The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) today published in the Federal Register notice of proposed regulations related to the implementation of amendments to the Bank Secrecy Act (BSA) regarding the trade in antiquities pursuant to last year’s Anti-Money Laundering Act. After relative silence over the nine months since the AMLA was passed as part of the National Defense Authorization Act, FinCEN somewhat surprisingly still has not drafted any proposed regulations, but rather seeks additional comment on a series of substantive questions. This effort to gather meaningful data is a positive step, but raises concerns about interested parties’ ability to respond by the 30 day deadline, and whether FinCEN will have time to incorporate those comments into regulations that must be promulgated (after further public notice and comment) by the end of 2021.
Topics: Antiquities, AML, Money laundering, FinCEN, Financial Crimes Enforcement Network, Bank Secrecy Act, National Defense Authorization Act, Treasury Department, BSA, Anti-Money Laundering Act, Byzantium
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
On January 1, 2021, the U.S. Senate overrode President Trump’s veto of the National Defense Authorization Act for 2021 (NDAA), a bill that (perhaps surprisingly) included rules affecting the art market. Specifically, the new law subjects antiquities dealers to the provisions of the Bank Secrecy Act, requires registration of the ultimate beneficial ownership of limited liability companies, and directs the Financial Crimes Enforcement Network (FinCEN) at the Department of the Treasury to conduct a study of money laundering in the art market. Long considered but only now passed, the bill is a significant step into regulating the U.S. art and antiquities market, though still far less invasive than the European Union’s current approach. The new regulations raise questions about the cost benefit balance of compliance, but leave no doubt after last year’s Senate report that regulators have the art market in their sights and the market must respond if it wants to have a say in the oversight that is sure to come.
Readers here will be familiar with our support for and participation in the Responsible Art Market Initiative’s common-sense approach to diligence and responsible practices, and this development is no exception. As I tried to spotlight in the RAM New York webinar we hosted last fall, whatever one thinks of the regulations or the regulators, these things are happening. And while we expressed skepticism that FinCEN is the right body to conduct a study of the art market, the market has a choice here. We can complain, or we can get involved in the dialogue. I would rather be at the table in the discussion than outside the room. The FinCEN study may not be ideal, but it is an opportunity that responsible actors will ignore at their peril.
Topics: OFAC, European Union, Terrorist financing, Responsible Art Market initiative, Money laundering, FinCEN, Financial Crimes Enforcement Network, Office of Foreign Assets Control, Bank Secrecy Act, Department of the Treasury, 31 U.S.C. § 5312(a), limited liability companies, National Defense Authorization Act, President Trump
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