FinCEN Releases Notice Explaining New AML Act
March 9, 2021
The U.S. Department of the Treasury’s Financial Crimes Enforcement Network issued a notice to financial institutions on March 9, informing them about how the art market will be affected by the Anti-Money Laundering Act of 2020, which was enacted into law with the January 1 passage of the National Defense Authorization Act for Fiscal Year 2021.
The notice reiterates Section 6110(a) of the AML Act, which the Antiquities Coalition explained in a January 1 press release. This measure amends the Bank Secrecy Act’s definition of “financial institution”—which already included banks, casinos, real estate professionals, travel agencies, and pawn shops, as well as sellers of precious metals, stones, jewels, automobiles, planes, and boats—to include antiquities dealers. Once FinCEN finishes implementing regulations, antiquities dealers will have to assist the U.S. government in detecting and preventing financial crimes.
Unfortunately, this expanded definition will not include dealers in other forms of art, as the Antiquities Coalition explained in a January 1 blog post. Instead, as FinCEN mentions in its notice, Section 6110(c) of the AML Act requires the U.S. Department of Treasury and its law enforcement partners to conduct a study on the risks posed by the facilitation of money laundering and terrorist financing through the art market.
The notice also makes other financial institutions aware of how the art market’s illicit activities have outreaching effects.
“Financial institutions with existing BSA obligations, including the reporting of suspicious activity, should be aware that illicit activity associated with the trade in antiquities and art may involve their institutions,” the notice reads. “Crimes relating to antiquities and art may include looting or theft, the illicit excavation of archaeological items, smuggling, and the sale of stolen or counterfeit Crimes relating to antiquities and art also may include money laundering and sanctions violations, and have been linked to transnational criminal networks, international terrorism, and the persecution of individuals or groups on cultural grounds.”
In a footnote for this passage, FinCEN cites numerous research reports and government advisories, including the Rotenberg report released in July 2020 by the U.S. Senate’s Permanent Subcommittee on Investigations and the guidance released by the U.S. Department of the Treasury’s Office of Foreign Assets Control in October 2020.
The report concludes with specific instructions on how financial institutions, such as antiquities dealers, can file Suspicious Activity Reports (SARs) regarding illicit activity in the art market. For more information, download the full notice here.
It is important to note that the mandates of the AML Act are not foolproof, and certain issues remain unaddressed. Until sufficient regulations for antiquities dealers are finalized, and until all dealers in cultural property are subject to the regulations of the Bank Secrecy Act, our mission to advocate for laws that protect art and antiquities from misuse by financial criminals will remain incomplete.
Nevertheless, the AML Act has helped to close several of the art market’s major loopholes. Such major legislative changes were made possible in part by the Antiquities Coalition, whose nonpartisan think tank convened the Financial Crimes Task Force. This diverse group of experts worked to create 44 recommendations for the U.S. government, the U.S. financial industry, the U.S. art and antiquities sector, and the international community. The policies, practices and priorities it released in September 2020—including, but not limited to, a call for Congress to explicitly apply the BSA to all dealers in cultural property—can be implemented to protect the American art market from money laundering, terrorist financing, sanctions violations, tax evasion, fraud, forgery, and related crimes.
For more information about the Financial Crimes Task Force and its recent report, click here.