Any crimes aimed at illegal sales, export or import, regardless of the commodity nature of the objects of criminal interest, are dangerous because they create conditions that can affect the stability of the domestic market and the well-being of the country as a whole. Within the framework of this article, we will consider the question of what liability is provided for the illegal sale/trafficking of precious materials, what are the features of this act and what punishment is imposed for it.
Punishment for illegal trafficking of precious metals, natural precious stones or pearls.
General concepts
It’s worth starting with the fact that, due to their market value, precious materials (stones, metals, etc.) are of great interest to the criminal world, since even a small amount of such materials can significantly enrich criminals. In this regard, on the territory of the Russian Federation there are a number of rules and conditions for the extraction and putting into circulation of the above-mentioned items. The concepts that will be presented below are quite general in nature, so it is necessary to examine in more detail what the features of the materials on the topic under consideration are. To do this, you need to refer to the provisions of Federal Law No. 41 of March 26, 1998 “On Precious Metals and Stones”, which indicate that:
- precious metals are gold, silver and platinum group metals in any state (native, refined (purified), raw material);
- precious stones - natural diamonds, emeralds, rubies, sapphires and alexandrites, as well as natural pearls in raw (natural) and processed form.
The key point in the definition is that the origin of the stone should only be of a natural nature, and that artificially created materials, even having the corresponding characteristic features of natural stones, are not classified as precious. Accordingly, the right to extract and sell precious metals and stones is granted under certain conditions, through the issuance of a special license and inclusion in the register. The set of rules and conditions contains many points that are quite difficult and impractical to analyze in the context of a single article.
Legal issues of turnover of precious stones and not only precious stones
A.V. Vakulenko
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partner of Legal, Candidate of Legal Sciences, member of the Society of Russian Experts on Subsoil Use
Federal Law of March 26, 1998 No. 41-FZ “On Precious Metals and Precious Stones” (hereinafter referred to as the Law on Precious Metals and Precious Stones) only classifies as precious stones natural stones (natural diamonds, emeralds, rubies, sapphires and alexandrites, as well as natural pearls in raw (natural) and processed form (Article 1).
From a gemological point of view, it is not entirely clear why pearls are included in the category of precious stones, since they are a product of organic origin and are not a mineral. It would be more logical to classify pearls, as well as unique amber raw materials, as formations that are equated to precious stones.
At the same time, precious stones may or may not have jewelry quality (Resolution of the Government of the Russian Federation dated November 23, 1998 No. 1365 “On the criteria and procedure for classifying precious stones as unsuitable for making jewelry”).
The main criteria for classifying precious stones as unsuitable for making jewelry are their size, weight, color and quality characteristics, as well as the economic feasibility of their processing at cutting industry enterprises.
Within the meaning of Decree of the Government of the Russian Federation dated January 19, 1998 No. 55 and Decree of the Government of the Russian Federation dated April 5, 1999 No. 372, only cut certified precious stones are allowed for retail sale to individuals. The sale of precious stones without a certificate can be classified as a crime under Art. 191 of the Criminal Code of the Russian Federation.
However, in gemology there is the concept of “ennobled stone”. This is a natural stone, not classified as precious, which, through physical influence on it, changes or improves its properties and becomes precious, or acquires jewelry quality.
For example, corundum can be transformed into sapphire through high-temperature treatment. Or a ruby that does not have jewelry quality (cracks, color, clarity, inclusions) is brought to jewelry quality using the same heat treatment.
Such refined stones are not artificial (synthetic), since they are extracted from the depths. They just didn’t lie that long and weren’t quite where they needed to be. However, it is impossible to equate natural stones with refined ones. It is quite clear that the latter should be sold on the market at a discount compared to natural ones. But at the legislative level, the concept of “refined stone” still does not exist, just as there is no legal regulation of the circulation of such refined stones, which creates the preconditions for misleading buyers of such refined stones.
In addition, at present in Russia there is no state registration of synthetic stones (grown artificially and having the properties of natural ones). According to the ALROSA Center for Strategic Projects and Analytics, only every fifth diamond grown in a laboratory for the jewelry industry is declared (https://rg.ru/2018/05/31/minfin-predlozhil-kontrolirovat-oborot...), which speaks about the volume of the black market for synthetic stones.
On the market, synthetic diamonds are sold at a 40% discount compared to naturally grown stones. But existing devices cannot give a 100% guarantee that the stone being purchased is natural. Therefore, there are cases of unscrupulous sellers deceiving buyers and selling them synthetic diamonds under the guise of natural ones.
In May 2021, the Russian Ministry of Finance developed a draft federal law on amendments to Art. 1 of the Federal Law “On Precious Metals and Precious Stones” (02/04/05-18/00081179) - www.regulation.gov.ru/projects#npa=81179. In it, he proposed to indicate that the procedure for the use and circulation of synthetic stones that have the characteristics (properties) of precious stones will be established by the Government of the Russian Federation (the project is still at the stage of independent anti-corruption expertise).
Further steps, according to the Russian Ministry of Finance, should be the introduction of measures to control the circulation of synthetic stones for the jewelry market, as well as regulation of their import into the territory of the EAEU and a ban on the use of the classification of stones of natural origin for artificially grown stones.
One of the attempts of the Russian Ministry of Finance to regulate the artificial stones market was the draft resolution of the Government of the Russian Federation “On Amendments to the Rules for the Sale of Certain Types of Goods” developed in May 2021 - www.garant.ru/….
In particular, this project proposes to determine that jewelry containing inserts of artificial stones should be placed in separate display cases in the sales area with the installation of a sign with the corresponding information inscription.
All of the above concerns the circulation of precious stones. But subsoil users still mine and sell so-called semi-precious stones (malachite, rhodonite, jadeite, etc.) on the market.
There is no legal definition of the concept of “semi-precious stone” as such. There are separate classifications proposed by various geological and gemological organizations and scientists. There is also a list of semi-precious stones approved by Decree of the Government of the Russian Federation of August 31, 2021 No. 1029, which is used for the purposes of applying Art. 7.5 Code of Administrative Offenses of the Russian Federation. This list includes others, in addition to those expressly specified in Art. 7.5 of the Code of Administrative Offenses of the Russian Federation, semi-precious stones are classified as beryl, including aquamarine and heliodor.
Art. itself 7.5 “Unauthorized extraction of amber, jade or other semi-precious stones” of the Code of Administrative Offenses of the Russian Federation appeared in December 2021 with active lobbying for its inclusion in the Code of Administrative Offenses of the Russian Federation by the Kaliningrad Amber Combine. According to the KYK, it should be aimed primarily at combating illegal amber mining.
By the way, unique amber formations are equated to precious stones within the meaning of Art. 1 of the Law on Drugs. metals and precious metals stones. The criteria for identifying unique amber formations are defined in the Decree of the Government of the Russian Federation dated January 5, 1999 No. 8 “On approval of the Procedure for classifying unique amber formations as precious stones” (weight over 1000 g, inclusions over 10 mm, etc.).
That is, everything that is not unique amber formations is just amber, for the illegal extraction and sale of which a person can simultaneously be brought to administrative liability under Part 1 of Art. 7.3. (unlicensed mining) and 7.5. Code of Administrative Offenses of the Russian Federation. But for the illegal extraction and sale of unique amber formations, they will be subject to criminal liability under Art. 191 of the Criminal Code of the Russian Federation.
At the same time, the fine for legal entities under Art. 7.5 Code of Administrative Offenses - from 10 to 60 million rubles. with the possibility of confiscation of instruments for committing an offense (special equipment, vehicles). The statute of limitations for bringing to administrative liability under this offense is 1 year from the date of commission of the administrative offense.
Judicial practice shows that people are charged mainly under Art. 7.5 of the Code of Administrative Offenses of the Russian Federation for persons illegally mining amber.
Separately, it should be said that there is still no union of miners of precious and semi-precious stones in Russia that could lobby the interests of subsoil users in this market segment and come up with a legislative initiative to bring the legislation on the circulation of precious and semi-precious stones into line with existing realities. Each company, to the best of its ability and status, tries to resolve its issues independently. In this case, ALROSA is the most fortunate, which is quite understandable, (lobbying for the introduction of Part 8 of Article 9 in the Zone with regard to the right to extract mineral resources).
Currently, there is only the Jewelers Guild, which includes the Association of Russian Diamond Manufacturers.
Published in the magazine “Gold and Technology”, No. 3(45)/September 2021
Article and responsibility
The act in question may be qualified in accordance with the Criminal and Administrative Codes.
Criminal Code
Within the framework of the Criminal Code of the Russian Federation, liability is established taking into account the provisions of Article 191 (“Illegal trafficking in precious metals, natural precious stones or pearls”), which, taking into account the latest editions, is as follows:
- Conducting a transaction related to precious metals, natural precious stones or pearls, in violation of the rules established by the legislation of the Russian Federation, as well as illegal storage, transportation or shipment of precious metals, natural precious stones or pearls in any form, condition, with the exception of jewelry and household products and scrap of such products, committed on a large scale, is punishable by forced labor for a term of up to five years or imprisonment for the same term with a fine in the amount of up to five hundred thousand rubles or in the amount of the wages or other income of the convicted person for a period of up to three years or without one.
- The same acts committed by an organized group or a group of persons by prior conspiracy are punishable by forced labor for a term of up to five years or imprisonment for a term of up to seven years with a fine in the amount of up to one million rubles or in the amount of the wages or other income of the convicted person for a period of up to five years or no.
As can be seen from the provisions of Part 1, in fact, any actions that violate established requirements and rules fall under the disposition of Article 191 of the Criminal Code of the Russian Federation. A large amount, in accordance with the reference of the legislator, is recognized as an amount in the amount of 2,250,000 rubles.
For example: Citizen “A” was engaged in purchasing old and non-working household appliances; he showed particular interest in television and computer boards. As it turned out, this interest was due to the fact that almost every board contains a certain amount of precious metals - silver and gold, which, using certain chemical compounds, can be separated from the rest of the raw materials and obtained in almost pure form. Citizen “A”, realizing the illegality of his actions, melted all the resulting substances into small ingots and sold them to jewelry workshops, which subsequently resold them to their clients.
These actions should be qualified under Part 1 of Article 191 of the Criminal Code of the Russian Federation if they were committed on a large scale, otherwise the Administrative Code comes into force. So, taking into account everything described above, two illustrative examples can be given:
Example 1. Citizen “B” inherited from her grandmother a box with 10 cut diamonds. Being in a rather difficult financial situation, “B” decided to sell part of the stones, which should have more than covered all the material problems in her life. Following the recommendation and assessment of the gemologist, citizen “B” sold the stones to a jewelry factory and received a substantial reward for this.
Such a situation does not constitute a crime, since the precious stones have already undergone the cutting procedure and have taken on a marketable form, which allows them to be classified as jewelry, and, as stated in Part 1 of Article 191 of the Criminal Code of the Russian Federation, this condition excludes the onset of criminal liability.
Example 2. Citizen “B”, being in Siberia, not far from the mines for the extraction of precious metals, on a business trip, went fishing with his colleagues “G” and “D”. 30 km. from the mines, three fishermen set up camp. Citizen "B", intending to make himself a bed under a tree, using a shovel, dug a hole, but accidentally discovered a small package containing several dozen unprocessed gold bars. Realizing how high the value of the find was, citizen “B” hid this from his colleagues. Returning from a business trip, “B” immediately went to the nearest pawnshop to resell the bullion. The appraiser, who had previously been prosecuted, filed a complaint with the police against citizen “B”. The actions of “B” were qualified under Part 1 of Article 191 of the Criminal Code of the Russian Federation.
Administrative responsibility
The topic under consideration within the framework of the Code of Administrative Offenses of the Russian Federation is associated with Article 19.14, the provisions of which are as follows:
Violation of the established rules for the extraction, production, use, circulation (trade, transportation, forwarding, collateral transactions, transactions made by banks with individuals and legal entities), receipt, accounting and storage of precious metals, pearls, precious stones or products containing them, and equal to the rules for the collection and delivery to the state fund of scrap and waste of such metals, stones or products entails the imposition of an administrative fine:
- for citizens in the amount of three thousand to five thousand rubles;
- on officials of organizations carrying out transactions with precious metals, precious stones in all types or products containing them - from ten thousand to fifteen thousand rubles;
- for legal entities - from thirty thousand to fifty thousand rubles.
The subject of a crime and an offense is common; it can be an individual, for example, as in the examples described above, or legal entities. For committing such an offense, the guilty person may be subject to an administrative fine, depending on the existence of the organizational and legal form, a minimum of 3,000 rubles, a maximum of up to 50,000 rubles.
Characteristics of the crime
The generic object of the crime is social relations in the sphere of legitimate economic activity, which undermine the normal functioning of the state.
A specific object is the procedure for the circulation of currency and valuables in the state.
The direct subject of the criminal act will be precious stones according to the established list, pearls, and precious metals. Household items, costume jewelry, jewelry, and scrap precious metals will not be considered crime items.
The subject of a crime is any individual (citizen, foreigner, stateless person) who has reached the age of criminal responsibility. In Russia, in this case, this age is reaching the 16th birthday. There is no special subject provided.
The danger of this crime lies in the fact that the illegal trafficking of precious stones and metals in Russia, as well as their export outside the country, can significantly affect exchange rates, cause the depreciation of materials that are considered the country’s gold reserves, and undermine stable market relations.
In order to control the processes occurring with metals and stones that have jewelry value, in Russia it is necessary to obtain a license for this type of activity. Moreover, the state ensured close attention to transactions with precious metals.
From the subjective side, this crime is characterized by the presence of direct intent, i.e. the person knows that he is committing a crime, assumes the consequences that may occur, but, no matter what, wants them to occur.
The purpose of committing a crime is most often selfish. The purpose and motives do not affect the qualification of the crime.
From the objective side, illegal actions with precious metals consist of committing one or more of the alternative acts:
- concluding transactions (both orally and in writing);
- illegal possession;
- illegal transportation or shipment (smuggling).
