Treasury: US Should Apply Anti-Money Laundering and Terrorist Financing Laws to High Risk Actors in the American Art Market
February 7, 2022
Study Warns that the Trade and Its Participants Are Vulnerable to Criminal Misuse
The Antiquities Coalition welcomes a new study from the U.S. Department of Treasury calling for strengthened anti-money laundering (AML) and counter-terrorist financing (CFT) measures for the multi-billion American art market.
While the report only looks at one segment of that broader market—fine art like paintings, drawings, and sculptures, and thus specifically excludes antiquities—it warns over 30 times variations of the well proven fact that such “high-value art and the market in which it is traded can be abused by illicit financial actors.” Featured examples span the globe from Russian oligarchs in Vladimir Putin’s inner circle, to international fugitive Jho Low, and one of Hezbollah’s top donors. The study also makes a number of recommendations to the Treasury Department for fighting back, including applying AML/CFT protections to additional at-risk art market participants.
“As the Treasury Department has again confirmed, legal and regulatory loopholes are allowing our country’s enemies to launder millions, evade sanctions, and even finance terrorism through art,” said Deborah Lehr, Chairman and Founder of the Antiquities Coalition. “Ongoing revelations from the Pandora Papers further demonstrate how bad actors are exploiting these weaknesses, particularly through the misuse of offshore accounts, tax havens, and trusts. U.S. leadership is critical to tackling this threat to our national security, economic integrity, and responsible art market.”
The 35-page Treasury report was published on February 4, having been mandated by Congress in the AML Act of 2020. While antiquities are explicitly excluded from the scope, it does cite the Antiquities Coalition’s Financial Crimes Task Force Report, as well as reinforce many of the latter’s own findings and recommendations. These include calling on the U.S. government to:
- Work with the private sector to strengthen information sharing
- Update guidance and training for law enforcement to include the unique risks and opportunities presented by the art market
- Use FinCEN’s existing tools, such as targeted recordkeeping and reporting requirements, to better understand threats to the art market from financial crimes, and
- Apply AML/CFT requirements to high-risk art market participants.
The American art market remains largely excluded from the U.S. Bank Secrecy Act (BSA), the 1970 statute that still governs AML and CFT efforts in the United States. The 2020 AML Act was the first major update to the BSA in almost twenty years, and among many other things, added antiquities dealers to the list of individuals that must assist the U.S. government in preventing and detecting financial crimes. In addition to expected businesses like banks, the BSA had already applied to sellers of precious metals, stones, jewels, automobiles, planes, and boats, as well as to casinos, real estate professionals, travel agencies, and pawn shops.
The 2020 AML’s Act inclusion of antiquities dealers was just one small part of a wider legislative overhaul, that has left Treasury with enormous tasks before it in the months and even years ahead. Says John Byrne, Chair of the Antiquities Coalition’s Financial Crimes Task Force:
“While we are disappointed that the Treasury Department did not immediately move to put the art world under the Bank Secrecy Act, we obviously recognize that there are a myriad of challenges to address all of the methods through which illicit funds are moved and thus need to be prioritized. The fact that Treasury identified the abuse of art as a clear method to launder funds should be noted in the AML community.”
Read the FCTF Report here.