U.S. financial crime regulations now reach antiquities trade and beyond

Posted on: February 1, 2021 by

A new year has swept in, bringing with it an expansion of U.S. federal anti-corruption / anti-money laundering laws. On 1 January 2021, America’s annual defense budget known as H.R. 6395, the National Defense Authorization Act for Fiscal Year 2021 (NDAA), became law. The wide-reaching and significant reforms included in the NDAA range from corporate ownership disclosures to regulation of the antiquities market, previously described as “the largest unregulated market in the world”, as well as an assessment of whether the U.S. art market should be next in line for regulation.

The NDAA’s inclusion of the Corporate Transparency Act (CTA) promises to demystify ownership of ‘shell companies’ and strengthen national security by requiring disclosure of corporations’ beneficial owners to the U.S. Treasury Department. [1] Such reform appears to be aimed at hampering concealment and laundering of assets in the U.S. by all manner of criminals, from traffickers of humans to traffickers of antiquities. It’s believed the CTA will make “follow[ing] the money” of such criminals a much easier task.

The presence of the Anti-Money Laundering Act of 2020 in the NDAA also means amendments to the Bank Secrecy Act of 1970 (BSA).[2] Among the amendments to the BSA making headlines is its broadened definition of “financial institution” to now include “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”.[3] Those who fall within this (not quite clearly defined) terminology will be obliged to report cash transactions over $10,000 and suspicious activity to regulators.

While some argue that concerns about money laundering within the U.S. antiquities market are overblown, others describe it as a multi-billion dollar industry that funds criminal and terrorist activities and cultural racketeering. The Committee for Cultural Policy, a U.S. non-profit that speaks to arts policy, has been quoted as denouncing a link between financial crime and antiquities, deeming it “not practical to use art to launder money”. Another American non-profit offers the contrasting view: the Antiquities Coalition’s Financial Crimes Task Force Chair John Byrne described the antiquities trade as “an area where clearly organized crime, terrorists, and oligarchs have used cultural artifacts to move illicit funds” for which legislative reform was “long overdue”.

While most involved in the antiquities market assuredly agree that responsible trade practices are key, the NDAA’s reform may still raise a bit of consternation and more than a few queries. Firstly, who falls within the definition of one whose business includes the solicitation or sale of antiquities? Would even a fraction of antiquities sales be enough to trigger compliance requirements? And, for those who must comply, the majority of whom are arguably not trafficking looted objects, how will compliance costs be borne? What shall be the impact on smaller business owners? Are these new obligations too onerous for some to continue to conduct business? Will entrepreneurial service providers be able to sufficiently ease this burden? If so, who will the best providers be? And are legitimate deals likely to be interrupted and ultimately foregone due to loss of anonymity?

Another concern is whether the U.S. art market as a whole will be next in line for regulation. The NDAA provides a 2022 deadline for the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) to assess and report on “the facilitation of money laundering and the financing of terrorism through the trade in works of art”, including the extent of its impact on the U.S. financial system, which art markets should be regulated, and whether exemptions are appropriate.[4] This is in the face of a July 2020 staff report from the Senate Permanent Subcommittee on Investigations that found “a lack of transparency in private art sales” and concluded that the “high-value art” industry should be added to the list of those regulated by the BSA.[5] To stress the importance of the upcoming FinCEN study, it has been described as “an opportunity that responsible actors will ignore at their peril.”

While the EU’s antiquities and art markets are already under financial crime regulations (with far more stringent requirements than those introduced under the NDAA), efforts in the States to regulate both markets and thus remove regulatory loopholes that allow unfettered money laundering and other financial crime have been a long time coming. As reformation of the antiquities trade becomes an implemented reality, there is much anticipation (and perhaps at least some angst) over how regulations will unfold – and how the U.S. art market should ready itself for another incoming tide of change.


[1]H.R. 6395-1217-1238.

[2]H.R. 6395-1174-1176.

[3]H.R. 6395-1174-1175.

[4] H.R. 6395-1175-1176.

[5] United States Senate Permanent Subcommittee on Investigations’ Staff Report, The Art Industry and U.S. Policies That Undermine Sanctions at 147.

Image credit: Jericho (CC BY 3.0) via Wikimedia Commons