FinCEN advance notice of proposed rulemaking regarding the antiquities trade

23 September 2021 | Applicable law: US

The Financial Crimes Enforcement Network (FinCEN), an agency of the US Department of the Treasury, today issued an advance notice of proposed rulemaking to solicit public comment on the implementation of the Anti-Money Laundering Act of 2020 (AMLA) as to the antiquities trade in the US.

The AMLA amends the Bank Secrecy Act of 1970 (BSA), the federal statute largely applicable to the financial industry, to include in the definition of “financial institution” a “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.” Comments as to the application of the BSA to the antiquities trade must be submitted to FinCEN by October 25, 2021. Although this comment period applies only to the antiquities trade, we anticipate that FinCEN will propose similar regulations applicable to the broader art market in 2022 for which there will be a public comment period as well.

Congress’ move to make the BSA applicable to the antiquities trade stemmed from the concern that the trade may be exploited by money launderers and terrorist financiers to evade detection by law enforcement. For the purpose of crafting regulations designed to combat these illegal activities, FinCEN today invited commentary on the following points, among others:

  • What are the roles, responsibilities, and activities of persons engaged in the trade in antiquities, including, but not limited to, advisors, consultants, dealers, agents, intermediaries, or any other person who engages as a business in the solicitation or the sale of antiquities?
  • How are transactions related to the trade in antiquities typically financed and facilitated?
  • Can the antiquities market be broken down to show the percentage of transactions that fall in a given monetary range?
  • What, if any, information does a buyer typically learn about the seller, consigner, or intermediary involved in the sale of antiquities?
  • How do foreign-based participants in the antiquities market operate in the United States?
  • When advisors, consultants, dealers, agents, intermediaries, or others receive payment from overseas accounts, what steps do they take, if any, to determine whether the payment comes from a legitimate source?
  • What are the money laundering, terrorist financing, sanctions, or other illicit financial activities risks associated with the trade in antiquities?
  • Which participants involved in the trade in antiquities are in positions in which they can effectively identify and guard against money laundering, the financing of terrorism, and other illicit financing risks in connection with the transactions they conduct?
  • What, if any, safeguards does the industry currently have in place to protect against business loss and fraud?
  • Should FinCEN establish a monetary threshold for activities involving the trade in antiquities that would subject persons involved in such activities above that threshold to FinCEN’s regulations, but exempt persons whose activities fall below that threshold?
  • Should there be any other exemptions for categories or types of persons engaged in the trade of antiquities beyond the consideration of a monetary threshold?
  • What, if any, difficulties are associated with requiring the disclosure of or otherwise obtaining beneficial ownership information for legal entities engaged in the trade of antiquities, including foreign legal entities that may be outside the scope of current or future US beneficial ownership reporting requirements?

This non-exhaustive list of questions that FinCEN has posed demonstrates the sweeping effect that the new legislation will have on the antiquities trade. Participants in the broader art market should anticipate and prepare for a similar line of inquiry when FinCEN proposes new regulations applicable to them as well. We already know that a US Senate report released on July 29, 2020 concluded that the art market as a whole is an easy and convenient vehicle for international bad actors to evade the requirements of the BSA. Consequently, all art market participants should prepare for similar proposed regulation and an opportunity to comment in the near future.

In related news…

Diana Wierbicki commented to The Art Newspaper on how antiquities dealers in the US should prepare for more regulation of their business activities.

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.


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