In connection with the late-2020 amendment to the Bank Secrecy Act (BSA) to include “dealers in antiquities” as a result of its inclusion in the National Defense Authorization Act (NDAA), the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) has issued a notice of “Efforts Related to Trade in Antiquities and Art.” The notice is a combination of guidance to entities now covered by the BSA, but it is also a potential backdoor around the entities that Congress chose not to regulate with respect to potential or perceived money laundering risks: art dealers. It also raises concerns about the objectivity of the forthcoming study of the art market that Congress instructed FinCEN to conduct. In either event, it is further evidence that momentum continues to gather for stricter oversight and regulation of the U.S. art market, and the importance of the art trade demonstrating more transparency and diligence if it hopes to modify or mitigate that regulation.
Topics: The Art Newspaper, Nazi-looted art, Antiquities, Terrorist financing, Responsible Art Market initiative, Money laundering, FinCEN, A Tragic Fate, Financial Crimes Enforcement Network, Illicit Art and Antiquities Trafficking Protection, suspicious activity reports, Corporate Transparency Act of 2019, Bank Secrecy Act, National Defense Authorization Act
A recent report by the U.S. Senate Permanent Subcommittee on Investigations (headlined by Chairman Senator Rob Portman, Republican of Ohio, and Ranking Member Tom Carper, Democrat of Delaware) has drawn widespread attention for its damning statements about the international art market. Focusing on purchases of art from major auction houses by Arkady and Boris Rotenberg, two Russian nationals described as “oligarchs” by the report, the Subcommittee makes a series of pronouncements about the supposed prevalence of money laundering in the art market, and the need for regulation to address this perceived problem. Yet upon closer read, the report is a recycling of clichés about the art market, a detailed description about the considerable diligence by the auction houses far beyond what any even theoretical regulation would require (thus begging the question of what lesser regulation would accomplish), and no discussion or empathy at all for the vast majority of small art businesses that could not possibly comply with such regulation and stay in business, let alone actually combat money laundering. In other words, in concluding that two men laundered money, the Senate committee deduces that the practice is rampant. This hardly follows as a matter of logic. Far from supporting the case for sweeping financial regulation of the art market, the report unintentionally makes the opposite point.
Topics: OFAC, Vladimir Putin, Uniform Commercial Code, House of Representatives, New York Times, Responsible Art Market initiative, Money laundering, FinCEN, Financial Crimes Enforcement Network, Permanent Subcommittee on Investigations, Boris Rotenberg, oligarch, shell companies, suspicious activity reports, Banking Secrecy Act, Politically Exposed Persons, Arkady Rotenberg, Treasury, ultimate beneficial owner, UBO, Corporate Transparency Act of 2019, Tom Carper, Office of Foreign Assets Control, Rob Portman