FinCEN Releases Notice Related to Trade in Antiquities and Art

Terri Luttrell, CAMS-Audit
March 12, 2021
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Notice provides information about illicit finance risks related to trade in antiquities and art

Many financial institutions, particularly those without an international footprint, are not familiar with these channels of money laundering.

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New AML Act

Act expands scope of BSA programs to include antiquities dealers

In response to a specific section of the new AML Act of 2020, the Financial Crimes Enforcement Network (FinCEN) issued a notice (FIN-2021-NTC2) relating to trade in antiquities and art. The notice provides information about illicit finance risks and specific instructions for Suspicious Activity Report (SAR) filing related to trade in antiquities and art.

Signed into law as part of the National Defense Authorization Act for 2021, the AML Act of 2020 (the Act), seeks to strengthen, modernize, and streamline the existing Bank Secrecy Act (BSA) requirements. One section of the Act expands the scope of BSA programs and SAR filing requirements to include antiquities dealers, which are now within the definition of financial institutions. In addition, the Act requires a study to be performed on art dealers to determine if they should also be brought into the BSA.

Red Flags

Be prepared to make changes to your program

Dealers in art and antiquities have long been part of money laundering typologies on a global scale with illicit movement of funds flowing through these channels. Many financial institutions, particularly those without an international footprint, are not familiar with these channels of money laundering. It is never too early to bump up your knowledge in these areas and prepare for new antiquities (and possibly art) red flags to be required as part of your overall suspicious monitoring program. FinCEN’s notice is intended to assist in preparation and updating of your BSA program in these areas.

The notice stresses that financial institutions should be aware that illicit funds may be flowing through their institutions using antiquities and art. Crimes related to this type of trade may include:

  • Looting or theft
  • Illegal excavation of archaeological items
  • Smuggling
  • Sale of stolen or counterfeit objects

Any of these methods of criminal activity may also be an indicator of money laundering and/or sanctions violations by transnational organized crime networks, international terrorism, or the persecution of individuals or groups by the illegal movement of cultural objects that are an integral part of a country’s heritage, history, and identity.

SAR Filing

How to file a SAR related to these transactions

FinCEN also gives instructions within the notice on SAR filing for crimes related to trade in antiquities and art. FinCEN requests that financial institutions:

  • Reference “FIN-2021-NTC2” in SAR field 2 (Filing Institution Note to FinCEN) and the narrative portion of the SAR to indicate a connection between the suspicious activity being reported and the activities highlighted in this notice
  • Select SAR field 36(z) (Money Laundering - other) as the associated suspicious activity type, and note if the suspicious activity relates to “Antiquities,” “Art,” or both
  • Include in the SAR narrative how the suspicious activity relates to antiquities or art by providing details including:
    • the objects are connected to the suspicious financial transactions and any other related transactions
    • names, identifiers, Internet Protocol (IP) address, and phone numbers of the purchasers or sellers of the property and their intermediaries or agents
    • the volume and dollar amount of the transactions involving the dealer in antiquities or art
    • any beneficial owners of entities involved
    • in the case of stolen art or antiquities, provide a detailed and specific description of the stolen item(s) and indicate whether photographs of the items are available.
    • information about the place(s) where the reported individuals or entities are operating

This is the first of many steps FinCEN must take to satisfy and implement the requirements of the Act, and financial institutions should remain diligent in updating policies, procedures, and processes as regulations and guidance unfolds. Being proactive and informed of the sweeping changes expected within the AML industry, will result in a stronger BSA program ready to face a more modernized and streamlined future.

 

About the Author

Terri Luttrell, CAMS-Audit

Compliance and Engagement Director
Terri Luttrell is a seasoned AML professional and former director and AML/OFAC officer with over 20 years in the banking industry, working both in medium and large community and commercial banks ranging from $2 billion to $330 billion in asset size.

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