with essential responsible business practices related to human and labor rights, anti-money laundering and anti-corruption.
The SoW was developed by the WDC in 2002 as an industry self-regulation system that would indicate that diamonds being sold comply with the minimum requirements of the KPCS, which was scheduled to be launched at the beginning of 2003.
At the WDC Annual General Meeting in October 2017, it was decided to review the SoW so that it also would encompass a broader range of principles related to responsible business practice. The WDC SoW Guidelines, which outline the revised SoW, were adopted by WDC in 2018 and updated in 2020. They specifically reference the UN Guiding Principles on Business and Human Rights, the ILO Declaration on Fundamental Principles and Rights at Work, the UN Convention Against Corruption, and national AML guidelines that comply with the FATF’s 40 Recommendations on Money Laundering for Dealers in Precious Metals and Stones.
The upgraded SoW was launched in September 2021.There will be an interim period during which companies still can decide to accept the older warranties from clients. This will be three years in the case of rough purchases and five years in the case of all other purchases.
Members of the industry who include the updated warranty statement on an invoice or memo note, must carry out specific due diligence, which begins by them registering on a dedicated SoW website and conducting self-assessment to gauge whether they are in compliance with the principles outlines in the WDC SoW Guidelines. Only those members who are approved as being compliant are permitted to issue the revised SoW warranty statement.
The self-assessment questionnaire is customized and takes into consideration the stage or stages of the diamond and jewelry value chain in which the industry member is involved, the size of the company, and whether it is already compliant with other recognized due diligence systems.
The self-assessment needs to be made on an annual basis in order to be eligible to issue revised SoW warranty statements.