AC and Other Industry Leaders Urge Secretary Yellen and FinCEN to Prevent Bad Actors from Exploiting the Art Market
December 8, 2023
The art market continues to be the largest unregulated market in the United States—and arguably the world—leaving it vulnerable to bad actors. Failure to close existing loopholes has allowed criminals to continue evading the law, with serious consequence.
One glaring example of this is evident in the U.S. Government’s efforts to isolate Russia’s economy following the 2022 invasion of Ukraine. Despite concerted efforts to impose sanctions and tighten economic restrictions, Bloomberg reported in February that federal prosecutors are investigating major auction houses regarding Russian oligarchs, the American art market, and potential sanctions evasion. Concerns by the Department of Justice (DOJ) are valid, as a 2020 Senate report showed that individuals associated with the Kremlin had laundered vast sums through top New York auction houses to bypass U.S. sanctions from Russia’s 2014 aggression towards Ukraine. Unfortunately, these vulnerabilities persist, allowing exploitation by criminals and adversaries. Recent findings from the Pandora Papers and federal probes highlight ongoing issues. For instance, the DOJ indicted Nazem Ahmad, a prominent Lebanese collector linked to Hezbollah, for using art and luxury goods to bypass terrorism-related sanctions, enabling transactions of over $160 million in the U.S.
On August 8th, the Antiquities Coalition along with a coalition of allies dedicated to fighting financial crimes, recommended immediate and concrete actions in a letter addressed to Treasury Secretary Janet Yellen and Andrea Gacki, the incoming director of the Financial Crimes Enforcement Network (FinCEN), urging them to close the $30 billion American art market to criminals.
The coalition, which includes organizations such as Transparency International U.S., International Coalition Against Illicit EconomiesJewelers Vigilance Committee, and the Jeweler’s Vigilance Committee, as well as prominent AML experts like John J. Byrne, urges the Treasury, and specifically FinCEN, to prioritize closing the legal and regulatory loopholes that continue to make the art trade and its participants vulnerable to criminal misuse. Steps could include:
- Issuing—and then finalizing—rules for antiquities dealers as required by the AML Act of 2020
- Applying AML/CFT protections to other high-risk American art market participants
- Working with the private sector to strengthen information sharing
- Updating guidance and training for law enforcement to include the unique risks and opportunities presented by the American art market
- Using existing tools, such as targeted recordkeeping and reporting requirements, as well as FinCEN alerts, to better understand and combat threats to the American art market from financial crimes like money laundering, terrorist financing, and sanctions evasion.
To protect our shared history and responsible market actors, we must strengthen rules surrounding art and anti-money laundering (AML), counter-terrorist financing (CFT), and sanctions. In the past year, global conflicts have made these actions more critical than ever. We urge the leadership of FinCEN and the broader Treasury Department to take action to better safeguard our cultural heritage.
Read the full letter here: Bar Criminals from Exploiting the 30 billion dollar American Art Market