Reported by Matthew Erskine

The “Center for Art Law Report on Anti-Money Laundering and Art” is an enlightening and comprehensive guide that explores the practices of Anti-Money Laundering (AML) in the art sector across EU member states and the UK, following the enforcement of the EU’s 5th AML Directive in 2018. This Directive brought the art world under closer scrutiny by EU’s AML regulations, particularly due to the increasing association of art financing with terrorist activities.

Here are key aspects of the U.S. Art AML Regulations:

1. Scope of Regulation: The AML Act of 2020 includes provisions for individuals “engaged in the trade of antiquities.” This encompasses advisors, consultants, and anyone involved in the business of selling antiquities. However, the exact definition of institutions or individuals to be included under these regulations is still being finalized.

2. Rulemaking and Implementation: The responsibility for determining the scope of rulemaking lies with the U.S. Treasury, in conjunction with the FBI, Attorney General, and Homeland Security. Factors such as business size, type, and location will be considered when deciding which individuals or businesses should be regulated.

3. Concerns by FinCEN: FinCEN, a part of the U.S. Treasury, has expressed concerns regarding money laundering and terrorist financing in the trade of art and antiquities.

4. Proposed Rulemaking: In 2021, FinCEN published an Advanced Notice of Proposed Rulemaking, seeking feedback on various aspects related to the application of the BSA to the trade of antiquities. However, as of July 2023, no regulations pursuant to the AML Act have been drafted or proposed, and FinCEN has surpassed the deadline set by Congress for taking this action.

5. High Risks/Red Flags: The specific high risks or red flags associated with money laundering in the art market are yet to be clarified in the implementing regulations. However, there is a focus on high-value trades in antiquities and the identification of actual purchasers, as well as agents or intermediaries involved in transactions.

6. Record-Keeping and Reporting Requirements:Current regulations for financial institutions include reporting cash transactions exceeding $10,000 and filing Suspicious Activity Reports (SARs). However, the specific requirements for antiquities dealers and a broader range of participants in the art market are still being finalized.

7. Reporting System: FinCEN provides an e-filing system for SARs, enabling regulated entities to report suspicions of money laundering.

The approach taken by the United States is still in the development stage. Key aspects, such as the scope of regulations, high-risk factors, and specific reporting and record-keeping requirements, are yet to be finalized. This stands in contrast to the more established and detailed frameworks in the European Union, where the 5th Directive has been implemented across various member states, accompanied by specific guidelines for art market participants.

Read full report: https://www.forbes.com/sites/matthewerskine/2023/12/04/the-center-for-art-law-report-on-anti-money-laundering-and-art-review/?sh=7c738293297f