Congress Continues Bipartisan Push to Tackle Financial Crimes in the Art Market

About the Bill: Understanding the Corporate Transparency Action of 2019

H.R. 2513 was introduced in May of this year by Rep. Carolyn B. Maloney (D-NY), with 10 cosponsors, including Rep. Peter King (R-NY).

Its passage garnered broader bipartisan support, with 25 Republicans joining the 224 Democrats who voted “yea.”
The bill was commended by the Trump Administration as representing “important progress in strengthening national security, supporting law enforcement, and clarifying regulatory requirements.”
Despite this vote of confidence, the White House stressed that “certain steps must be taken to improve H.R. 2513 as it moves through the legislative process” in order to align definitions with other regulations, protect small businesses, and improve its proposed disclosure regime.

It is important to remember that H.R. 2513 has 306 sections, and only one deals with art and antiquities, while the bill’s overall purpose is to:

“ensure that persons who form corporations or limited liability companies in the United States disclose the beneficial owners of those corporations or limited liability companies, in order to prevent wrongdoers from exploiting United States corporations and limited liability companies for criminal gain, to assist law enforcement in detecting, preventing, and punishing terrorism, money laundering, and other misconduct involving United States corporations and limited liability companies, and for other purposes.”

The language on art and antiquities was a late addition, included just before the bill left the House.

Before H.R. 2513 passed, Rep. Maxine Waters (D-CA) amended its text to include provisions from the Counter Act of 2019(R. 2514), which had sought to “close significant loopholes that are commonly abused by bad actors”—including the art and antiquities market.
This bill had been introduced in May by Rep. Emmanuel Cleaver (D-MO), and co-sponsored by Rep. Maloney and Rep. Steve Stivers (R-OH), but was discharged by the Committee on Ways and Means earlier this week.

UBS Contemporary Art

What This Bill Will Do for Art and Antiquities

211 of the bill explicitly adds the following to the BSA’s list of financial institutions:

a person trading or acting as an intermediary in the trade of antiquities, including an advisor, consultant or any other person who engages as a business in the solicitation of the sale of antiquities

While this is an important first step, the language inexplicably does not cover art dealers.

Numbers matter: The joint effort to report the extent in which antiquities and art are being used to further money laundering or terrorism financing in the US.

Treasury Department “shall” coordinate with the Attorney General, Federal Bureau of Investigation, and Homeland Security Investigations to study and report on the extent to which antiquities and art are being used to further money laundering or terrorism financing in the US financial system.

That’s another key step, as while the United Nations Office on Drugs and Crime (UNODC) estimates a shocking 2–5% of the global GDP is laundered each year, more research is needed on money laundering via cultural property.

Art Market Provisions Are Still Needed

Unless H.R. 2513 is further amended in the Senate to include art dealers, it will be a major missed opportunity, as antiquities are just one part of a much larger art market.

Moreover, it will force the U.S. government to tackle a difficult question: what is an antiquity?

A wide range of voices—from the Financial Action Task Force (FATF) to the Basel Art Trade Guidelines— have warned that the $67.4 billion global art market* is particularly vulnerable to financial crimes like money laundering, terrorist financing, and fraud, in addition to the risk of unknowingly dealing in stolen property.

Despite this high risk of exposure, they have been exempt from the BSA, which compels “financial institutions” to satisfy record keeping requirements, and identify and report possible criminal activity.
The art market clearly meets the BSA’s definition of a financial institution—a business “whose cash transactions have a high degree of usefulness in criminal… matters.”
And art market actors are increasingly operating more as traditional financial institutions every year, even lending money against pieces (and making millions and even billions in the process).

* Other economists value the art market at $45 billion, depending on which metrics they use.

What’s Next for the Bill:

The Senate received the bill on Wednesday, October 23, read it twice and referred it to the Committee on Banking, Housing, and Urban Affairs.
That Committee is Chaired by Senator Mike Crapo (R-Idaho), with Ranking Member Senator Sherrod Brown (D-Ohio).
The Committee is currently reviewing a competition version of H.R. 2513, the much shorter 1978: Corporate Transparency Act of 2019.

Antiquities Coalition Launches Financial Crimes Task Force to Take Action

In April, we launched our new Financial Crimes Task Force, a multi-stakeholder initiative that unites leaders from the art, legal, and banking sectors.

This diverse group of experts will work together in the coming months to develop concrete recommendations for combating a wide range of crimes, including

money laundering
forgery
fraud
and terrorist financing, via art and antiquities

The task force was announced at the 14th annual international conference of the Association of Certified Anti-Money Laundering Specialists (ACAMS), the world’s largest financial crime prevention community.

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