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AC Executive Director Tess Davis Explores How AML Regulations Can Keep Financial Crimes out of the Art and Antiquities Markets in Guest Blog

June 28, 2021

Antiquities Coalition Executive Director Tess Davis shared some insight on how anti-money laundering regulations can keep financial crimes out of the art and antiquities markets in a June 28 post on Money Laundering Watch, an AML-focused blog maintained by the Ballard Spahr law firm.

Following a brief introduction by Peter D. Hardy and Alexa L. Levy of Ballard Spahr, Money Laundering Watch’s questions and Davis’s responses are presented in a Q&A format.

In her answers, Davis stresses the importance of applying the Bank Secrecy Act to the art market as a whole—not just the antiquities portion, which became subject to the BSA (and, as such, required to assist the U.S. government in preventing and detecting financial crimes) on January 1, when Congress passed the National Defense Authorization Act for Fiscal Year 2021.

This move, in and of itself, does not implement the regulations the antiquities market desperately needs—but it does set off the chain of events necessary to facilitate such changes, including a “notice and comment” period that will enable all stakeholders to work together to create appropriate and effective regulations that clarify remaining variables, such as who will be subject to regulations as an “advisor” or a “consultant” engaging “as a business in the solicitation or the sale of antiquities,” as well as what objects will be defined as “antiquities.”

While voluntary AML programs are the current norm, the step up to concrete regulations is much needed. This is shown to be true by AC’s years of research and by the 2020 Rotenberg report, in which the U.S.’s Senate’s Permanent Subcommittee on Investigations detailed an alleged multimillion-dollar money-laundering scheme by two Russian business tycoons and concluded, as Davis puts it, that “the art market’s exemption from AML laws and regulations gave these billionaire brothers a backdoor into the world’s largest economy.”

Even after regulations are set in place, cooperation and dialogue between financial institutions will be essential.

“Relevant stakeholders—whether banks, insurance companies, conservators, appraisers, et cetera—are often highly specialized,” Davis said. “Most will only glimpse a small fraction of the wider criminal scheme. What constitutes a red flag to one group may not to another, and moreover, it may take seeing the whole picture to know something is amiss.”

The Antiquities Coalition’s Financial Crimes Task Force recommends that the U.S. Government, the financial industry, the international community and the art and antiquities sector work together to combat financial crimes. For more information, check out our Financial Crimes Task Force Report.