On March 9, 2021, the Financial Crimes Enforcement Network or FinCEN issued a notice to financial institutions informing them of (i) the new measures to the Anti-Money Laundering Act of 2020 (the AML Act) regarding the antiquities and art trade, (ii) potential criminal activity associated with art and antiquities trade (iii) and updates to the SAR filing.

New AMLA-2020 Measures

 The AMLA-2020 passed on January 1,  2021 as part of the National Defense Authorization Act. The AMLA is the first major update to the money laundering laws since the U.S. Patriot Act. The AMLA reforms the money laundering laws under the Bank Secrecy Act or BSA passed in 1970. The BSA acts as a guide on detecting and combating money laundering and on finance-related terrorism.

The recently issued notice amends the definition of financial institutions in the AMLA, under Section 6110(a), to include art and antiquities traders, thereby holding them to the same reporting standards as financial institutions under the BSA.

Generally, financial institutions file a suspicious activity report or SAR. The notice provided specific instructions for art and antiquities traders. Filers must detail how the suspicious activity ties to antiquities and art. The notice recommends filers to include: specific details on how the objects ties to the financial institution, contact information as well as any IP addresses and other identifying information on the purchasers, sellers, and any intermediaries or agents, as well as the cost of the object.

Filing SARs “in conjunction with effective implementation of their other BSA compliance requirements, is crucial to identifying and stopping money laundering and other crimes related to trader in antiquities and art,” the notice reminded.

Illicit activity in the antiquities and arts trade

Much like the drug or arms trade, art and antiquities, too, can be a source of money laundering. This type of illicit trade can is linked to international terrorism, persecution of cultural groups, and criminal networks. Crimes associated with art and antiquities vary and “may include looting or theft, the illicit excavation of archaeological items, smuggling, and the sale of stolen or counterfeit objects.”

According to a 2018 report, the antiquities trade is popular among organized crime groups and terrorist organizations. It is a multibillion-dollar industry; particularly popular in the black market and comes third to drug and arms trade.

Unlike other illicit trades, art and antiquities are sold in legally structured institutions (e.g. museums or private collectors) through the use of middlemen or dealers. Criminals still use deceptive money laundering practices to successfully obtain the payments.

A factor that contributes to antiquities laundering is unidentified and unaccounted for antiquities. Unaccounted for items can easily slip into the hands of dealers as the items in question are not consider “stolen property,” thus, the country in question cannot claim the items as “stolen.” And some criminals illegally excavate and traffic the items making it harder for origin countries to account for their antiquities.

While the illegal antiquities and arts trade has gone unregulated, the AMLA measures are a step in the right direction in combating this illicit market.  A major challenge for persons dealing in art and antiquities is that, unlike banks, they have not previously been subject to anti-money laundering and financial regulations.  Hence, they will have to undergo education and training on the AML requirements and develop and implement AML due diligence internal controls.

Biden administration revokes license

On March 8, the U.S. State Department along with the Treasury Department revoked Dan Gertler’s license. Gertler is an Israeli mining businessman that is allegedly involved in public corruption in the Democratic Republic of Congo. The license revocation is a move to reverse a decision made in the final days of former-President Trump.

This decision came amid pushback from human rights activists in the U.S. and DRC and congressional lawmakers. The Biden Administration revoked his license to reaffirm its stance on anti-corruption efforts. In a press statement by the State Department, they noted that granting Gertler a license is “inconsistent with America’s strong foreign policy interests in combatting corruption around the world, specifically including U.S. efforts to counter corruption and promote stability in the Democratic Republic of the Congo.”

Gertler’s corrupt mining deals

According to the Treasury Department, Gertler made his fortune through obscure and corrupt mining deals. He had ties to former Congolese president, Joseph Kabila, which enabled him to organize these mining oil deals. Through his dealings with Kabila, Gertler was made the middleman for mining sales in Congo thereby requiring companies to go through Gertler to do business. This deal resulted in a loss of $1.36 billion in revenue from mineral sales in the DRC. For more than two decades, Gertler exported diamonds, gold, oil, cobalt, and other minerals.

The U.S.  sanctioned Gertler in late 2017 under the Global Magnitsky Human Rights Accountability Act, a law that allows the U.S. to punish business executives or government officials that violate international human rights.

Trump’s administration secretly revokes license

In 2019, he hired lobbyists with ties to Trump, including Alan Dershowitz that made it easier for him to retrieve his license. On January 15, 2021, five days from the end of the Trump Presidency,  the Department of Treasury granted him a one-year license that would unfreeze money in U.S. banks and authorized him to conduct business through the international banking system. The license revocation strips Gertler of those conditions.

According to New York Times reporting, the then-Treasury Secretary Steven Mnuchin directed officials in the Office of Foreign Asset Control to issue his license, even though some top State Department officials were unaware of this decision would have likely opposed it.

According to a New York Times article, the Treasury Department issued the license in exchange for his assistance in a U.S. national security interest, however, the nature of his aid to the U.S. was not disclosed.