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Anti-money laundering expands to include antiquities and art

Apr 19, 2021

The upcoming year will bring change to the existing Bank Secrecy Act (BSA) of 1970 obligations due to the National Defense Authorization Act for Fiscal Year 2021 (NDAA).  

On March 9, 2021, the Financial Crimes Enforcement Network (FinCEN) issued FinCEN Notice on Antiquities and Art (FIN-2021-NTC2). The three areas mentioned in the notice are:

  • The Anti-Money Laundering Act of 2020 (AML Act), which includes efforts related to the trade in antiquities and art.  (The AML Act was enacted into law as part of the NDAA.)
  • Highlighting of the existing illicit activity related to antiquities and art.
  • Specific instructions for filing Suspicious Activity Reports (SARs) related to suspicious activity involving antiquities and art.

New AML Act measures

The AML Act amends the BSA’s definition of financial institutions to now include persons “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.” 

This means transactions involving the trade in antiquities will become subject to the BSA requirements similar to those which banks and credit unions face. This change may assist in bringing greater transparency to the buyers and sellers involved in the trade of antiquities. 

FinCEN will be working to promulgate implementation of regulations and obligations imposed by Section 6110(a). The Secretary of the Treasury must issue proposed rules to carry out the amendment no later than 360 days after the date of enactment of the NDAA. The amendment will take effect on the effective date of the final rules issued by the Secretary of the Treasury.

Before issuing a proposed rule, the Secretary of the Treasury, acting through the director of FinCEN, in coordination with the Federal Bureau of Investigation, the attorney general and Homeland Security investigations, must consider:

  • Which markets should be subject to regulations (i.e., what persons should be subject to the rule making, by size, type of business, domestic or international geographical locations or otherwise).
  • The degree to which the regulations should focus on high-value trade in antiquities and 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.
  • 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.
  • Whether thresholds should apply in determining which persons to regulate.
  • Whether certain exemptions should apply to the regulations.
  • Any other matter the Secretary determines appropriate.

The definition of financial institutions currently does not include those engaged in the trade of works of art. That may change in the future after the Secretary of the Treasury, in coordination with the director of the Federal Bureau of Investigation, the attorney general and the Secretary of Homeland Security, completes a study regarding the facilitation of money laundering and the financing of terrorism through the trade in works of art. 

This study must be conducted not later than 360 days after the date of the enactment of the NDAA and will include an analysis of:

  • The extent to which the facilitation of money laundering and terrorism financing through the trade in works of art may enter or affect the financial system of the United States, including any qualitative or quantitative data or statistics.
  • An evaluation of which markets, by size, entity type, domestic or international geographical locations or otherwise, should be subject to any regulations.
  • The degree to which the regulations, if any, should focus on high-value trade in works of art and the need to identify the actual purchasers of such works, in addition to the agents or intermediaries acting for or on behalf of such purchasers.
  • 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 works of art.
  • Whether thresholds and definitions should apply in determining which entities, if any, to regulate.
  • An evaluation of whether certain exemptions should apply.
  • Whether information on certain transactions in the trade in works of art has a high degree of usefulness in criminal, tax or regulatory matters.
  • Any other matter the Secretary determines appropriate.

Illicit activity associated with trade in antiquities and art

Be on the lookout for suspicious activity as illicit activity associated with the trade in antiquities and art that may involve your financial institution. According to the notice, this activity may include money laundering and sanctions violations as well as looting or theft, the illicit excavation of archaeological items, smuggling and the sale of stolen or counterfeit objects. Crimes might have been linked to transnational criminal networks, international terrorism and the persecution of individuals or groups on cultural grounds.

SAR filing instructions

You should file a SAR when you discover suspicious activity involving antiquities or art. The notice includes SAR filing instructions that should be referenced when completing SARs for suspicious activity related to antiquities, art or both.

How Wipfli can help

Our team at Wipfli can help your financial institution with BSA and AML issues, including helping you  enhance your BSA policy and procedures to include suspicious activity monitoring of businesses associated with the antiquities and art trade. To learn more about our compliance services and how we can help you, see our web page.

Author(s)

Tracy Bush, CRCM
Senior Manager
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