Anti-money laundering (AML)
Oct 26 2021 | CINOA

CINOA Submission for the US BSA Money Laundering Consultation

Subject: This ANPRM seeks comment on various issues to assist FinCEN in preparing proposed rules to implement Section 6110(a)(1) of the AML Act.[1] AML Act Section 6110(a)(1) amends the BSA by adding to the BSA’s definition of “financial institution” “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.”

Submission by: CINOA – Confédération Internationale des Négociants en OEuvres d’Art
Date: 25 October 2021

As representatives of the art and antiquities trade, CINOA1 supports effective measures against money laundering and terrorist financing. CINOA is ready to work with US institutions to help provide information and insight into the art market sector and the sector’s business practices. CINOA encourages reasonable policies that do not add disproportionate regulatory burdens, which have the potential to negatively impact businesses in the trade. CINOA’s submission focuses on micro-businesses trading in antiquities.

We understand that FinCEN will be guided by specific parameters in their assessment of the antiquities market sector when making decisions on the legislation. CINOA believes that through further dialogue with all stakeholders, a workable policy using criteria such as risk, cost and effectiveness should be used to determine by whom, when and how the new measures should be carried out.

We call for a proportionate, risk-based approach to AML legislation implementation. The cost of compliance with BSA requirements would represent a significant financial burden as well as threaten the survival of many micro-businesses. To mitigate the damage to the sector, clear risk criteria and a monetary transaction threshold should be established by regulators, otherwise all businesses dealing in antiquities, which are for the most part micro-businesses involved in low risk transactions, would be subject to BSA compliance. Without reducing the scope of the regulation, these micro-businesses consisting on average of two to four individuals, would be required to comply with the same anti-money laundering obligations as a large financial institution.

It is clear that the scope of ‘illicit activity’ involving antiquities has been highly exaggerated by advocates of implementing such controls. Sensationalized headlines about illicit trade abound. However, they are not supported by the data on the trade in general, or specific details of cases of illicit trade. It is important to understand the actual workings of legitimate antiquities market and current established business practices in order to clearly identify suspect or illicit practices. Regulatory choices should be made based on factual economic data and actual evidence of crime. Instead of relying on unfounded information, FinCEN should utilize the work of recognized, independent sources such as the RAND report.

We request that policy makers take the time to sift through the data to base any new regulations on hard facts and figures and understand fully the businesses their policy would directly affect, and how.

As representatives of the art market professionals, we have tried to answer as completely as possible the consultation questions. Our suggestions, criteria, and recommendations for the inclusion of “antiquities” to the Bank Secrecy Act (BSA) are the result of market analysis and discussions with relevant market stakeholders.

2021 10 25 CINOA submission for the USA Bank Secrecy Act