New Delhi: The United States has frozen $26 million belonging to at least two Indian diamond companies that allegedly traded with Russian diamond giant Alrosa, which is under sanctions for its role in the Ukraine crisis, three Indian sources told Reuters.
The funds were seized by the Office of Foreign Assets Control (OFAC), the U.S. Treasury unit that enforces sanctions, earlier this year, said two of the sources, who are Indian government officials. They did not want to reveal their identities or the names of the companies because of the sensitivity of the issue.
This is the first known case of any Indian business being affected by the U.S. sanctions on Russian entities since Russia launched a full-scale invasion of Ukraine last year. The funds were frozen when the UAE-based subsidiaries of the Indian companies tried to transfer them to buy rough diamonds. Reuters could not verify if the money was meant for Alrosa or another entity.
“The government is aware of the OFAC action and has started dialogue over it,” one of the Indian government sources said. “The problem was suspicion of trade links with Alrosa.”
The Indian companies involved in the matter have told the government that the payments were either for Russian entities that are not under sanctions or for orders that were completed before Alrosa was sanctioned in April last year, the source said.
Alrosa, which is controlled by the Russian state and is the world’s largest producer of rough diamonds, did not respond to an email seeking comment. India’s trade and foreign ministries and the U.S. treasury department also did not respond to requests.
India has the world’s largest diamond processing capacity and exported polished diamonds worth more than $22 billion in the last fiscal year that ended on March 31. The industry, which is mainly based in Gujarat, buys rough diamonds from suppliers in countries such as the United Arab Emirates, Belgium, and Russia.