Life is just about to get tougher for dealers trading in antiquities – not just in Europe, but also in the United States. 

The U.S. antiquities trade had no special reason for concern when the U.S. House of Representatives introduced an Act in March 2019 (HR 2514) to tackle money laundering and terrorist financing. However, by the time the Act was passed at the end of October, it ended up imposing tough new money laundering regulations on dealers in antiquities, taking many by surprise.

The Act, innocently called the ‘ Coordinating Oversight, Upgrading and Innovating Technology, and Examiner Reform Act of 2019’ had already attracted wide, cross-party support. However, a new provision added during the passage of the Act (Section 211), means that, going forward, all those engaged ‘as a business in the solicitation of the sale of antiquities’ will need to comply with the reporting regulations of FinCEN, the U.S. Treasury’s Financial Crimes Enforcement Network. This will involve dealers in a great deal more administration, together with full disclosure of a client’s personal financial details - on all sales over a certain, yet to be specified, threshold. 

The Act still has to be confirmed by the U.S. Senate before it becomes law.

Those who support bringing antiquities dealers into a more regulated money laundering regime argue the trade is being exploited by criminals and extremists linked to terrorism. But opponents claim there’s no evidence to support any connection between the antiquities trade and money laundering. They question why antiquities are being singled out for increased regulation when, as one of the smallest sectors in the art market, public sales of antiquities represent only about 1% of all global art sales.

From the regulator’s standpoint, the Act brings the United States closer in line with European legislation, in particular, with the fifth Anti-Money Laundering Directive , adopted in 2018, and the EU's  Regulation on the Introduction and the Import of Cultural Goods , adopted in 2019. Both EU initiatives place greater responsibility on the dealer to investigate and report on a customer’s source of finances - for all transactions over a threshold of €10,000. They also introduce more extensive due diligence arrangements to monitor and report on suspicious transactions involving ‘high risk’ countries.

An influential U.S. advocacy group called ‘ The Antiquities Coalition ’, which has ties with the Egyptian Government and which promotes national ownership of art, has been the driving force behind the adoption of Section 211. The group has been lobbying for this provision alongside other groups with financial interests in anti-money laundering compliance.

The Antiquities Coalition insist this is just a first step. They want the Act to cover all art businesses, not just antiquities.

In response, art dealing industry groups such as the Art Dealers Association of America and the Authentic Tribal Art Dealers Association, whose members will face the higher costs and extra administration, refute their industry has any link to money laundering. No U.S. art dealer, they insist, has been convicted of pure money laundering in works of art.  They also maintain the government is failing to recognise the procedures that are now in place to ensure that art and antiquities dealers comply with money laundering regulations. As each dealer’s banker is already required to comply with FinCEN, why should an extra tier of regulation be imposed on them?

There are other concerns as well.

The threshold is currently undefined, although this figure is due to be determined, along with other definitions, after a further study and analysis has been completed and presented to the House by the Secretary of the Treasury.  Dealers fear it is likely to be set at the same figure of $10,000 proposed in the 2018 Illicit Art and Antiquities Trafficking Prevention Act (HR 5886), an act that is currently stalled in the House. The figure also broadly equates with the figure of €10,000 imposed by the European Union.

Equally concerning to dealers is how the Act will define what constitutes an ‘antiquity’. There are fears it could end up applying to any item older than 100 years – which means any object made before 1919.

So, will bringing the antiquities trade into the same anti-money laundering regime as banks, bullion and casinos make any difference? Is this a sledgehammer to crack a very small nut?

There’s no doubt - in theory - the wider art market can be attractive to money launderers (an industry that’s estimated to account annually for 2%-5% of global GDP), not least because regulation and transparency are weaker in the art world than in other ‘commodity’ market. 

But hard evidence that confirms antiquities are being used for money laundering is simply not available. Also, the financial value placed on antiquities is usually lower than other art commodities. Which is perhaps why many of this Act’s critics fear that antiquities have been included more on the basis of a theory rather than on hard evidence.

However, it’s the impact this Act may have on slowing the trafficking of looted art where this new legislation could make a real difference. 

A recent impact assessment commissioned by the EU Commission (referenced in the EU's resolution on cross-border restitution claims , dated January 2019) stated that ‘80%-90% of global antiquities sales are of goods of illicit origin’.  These figures underline the urgency of the problem and illustrate why governments must step forward and impose stricter regulatory regimes in order to halt this massive trade in stolen artefacts. Under this new Act, looted artefacts presented for sale in the U.S. will become subject to the same strict rules of financial disclosure imposed to stamp out money laundering. 

On the face of it, it might appear like a sledgehammer. But if it does go some way to help crack trafficking in looted antiquities, many will welcome it.  Dealers will learn to adapt by dealing only in foreign artefacts with legitimate ownership and export documentation. 

Photo: Flag of the United States House of Representatives

Courtesy of Wikimedia Commons