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On September 23, 2021, the Financial Crimes Enforcement Network
(FinCEN) took the first formal step toward writing new rules that
would subject dealers in antiquities to the federal anti-money
laundering laws and regulations. FinCEN’s Advance Notice of Proposed Rulemaking (ANPRM)
solicits information about a range of issues to assist FinCEN in
drafting a proposed rule, including the appropriate scope of the
rulemaking, the types of antiquities industry participants that
should be subject to the rule, and whether certain monetary
thresholds and exemptions may be appropriate.
What Does Section 6110 of the AMLA Require?
Section 6110 of the Anti-Money Laundering Act of 2020 (AMLA)
expanded the list of “financial institutions” under the
Bank Secrecy Act (BSA) to include dealers in antiquities.
Specifically, 31 U.S.C. § 5312(a)(2) was amended by adding
“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, subject to
regulations prescribed by the Secretary[.]” Section 6110 also
requires FinCEN to propose rules no later than December 27,
2021.
Why Are FinCEN and Congress Focusing on Antiquities?
As part of the ANPRM, FinCEN included a discussion of the
potential for money laundering, terrorist financing, and other
illicit financial activity through trade in antiquities, including
certain features that make the antiquities market prone to
exploitation by illicit actors to evade detection by law
enforcement. These features include client confidentiality;
challenges associated with accurately documenting provenance; the
use of intermediaries; and unregulated customer due diligence
practices. FinCEN also flagged the small size, ease of transport,
and subjectivity of prices of antiquities as additional risk
factors.
Notably, in March of 2021, FinCEN issued a notice about its efforts under Section 6110.
The notice included an alert to financial institutions already
subject to BSA obligations (e.g., depository institutions, money
services businesses) about the types of crimes that may be related
to antiquities and art and provided specific SAR-filing
instructions for reports of activity involving antiquities and
art.
Request for Comments
FinCEN is soliciting comments generally relating to the scope of
coverage of the proposed rules, what sorts of risks or mitigants
exist with respect to the antiquities market, and how antiquities
should be defined, including the difference between antiquities and
works of art. Several notable questions include:
- Identify and describe 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. Are there
commonly understood definitions of particular roles within the
industry? Who would be considered within or outside such
definitions? - How should “antiquities” be defined for the purposes
of FinCEN’s regulations? Should jurisdictional or territorial
considerations be taken into account when determining how
antiquities should be defined (e.g., foreign cultural heritage
laws)? - How is an antiquity distinct from a work of art?
- How should “trade of antiquities” be defined for the
purposes of FinCEN’s regulations? Should FinCEN distinguish
between the commercial, for-profit trade of antiquities and
non-commercial, not-for-profit activity? If so, how?
Comments on the ANPRM are due no later than October 25, 2021.
Financial institutions or other industry participants interested in
the BSA/AML reform, related rulemaking, and the impact on their
businesses may contact any of the authors of this Advisory or their
usual Arnold & Porter contact. The firm’s Financial
Services team would be pleased to assist with any questions about
the reform or BSA/AML compliance and enforcement more broadly.
*Ja Hyeon Park contributed to this Advisory. Ms. Park is a
graduate of The George Washington University School of Law and is
employed at Arnold & Porter’s Washington, DC office. Ms.
Park is admitted only in New York. She is not admitted to the
practice of law in Washington, DC.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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