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December 28, 2021

Art and Cultural Artifacts Take Center Stage in AMLA Amendment

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We recently published a piece detailing the Anti-Money Laundering Act 2020 (AMLA 2020) — the most significant addition to United States financial crime regulation since the Patriot Act became law after 9/11. Now, new antiquities regulations are going to be launched by FINCEN in response to AMLA, bringing to light some of the more nefarious aspects of art trading.

Section 6110 of the AMLA amended the Bank Secrecy Act to consider “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” as a financial institution. This amendment will bring additional requirements for merchants to crack down on breakthrough cases of illegal art deals.

Why Now?

As JD Supra reports, there has been concern for many years “that bad actors have been exploiting the secrecy of the antiquities trade to facilitate money laundering and terrorist financing.” Recent headlines — such as the black market dealing of an ancient tablet from Iraq containing one of the world's oldest works of literature — have only raised the alarm more.

With subjective monetary values, antiquities, art, cultural artifacts and other high-value items may be used by money launderers and terrorist financiers to evade detection. Therefore, these merchants are generally considered higher risk. Lately, the art market has been increasingly identified as lacking regulation and ripe for abuse. EverC alone found a 19% increase in the number of illicit or illegal transactions in the art dealers and galleries category from 2020 to 2021. 

New Look Mirrors a Familiar Face

The United Kingdom has set a particularly strong precedent for how regulations should be handled around fraudulent antiquity transactions, having the broadest regulatory scope in Europe, and possibly, the world. British art dealers must follow money laundering regulations that mirror how many governing UK bankers and lawyers follow regulations. Additionally, they “must register with the UK supervising authority (HMRC), conduct Know Your Client (KYC) and Customer Due Diligence (CDD) checks, undertake a risk assessment, adopt an AML policy, file Suspicious Activity Reports with the UK’s National Crime Service, among other duties.”

So, it’s no surprise that many of these due diligence methods have made their way to the U.S. According to the new FINCEN guidelines, there will be an extensive study of the facilitation of money laundering and the financing of terrorism through art trades. In addition, “the notice provides information about illicit finance risks, as well as specific instructions for financial institutions filing Suspicious Activity Reports, related to the trade in antiquities and art.”  

The implementation of the above statue is still being resolved and is set to be finalized by Dec. 27, 2021. 

Setting Yourself Up for Success

While this amendment will set payment organizations up with more safeguards and ensure greater accountability, there’s still more that can be done.

Payment organizations need to:

  • Enact greater due diligence to know who they’re doing business with (KYC / KYB).
  • Incorporate advanced digital technologies and modernize their operations.
  • Use these tools and procedures to identify suspicious merchants who may be engaged in transaction laundering. 

EverC’s MerchantView helps payment organizations deal with merchant-committed money laundering and online fraud, analyzing the digital fingerprint of millions of top-level domains and billions of digital entities to reveal risk patterns and behaviors. Our advanced cyberintelligence technology, based on machine learning and artificial intelligence, enables payment organizations to make informed decisions and identify financial crime more accurately and efficiently.

To stay updated on the latest regulations and learn how they could affect your business, contact us at info@everc.com