On January 1, 2021, the Senate voted to override President Trump’s veto of the massive, $741 billion US National Defense Authorization Act (S.4049 /H.R. 6395) and pass it into law. Among many non-defense-related additions to the bill are anti-money laundering provisions that are specifically directed at the antiquities trade. These amendments to the 1970 Bank Secrecy Act (BSA) will make “antiquities dealers” subject to similar record-keeping and recording requirements as banks, financial institutions, gold and silver bullion, and fine jewelry sellers.
The new law defines an “antiquities dealer” as: “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.” However, it fails to define what an “antiquity” is. Among the possible definitions available under current U.S. law, the term “antique” is already utilized by U.S. Customs meaning over 100 year of age, and the 1983 Cultural Property Implementation Act, which deals with the importation of ancient art into the U.S., covers “objects of archaeological interest” over two hundred and fifty years old that are normally discovered as a result of excavation, and “objects of ethnological interest,” which are the products of a tribal or nonindustrial society. The legislation also does not define the functions of an advisor, consultant,
or person who solicits the sale of antiquities. All these individuals would also be subject to the reporting requirements.
Based upon anti-money laundering regulations currently applied to bullion and diamond dealers, regulations may require intrusive and burdensome reporting for anyone classed as an “antiquities dealer” under these terms. These could include antiques, ethnographic art, and coin businesses with sales of as little as $50,000 per year, despite the fact that in almost all cases, this would duplicate reporting done by banks on the same transactions.
Congress has given the Treasury Department guidelines for what the regulations will define and what the thresholds and limitations will be for antiquities dealers. This period for writing regulations is the best opportunity for U.S. businesses to provide input to the Treasury. Here’s what FINCEN (the Financial Crimes Enforcement Network), a Treasury Department entity, is supposed to consider:
• Having the regulations vary by the size of the business, the size of the transaction being conducted, and whether the transaction takes place in the United States or elsewhere;
• whether the regulations should focus on the high-value trade in antiquities in a different way than lower-value objects;
• whether the antiquities dealer must identify the actual purchaser of an antiquity when the seller or buyer is working through an agent or intermediary;
• the need, if any, to identify trade seller or buyers, such as other dealers, advisors, consultants, or other persons trading in antiquities as a business;
• whether volume or financial thresholds should apply in determining whether an antiquities dealer or a specific transaction should be regulated; and,
• whether certain transactions should be exempted from the regulations.
Since the bill is now passed, the chief opportunity left to the art trade is to ensure that regulations are limited to what is reasonable to halt any criminal activity but which will not hurt legitimate businesses. Unfortunately, the legislation poses the greatest threat to small businesses that serve ordinary American collectors. Large international auction houses can more easily set the rules for both consigners and consumers through contract than small businesses, and the scale of the business and high value of goods sold justifies maintaining staff solely to deal with compliance.
Unfortunately, S.4049 /H.R. 6395 has been signed into law, and antiquities dealers, however they are defined, will have to adapt their business practices to meet its reporting requirements. The only benefit to such regulation, according to Cultural Property News, my source for this column, is that actual data on the antiquities business will go on record, and “perhaps dispel the ridiculous assumptions about its size, scale, and value held by the government, law enforcement, and especially by the media.”
For now, antiquities dealers will need to be diligent in following new reporting requirements (as soon as these are final) regarding buyers and sales, as well as to continue to carefully scrutinize provenance and authenticity in order to avoid trading in illegally sourced objects. “Hopefully, their diligence will result in providing law enforcement with better facts and dispelling false assessments that are, in the end, harmful not only to businesses and collectors but also to museums, which benefit greatly from private donations, and to the public weal.”
For more information on this issue, visit: culturalpropertynews.org/anti-money-laundering-law-goes-after-antiquities-trade/
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