The G7 group of nations is preparing to impose a new ban on the import of Russian diamonds as part of efforts to hinder Moscow's ability to finance the war in Ukraine.

Belgian officials said the move, which is expected to be announced in the coming weeks, would "fence off the G7 market" when it comes into force from January 1st 2024.

Reuters reports that the G7 accounts for 70 percent of the global consumer diamond market, while Russia is the world's largest producer of rough stones, so the move has the potential to significantly restructure the landscape.

"With this system, we are cutting them out, leaving them in an inferior market with lower prices. We are slashing the financial flows from this sector," an official told the news provider.

However, Belgium - which accounts for around 84 percent of global rough diamond trade through Antwerp - has warned that a direct ban will be ineffective and difficult to enforce, as it could simply divert trade to other hubs such as Dubai unless strong tracing measures are put in place.

The country has called for a combination of physical controls on diamonds as well as digital traceability data. This will include three layers of control and blockchain systems that will generate two G7 certificates for rough and polished items. Only stones that have all this documentation will be allowed to enter the G7.

Belgium has also suggested that customs checks be centralized in the G7's wholesale entry points for rough and polished stones in order to ensure that any extra costs do not fall onto consumers or jewelers.

The proposals were welcomed by European Council president Charles Michel, who said: “Russian diamonds are not forever and I am delighted that this ban on Russian diamonds is now materializing.”