Consistent with efforts in recent years to apply banking laws to the art market, the prospects of passage of a bill in Congress that would apply those rules to a broad category of advisors and attorneys have recently increased. The “ENABLERS Act,” a gimmick of nomenclature apparent from the moment it was proposed, was briefly attached to the annual National Defense Authorization Act, which in keeping with longstanding tradition easily passed the U.S. House of Representatives on July 14, 2022. This tactic, which was also used to extend the reach of the Bank Secrecy Act to antiquities dealers in 2021, greatly enhances the odds that what seemed initially like an unserious publicity stunt might become law. Readers of the Art Law Report will not be surprised at a critical view here of the effort to place a square peg—the art market—into a round hole—bank oversight. This bill is considerably worse, however. Compounding the confusion is that despite widespread coverage about its attachment to the NDAA, the ENABLERS Act as originally proposed is not in the version of the NDAA that passed the House of Representatives last week (it was added then revised, notwithstanding at least one report to the contrary). What was approved for the moment omits the worst parts of the ENABLERS Act. But the perception that it is a done deal ironically may have the effect of lowering vigilance about its prospects. Even if this bill never becomes law, it has come much closer than it should have.
Topics: Congress, Supreme Court, House of Representatives, AML, Money laundering, FinCEN, Financial Crimes Enforcement Network, Illicit Art and Antiquities Trafficking Protection, suspicious activity reports, Bank Secrecy Act, 31 U.S.C. § 5312(a), National Defense Authorization Act, Treasury Department, ENABLERS Act, NDAA, art market regulation, Tom Malinowski, dealers in antiquities, JOHN HENRY WIGMORE, Berd v. Lovelace, Federal Rules of Evidence, Panama Papers, International Consortium Investigative Journalists, Offshore Leaks database, English Chancery Court, Blackburn v. Crawfords Lessee, Pandora Papers
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
A quirk of parliamentary procedure is that any bill in Congress exists only for so long as that particular Congress is in session. This week, the 114th Congress took its seats, meaning that any bill not passed by both the House of Representatives and the Senate, and signed by the President, is a dead letter. This is the fate of many, many bills—indeed most.
Topics: Legislation, Resale Royalties, Chuck Close, Moral Rights, Nazi-looted art, Foreign Sovereign Immunities Act, 28 U.S. § 1605, Art Law Day, 114th Congress, 22 U.S.C. § 2459, City of Amsterdam, Rep. Jerrold Nadler (D-NY), FSIA, expropriation exception”, droit de suite, IFSA, Foreign Sovereign Immunities, Senate, House of Representatives, Immunity from Seizure Act, President, Foreign Cultural Exchange Jurisdictional Immunity
The House of Representatives approved the Foreign Cultural Exchange Jurisdictional Immunity Clarification Act on March 19, 2012, to remove the display of a work of art in the United States as basis to sue a foreign sovereign here. The law touches on important distinctions between immunity from suit—when a party cannot be sued at all—from immunity from seizure—when a particular object or asset cannot be seized.
Topics: Legislation, 22 USC 2459, Immunity from Seizure, FSIA, Restitution, Senate Bill 2212, World War II, Foreign Sovereign Immunities, Portrait of Waly, House of Representatives, Immunity from Suit, Foreign Cultural Exchange Jurisdictional Immunity, State Department