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05 april 2021
flun_gumerov_xx.jpgFlun Gumerov, Chairman of the Council of the “Jewellers Guild of Russia” Association and the founder of Almaz-Holding, told Rough&Polished about what is new in the legislation relating to the jewellery production and trade, about the sentiments at the Jewellers Guild of Russia and their plans for the future.

The state integrated information system in the field of control over the circulation of precious metals and precious stones (SIIS PMPS) launched this year and designed to make the market of precious metals, stones and products from them transparent converts all existing business processes into the digital format. In early March, the hallmarking of jewellery - that is important for jewellers - was considered. What’s the bottom line?

Let’s point out first that the struggle between a regulation and freedom is an issue of development! A dialogue with the authorities and regulator is required, it should be conducted on an ongoing basis to ensure the jewellery industry development.

At the meeting of the government subcommittee, the regulator considered favorably the requests of the jewellery business community representatives on the dates of the stages of the SIIS PMPS implementation, and we are grateful to the regulator for this. But, unfortunately, our request not to put the mandatory marks straight on the surface of jewelry goods was rejected.

Are these decisions final?

Yes, they are final. But some matters remained to be resolved, including the need to read a 16-digit UIN (unique identification number of the product) from the metal of the jewellery piece and put the same UIN on the jewellery piece’s tag (label) that will be used by the trade.

How will this affect the industry?

It is obvious that such administrative and fiscal loads as physical hallmarking each item would slowdown the industry and adversely affect the exports from Russia. In recent years, capital has been removed from Russia and production facilities have been started up all over the world.

Three years ago, A. V. Moiseev, Deputy Head of the Ministry of Finance, voiced the position of the Ministry of Finance of Russia “We must follow the path of marking and tracking the movement of natural stones.”

I hope that we will be able to convince the regulator that they will achieve the same goals with minimal costs for the business.

It is clear that the state must have regulatory control and trace the movement of precious metals and precious stones, curb the ‘illegal circulation’, - but we should not forget that we use about 10-11 percent of the gold mined in Russia.

Indeed, many states have legislatively abandoned the regulation of the production process itself.

Russia is a state governed by the rule of law, where all the entities, including religious organizations, must work in the same taxation and legal environment. I am sure that if any exceptions for the religious organizations’ retail units are introduced into the regulatory space of the SIIS PMPS that exclude the control over the circulation of religious items, we could get a huge gap in the overall traceability of precious metals and stones. Then what kind of achievement of the goals and objectives of the SIIS PMPS can we talk about? In this matter, I agree with E. Yu. Utkin, Director General of the Guild.

What the Jewellers Guild’s plans for the legal and regulatory space?

I should note that the jewellery industry was not initially included in the list of the industries most affected by the lockdown restrictions - and it was added only after the address of the Jewellers Guild of Russia and Delovaya Rossiya (Business Russia) to the government of the country. But only the retail trade was included, and the jewellery manufacture was not in the list.

We have outlined three fundamental directions for improving the legal regulation of the jewellery sector.

First of all, it is SIIS PMPS. We will seek amendments to the “Rules ...” that will change the marking technology - so that the Federal Assay Chamber (FAC) would enter not the UIN (unique identification number of the product) in the 2D barcode applied to the item itself, but the INB (identification number of a batch), possibly combined with the registration number of the SIIS PMPS participant. This would allow the jewellery manufacturers to simplify the procedure for the operations related to hallmarking and reduce its cost as it would be not required to read the barcode from the items received from the FAC after being tested and hallmarked. And it is also possible to avoid putting a manufacturer’s stamp on an item.

The second line of ​​work is improving the conditions for exporting jewellery. A radical simplification is needed as today’s fast growing e-commerce requires to fulfill the orders faster. Until recently, this line of activities also included abolishing the duties on imported stones. Fortunately, the decision has been taken recently.

The third area is improving the enforcement of the anti-money laundering law (115-FZ) to the jewellery circulation. At the first stage, it stipulated the withdrawal of silver jewellery from the norms of this law. Almost all silver pieces are inexpensive and cannot be used to launder ill-gotten gains or finance terrorism. However, we want to draw the state’s attention to the fact that with the introduction of the SIIS PMPS, almost all control over the prevention of money-laundering and terrorism financing in the jewellery sector can be safely “digitalized”. That is, to shift this task to the artificial intelligence of the SIIS PMPS and unload the jewellery manufacturers and trade from the work that can be performed much faster and better by the regulator’s computers. Whether we like it or not, this issue will also have to be resolved together with the authorities. Fortunately, Yu. A. Goncharenko, head of the relevant department of the Ministry of Finance of Russia, expressed her readiness to have regular meetings (once a month) with the members of the Association Council and help organize such meetings with Deputy Finance Minister A. V. Moiseev (at least, once a quarter). I hope that the expert group under FAC set up on the initiative of Yuri I. Zubarev, Head of FAC, will also start working on a regular basis. Indeed, one can listen to each other’s arguments and find a balance of interests of the state, business and consumers only through the communication and interaction with each other. Moreover, we must pay tribute to the regulator leaders as they have repeatedly shown their willingness to have a respectful conversation with business and their ability to conduct a dialogue on an equal footing - many of the leaders have worked in business and they know the real situation. These Augean stables must be cleaned and this can only be successfully done together with the authorities.

I would like you to comment on the elimination of duties on small-size diamonds and coloured gemstones. Will this have a positive effect on the industry?

I have already mentioned that a situation has developed when it is more profitable to import finished jewellery goods from the countries that are not the Eurasian Economic Union members than to manufacture in this area.

In February, the Ministry of Finance submitted a proposal to the Eurasian Economic Commission to abolish these duties. And, there is also a proposal to finally slash the rates of import customs duties on coloured precious stones and small-size diamonds (under 0.3 carats) to zero for two years. The Jewellers Guild has been pushing for this decision over the years.

Unfortunately, most people today cannot afford purchasing diamond jewellery pieces because of their incomes. And as for another segment of the population, so called “middle class”, unfortunately, their budget is the main criterion when buying jewellery. In these conditions, jewellery pieces studded with small diamonds are in most demand, however, it is unprofitable to manufacture these in Russia.

Probably, some small-size diamonds come to Russia through various “shady” and “quasi-legal” schemes and the stones are purchased by unscrupulous jewellery manufacturers who gain an advantage in unfair competition with the jewellery companies that use legally imported stones as well as with the legal importers of precious stones.

The abolition of import duties on small-size diamonds and coloured stones that are practically not available in Russia would allow the jewellery business to work competitively with legally imported stones only. It is clear that fair importers will only benefit from this innovation as the demand for their goods will increase.

The pandemic severely hit the jewellery market. How soon will the industry get back on track after the pandemic is over?

The crisis in the jewellery industry existed long before the lockdown, but during the lockdown, we saw the exacerbation of the crisis. As I repeatedly noted before, there are no cash reserves in our business, it is difficult to do them because of the currency and raw materials specifics, which requires investing all free money in precious metals promptly.

In addition to the current crisis, further and significant growth in foreign exchange prices for precious metals is expected in the near future. Of course, gold will rise in price (due to the ongoing perturbations in the dollar and euro zone), first of all, and other precious metals will also rise in price along with the roughs and the rest raw materials used for the jewellery manufacture. The rouble exchange rate does not inspire much optimism taking into account the specifics of the exchange rate policy of the Central Bank of the Russian Federation, which doesn’t seems to be revised. Therefore, it is rather problematic to talk about the prospects for the jewellery industry development in our country in the near future.

What can you say about the possible growth in the popularity of lab grown diamonds and, accordingly, about forcing out the natural diamonds from the market?

I think that a diamond is a unique gift from nature. Synthetic diamond is a man-made imitation of the gift of nature. Yes, these stones look the same, it is not possible to distinguish between them with a naked eye. But after all, it is important for a person to know what he or she possesses. You can have a painting by a famous artist or you can have a wonderful reproduction or replica of it. Is it the same thing? I think diamond mining companies will be able to convey this line of thinking to their consumers ... But we must admit that the lab grown diamonds have a future and the demand will grow in the years to come!

As the head of the Jewellers Guild, what can you say about the relations between the players of the jewellery market in Russia?

Today, we especially need solidarity, mutual support and responsibility of everyone before everyone - shared responsibilities. I always say that the strength of any chain is equal to the strength of the weakest link. You cannot solve the problems of one group of the market participants by spelling troubles for other market participants. You cannot solve the problems of large companies at the expense of small and medium-sized ones, especially, taking into account that many of us were small or medium-sized businesses yesterday. And it is good that jewellers, being so different, strive for a consensus and they agree upon a consolidated position on various issues while working on the platform of the “Jewellers Guild” Association that unites us.

What changes do the manufacturers and buyers expect in the short and medium term?

Despite a rather challenging situation on the market, we would still like to think that any crisis also brings new opportunities - for example, using the pause for introducing some changes, optimizing the production and increasing the business efficiency.

As for buyers, women always loved to wear jewels and men always loved to bring joy to women by giving jewellery pieces to them. So, I don’t see any serious threats to the jewellery industry. Certainly, some new preferences always arise in each generation, but there is a place for everything.

Of course, the demand for jewellery greatly depends on the customers’ income. Someone thinks that by the end of the year, a normal life will come back, someone sees a recovery horizon in two or three years ... the main thing is not to sit and wait for any improvements to come but to learn to work in today’s realities. The market will never be the same.


The decree introducing the procedure for the implementation of the SIIS PMPS and the rules that determine the essence of the system functioning came into force on March 1.

At the first stage of the system implementation, market participants will be able to register with the SIIS and be specially registered after submitting an application to the Federal Assay Chamber. After registration, the users can re-register their special registration card in the system, as well as apply for registration of the manufacturer’s stamp.

From September 1, 2021, all special registration operations - such as registration, withdrawing, making changes - will be carried out electronically. Broader functionality, including the ability to voluntarily apply a 2D barcode directly on a jewellery item, is available from April 1. The sale of unmarked items will be banned from 2024.

Galina Semyonova for Rough&Polished