Antwerp’s diamond dealers to raise legal case over blocked dollar accounts | DW | 01.06.2022

Enraged diamond traders in Antwerp say they are considering launching a group case to try to ensure access to their US dollar accounts.

The northern Belgian city is the global hub for the precious stones but EU money laundering rules implemented since 2016 have seen around two-thirds of the city’s 1,600 diamond traders excluded from accessing the money they hold in US dollars in banks.

Rob van Buerden, the owner of Diamond House Antwerp, has been trading for over four decades. “The main banks in Belgium have excluded diamond dealers from their bank accounts, so we believe there will be a class-action [lawsuit] because you cannot see this otherwise than discrimination of an entire industry,” van Beurden told DW.

Lawyers for the diamond trader clarified that the case in Belgium would be called a ‘group case’ rather than a class-action lawsuit.

Rob van Beurden recently won an individual case against his bank to have his business account reopened but his personal account remains blocked. He and other diamond traders believe the banks in Belgium have used the EU rules to unfairly target them.

Many of the diamonds traded and cut in Antwerp come from Russia which is the world’s largest producer

Precious stones

Tom Neys, the spokesperson for the Antwerp World Diamond Centre (AWDC) — an organization which represents the traders but which will not be in any way involved with the legal proceedings — says the closing of the traders’ accounts actually had the adverse effect on transparency.

“In the beginning, some crazy things were happening. People suddenly started to pay their employees in cash money. And if there’s one thing you want in a business, and if you want to have anti-money-laundering measures, then of course these are the things you exactly want to avoid,” Neys told DW on the 23rd floor of the AWDC building overlooking Antwerp’s Diamond Quarter below.

The European Union agreed a set of sweeping anti-money-laundering directives in the wake of the financial crisis of 2008 in order to boost transparency and fight against the funding of terrorist and criminal networks.

Diamonds were considered a high-risk business because of their huge cost, easy transportability and lack of transparency around prices and deals that are done.

Every year, diamonds worth $37 billon (€34.36 billion) pass through Antwerp’s diamond trade located at Hoveniersstraat — a street in the city’s center.

The competition is fierce but there’s an old adage in the Diamond Quarter that it is the only place on the planet where there is genuine world peace — the entire industry relies on traders trusting one another.

Banks defiant

Belgium’s financial sector association, Febelfin, said the traders are not being discriminated against unfairly.

“We must not forget that banks are private companies which determine their business model in line with risk assessments and capital requirements,” Febelfin told DW in a statement.

“This is in line with the freedom of enterprise which means they have a right to refuse a business relationship with a certain client and can also terminate the contract if they deem this necessary.”

The association refused to comment on what it called “hypothetical” legal cases, but noted that “every bank has its own legal & compliance department which will analyze the complaints of the clients in light of this legislation and possible litigation procedures.”

In January 2022, the European Banking Authority (EBA) released an opinion saying that financial services authorities needed to step up efforts to ensure that the root causes of unwarranted derisking were addressed, including in relation to diamond traders.

The Belgian government has also set up a so-called Basic Banking Law to ensure that anyone rejected three times for a bank account will have the right to demand at least a basic account to continue transactions.

Sanctions pressure

The traders in Antwerp say they’re also under additional pressure from an import ban on uncut diamonds from Russia as a result of EU sanctions brought in over the war in Ukraine. Previously, Antwerp imported 30% of Russia’s diamonds and is unable to do so now.

Koen Vandenbempt, a professor of strategy at University of Antwerp, told DW he did not think the sanctions were effective due to the nature of the diamond industry.

“Diamonds are not polished in Russia. So a rough diamond that is significantly transformed, which means polishing, is not anymore a Russian diamond, but becomes an Indian diamond, because 90-95% of all diamonds are polished in India,” said Vandenbempt.

The governments in the other diamond hubs like Mumbai and Dubai are not enacting sanctions on Russia over the invasion.

Edited by: Hardy Graupner