“Notice and Comment”: How Industry Can Help Shape the New Anti-Money Laundering Regulations for the Antiquities Market
May 17, 2021
Background
On January 1, 2021, Congress enacted the Anti-Money Laundering Act of 2020 (the “AML Act”) as part of the National Defense Authorization Act (NDAA) for 2021.
The AML Act amends and expands the longstanding Bank Secrecy Act (BSA) in several ways. Most notably, for those involved in the antiquities market, this new BSA amendment will soon apply the BSA’s anti-money laundering (AML) requirements to any “person engaged in the trade of antiquities, including an advisor, consultant, or any other person who engages as a business in the solicitation or the sale of antiquities, subject to regulations prescribed by the [Treasury] Secretary.”1
In essence, the United States’ AML laws will soon apply, in some fashion, to individuals and companies involved in the antiquities market.
If the AML Act was enacted at the beginning of this year, are antiquities market participants already subject to the AML requirements in the BSA?
Not yet. U.S. federal law often comprises two components: the legislation (enacted by Congress) and the regulations, also called rules or requirements (written and carried out by Executive Branch departments and agencies).2 Rules provide more detail for how to comply with the legislation after a public notice and comment process.
Here, Congress has enacted legislation in the form of the AML Act. That legislation, in turn, requires the Treasury Department to draft and issue the new regulations that will apply to the antiquities market.
The AML Act requires the Treasury Department to issue proposed rules within 360 days of January 1, 2021.3 It also specifies that the new requirements on the antiquities market won’t take effect until the “effective date of the final rules issued by the Secretary of the Treasury . . .”4 Final rules cannot be issued without permitting the public to weigh in on any proposed rules during a “notice and comment” period. This means that before the antiquities market can be subject to any rules, the rules must be drafted, made public and open for comment, and revised into final rules–a process that is likely to take several months.
However, financial institutions, as defined under the BSA and already subject to the BSA’s anti-money laundering requirements, should be aware of a March 9, 2021, notice issued by the Financial Crimes Enforcement Network (FinCEN), which is the specific Treasury Department bureau that imposes and carries out the BSA regulations.
The notice, titled “FinCEN Informs Financial Institutions of Efforts Related to Trade in Antiquities and Art,” alerts financial institutions that illicit activity connected with the antiquities market could already be affecting them. It also includes instructions for filing Suspicious Activity Reports (SARs) for transactions relating to art and antiquities.
Organizations that were already subject to BSA requirements before the AML Act was enacted should be sure to review the FinCEN notice.
How can antiquities market participants have a say in the new regulations?
Before federal rules can be finalized, the federal agency that is drafting them must publish the proposed rules and open them to comment by the public, during what is known as a “notice and comment” period. The public can comment on the rules through the Regulations.gov website.
The agency can choose to involve the public before publishing proposed rules, by holding informal conversations with interested people and organizations. It can also publish an “Advanced Notice of Proposed Rulemaking” in the Federal Register, to which interested individuals may respond by submitting comments and recommendations.5
Once the proposed rules are drafted, the agency must publish them as a Notice of Proposed Rule Making (NPRM) in the Federal Register. The public is then encouraged to submit comments via Regulations.gov. Examples of comments on other proposed rules can also be found on Regulations.gov.
What are the proposed regulations likely to say?
The AML Act requires the Treasury Department’s Financial Crimes Enforcement Network (FinCEN), which imposes and carries out the BSA regulations, to coordinate with the FBI, Attorney General, and Homeland Security Investigations (HSI) to consider several factors when drafting its proposed rules. These factors are the best indication of what the regulations will address:
- (A) the appropriate scope for the rulemaking, including determining which persons should be subject to the rulemaking, by size, type of business, domestic or international geographical locations, or otherwise;
- (B) the degree to which the regulations should focus on high-value trade in antiquities, and on the need to identify the actual purchasers of such antiquities, in addition to the agents or intermediaries acting for or on behalf of such purchasers;
- (C) the need, if any, to identify persons who are dealers, advisors, consultants, or any other persons who engage as a business in the trade in antiquities;
- (D) whether thresholds should apply in determining which persons to regulate;
- (E) whether certain exemptions should apply to the regulations; and
- (F) any other matter the Secretary determines appropriate.6
When can the public comment on the proposed regulations?
FinCEN has not yet issued a Notice of Proposed Rulemaking for the antiquities market regulations; it is required to do so within 360 days of January 1, 2021.7
Once it issues the Notice, FinCEN will likely specify a comment period of at least 30-60 days. It may also hold public hearings where people can make statements and submit data.
1 NDAA Sec. 6110(a)(1)(B), to be codified at 31 U.S.C. Section 5312(a)(2)(Y), available at https://www.congress.gov/bill/116th-congress/house-bill/6395/text.
2 “Regulations” and “rules” are typically used interchangeably, as they are in this FAQ. See https://www.federalregister.gov/uploads/2011/01/the_rulemaking_process.pdf note 1.
3 Id. Sec. 6110(b)(1).
4 Id. Sec. 6001(a)(2), emphasis added.
5 See https://www.federalregister.gov/uploads/2011/01/the_rulemaking_process.pdf.
6 NDAA Sec. 6110(b)(2)(A)-(F).
7 Id. Sec. 6110(b)(1).
About the Author: Betsy Feuerstein is an attorney and member of the Antiquities Coalition’s Financial Crimes Task Force. Her practice has focused on international economic sanctions, anti-money laundering, and anti-corruption matters. Ms. Feuerstein earned her J.D. at New York University School of Law, and earned a B.A. in Political Science and Art History from Northwestern University.