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There is a 10-ton truck bearing down upon the diamond trade, and few appear aware that it is headed this way. Called the USA Patriot Act, it could possibly precipitate a restructuring of the diamond pipeline into the United States, with a good number of foreign suppliers discovering that they are no longer able to do business directly with their retail clients.
The USA Patriot Act (Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001), or the "Patriot Act" as it generally is referred to, is in fact a series of amendments to 15 laws, the aim of which is to increase the surveillance and investigative powers of domestic law enforcement agencies.
According to the Patriot Act, dealers in precious metals, gemstones or jewels will have to develop and implement formal anti-money laundering programs, and failure to do so could result in criminal prosecution. Retailers, though, can seek to be exempted from this obligation, if they only buy from dealers who themselves have implemented anti-money laundering programs. This will put non-American wholesalers who do not operate U.S. offices at a severe disadvantage.
In ordinary times, the 342-page-long act would have inched its way through Congress, and possibly would have emerged with a tighter set of checks and balances on the agencies whose powers it was greatly enhancing. But it was rushed through Capitol Hill in the days immediately following the terrorist atrocities of September 11. In fact, within five weeks it was ratified by both houses of Congress, and then signed into law by President George W. Bush on October 26, 2001.
Some of the provisions of the act are relatively benign, such as creating a framework for the provision of assistance to victims of the September 11 attacks. But the law also expands the government's ability to gain access to personal information without any actual proof or even suspicion of wrongdoing, simply by noting that …