Ivorian diamonds are still being sold on the international market in breach of the international ban imposed almost a year ago, United Nations experts say.
Weapons are acquired with rough diamond revenues
A report claims the stones are smuggled from northern rebel-controlled areas to neighbouring countries, in particular Ghana, where they are deemed certified.
The UN experts say it is West Africa's only case of "blood" diamond trade and a violation of an industry-wide scheme.
The ban is designed to prevent northern rebels acquiring weapons illicitly.
The United Nations Security Council imposed sanctions on Ivory Coast and banned imports of rough diamonds last December in response to the country's deteriorating situation.
The country is also subject to the Kimberley Process, an international initiative started in 2002 to prevent the sale of "conflict diamonds" used to fund wars in Angola, DR Congo, Sierra Leone and Liberia.
The World Diamond Council, an influential industry association created to manage the publicity backlash against "blood" diamonds, asked the Kimberley Process to consider a temporary suspension of all rough diamond exports from Ghana in September, in addition to the Ivorian ban in an attempt to curb the illegal exports.
Ivory Coast has been split in two since a failed coup attempt in 2002 - the south is government-controlled and the north rebel-held.
West African leaders attended a summit meeting last Saturday to decide how Ivory Coast should be administered, but nothing has yet been disclosed.
Elections were due to take place at the end of October but have been delayed indefinitely.