As we’ve blogged, high-end artwork can create an ideal vehicle for money laundering. And, as we’ve also blogged, the Permanent Subcommittee on Investigations for the U.S. Senate released in July 2020 a detailed report titled “The Art Industry and U.S. Policies That Undermine Sanctions,” focusing on the nexus between high-end art and U.S. sanctions law violations, potential money laundering schemes and anti-money laundering (“AML”) risks. The Senate report recommends in part that the Bank Secrecy Act (“BSA”) be amended to include art dealers as “financial institutions” subject to AML obligations under the BSA.
Indeed, recent legislation has included a proposal to (i) add to the list of “financial institutions” covered by the BSA “a person trading or acting as an intermediary in the trade of antiquities, including an advisor, consultant or any other person who engages as a business in the solicitation of the sale of antiquities;” and (ii) require a study by the Secretary of the Treasury “on the facilitation of money laundering and terror finance through the trade of works of art or antiquities,” including an evaluation of whether art industry markets should be regulated under the BSA.
This is a “hot” topic. In the latest development in this area, and in what appears to be a response to — or affirmation of – the Senate report, the U.S. Department of the Treasury’s (“Treasury”) Office of Foreign Assets Control (“OFAC”) recently issued a new advisory (the “Advisory”) highlighting the related problem of individuals blocked by OFAC from entering the U.S. financial system trying to evade those restrictions through the commerce of art, and emphasizing sanctions for U.S. persons who engage in prohibited transactions.
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