"No invoices? Cool." Art, Artifacts, and Money Laundering

A look at cases involving art, artifacts, and money laundering helps explain why art and antiquities dealers should be included in anti-money laundering laws.

Money laundering transforms criminals' ill-gotten gains into usable cash or commodities. It also mitigates the risk and anxiety of getting caught. "You don't have to worry about it," an art gallery owner and money launderer confidently assured a potential client.

Pretending to be a narcotics trafficker who needed to launder dirty cash, an undercover agent asked the gallery operator if the artworks she wanted to buy could be "in somebody else's name to where if [the undercover] were to ever have to sell it, that [other] person can sell it." The gallery owner explained, "We can do it any way, any way you want." "It doesn't have to be, it doesn't have to be in anybody's name," he said, "It can be in anyone's name you want."

The prosecution of the gallery owner is among a sample of court cases described below that offer a window into the world of art, artifacts, and money laundering.

Why is knowing about money laundering in the sale of art and antiquities important?

Industries that deal with high cash value transactions are the first lines of defense against money laundering. Banks, life insurers, casinos, precious metal dealers, automobile sellers, travel agencies, and other sectors are best positioned to become aware of unusual financial transactions early. That's the reason why the Bank Secrecy Act (BSA) directs certain of these businesses to file Suspicious Activity Reports (SARs) with the U.S. Treasury's Financial Crimes Enforcement Network (FinCen) and requires designated sectors to maintain risk-based anti-money laundering (AML) programs.

Art and antiquities dealers do not fall under the BSA's directives, yet they are susceptible to money laundering. Like other trades and businesses, they are required to file Form 8300 when they receive more than $10,000 in cash, cashier's checks, bank drafts, traveler's checks, or money orders either from a single or several related transactions. But they are not part of the BSA's reporting, recordkeeping, and anti-money laundering program requirements even though they sometimes receive large amounts of cash for high value goods.

In its National Money Laundering and Terrorist Financing Risk Assessment (2013) report, the Financial Action Task Force (FATF) expressly called attention to the illegal trading of antiquities as a predicate crime of money laundering. FATF, in fact, specifically flagged art and antique dealers as a commercial sector that must "build[] a list of the [money laundering/terrorist financing] vulnerabilities that can be exploited." They additionally need to assess "the adequacy of their [anti-money laundering/counter-financing of terrorism] controls."

Both FATF's report and the Basel Art Trade Guidelines' (2012) conclusion that "the art market faces a higher risk of exposure to dubious trade practices" is why CHL in 2014 called for taking a fresh look at federal AML laws and why CHL later listed such improvements as one of the top six law enforcement recommendations to combat transnational cultural heritage trafficking.

Congress made initial progress on this topic last year when Rep. Luke Messer (R-IN-6) introduced the Illicit Art and Antiquities Trafficking Prevention Act (H.R. 5886) in the U.S. House of Representatives. The bill sought the addition of "dealers in art or antiquities" to the BSA. Although the legislation sat idle in 2018, it could be presented to lawmakers again in 2019. In the meantime, the nonprofit Antiquities Coalition has started to focus vital attention to the AML issue.

2018 In Review

Happy New Year! CHL looks forward to beginning its tenth year of blogging.

Thank you readers and subscribers for taking an interest in the issues surrounding cultural property law and heritage preservation policy.

As we begin 2019, let's look back at the five most popular posts from 2018.

1. [VIDEO] "Moxie" Sniffs Out the Scent of Antiquities

2. Rubin v. Iran: Supreme Court Says Persepolis Collection Will Stay at the Oriental Institute

3. How to Secure an Archaeological Site: ASIS Releases New Case Study on Clunia

4. Proposed Bill Enlists Art & Antiquities Dealers in the Fight Against Money Laundering

5. AUSA Calls Baltimore Test Case "A Numismatic Fantasy"

Photo credit: Svilen Miley/freeimages.com
Text and original photos copyrighted 2010-2019 by Cultural Heritage Lawyer Rick St. Hilaire, a blog commenting on matters of cultural property law, art law, art crime, cultural heritage policy, antiquities trafficking, looted, antiquities, smuggled antiquities, illicit antiquities, museum risk management, and archaeology. Any unauthorized reproduction or retransmission without the express written consent of CHL is strictly prohibited. The materials presented on this site are intended for informational purposes only and should not be used as legal advice applicable to the reader’s specific situation. In addition, the provision of this information to the reader in no way constitutes an attorney-client relationship. Blog url: http://culturalheritagelawyer.blogspot.com.

Court Dismisses Dinosaur Forfeiture Case

Missed statute of limitations deadline prompts government to lose cultural property forfeiture case filed in Texas.

The fossilized Tyrannosaurus bataar skull.

A missed deadline has caused federal prosecutors to lose their court case to confiscate a dinosaur skull allegedly pilfered from Mongolia. "[T]he Court finds that the Government’s request for a final order of forfeiture for the Defendant Bataar Skull should be and is hereby DENIED," wrote U.S. District Judge Reed O'Connor in a decision rendered last week. The dismissal in the case of U.S. v. One Fossilized Tyrannosaurus Bataar Skull (17-cv-00106-O) is the second time that the court has quashed the government's forfeiture action.

Expanded Counter Terrorism Network Could Help Antiquities Trafficking Prosecutions

Prosecutors' Counter Terrorism Network could leverage criminal cases against cultural heritage traffickers.

A new project launched this week by the International Association of Prosecutors (IAP) aims to build better connections between counter-terrorism (CT) prosecutors.

The initiative should be welcome news to those few prosecutors worldwide who monitor antiquities trafficking and its links to organized crime, smuggling rings, and terror groups.

Illicit Financial Flows and Cultural Heritage Trafficking

Cultural heritage trafficking and illicit financial flows should be probed by law enforcement.

Cultural heritage trafficking is a serious crime. Like most serious crimes, heritage trafficking is associated with other crimes such as lying on customs forms, falsifying invoices, wire fraud, money laundering, and even genocide.

Now the World Customs Organization has published a report on illicit financial flows (IFFs). Although the report--titled Illicit Financial Flows via Trade Mis-invoicing Study Report 2018--is silent on the topic of IFF's relationship to cultural heritage trafficking, its observations and analyses apply, which is why the association between heritage trafficking and illicit financial flows should be probed by law enforcement authorities.

Baltimore Test Case: Fourth Circuit Rejects Ancient Coin Collectors' Claims

Fourth Circuit Court of Appeals

The United States Court of Appeals for the Fourth Circuit has issued a unanimous decision rejecting the Ancient Coin Collectors Guild's (ACCG) effort to strike down U.S. import controls that protect ancient coins from transnational looting and trafficking.

"Having already received two hearty bites at the proverbial apple, .... we are satisfied to reject each of the Guild’s contentions on appeal," wrote the appellate court in the case of U.S. v. Three Knife-Shaped Coins; 7 Cypriot Coins; 5 Other Chinese Coins.

Preemptive Rulings Sought in Moon Dust and Bronze Horse Cases

Note reportedly written by Neil Armstrong.
Source: court papers filed in Cicco v. NASA

“To Laura Ann Murray – Best of Luck – Neil Armstrong Apollo 11.” This message accompanied a vial of moon dust that Laura Cicco (neé Murray) received from her mother when she was about ten years old. The first man to set foot on the moon scribbled the note on the back of a business card carried by Cicco's father, who was friends with Armstrong.

These are some of the claims Cicco makes in a declaratory judgment (DJ) pleading her lawyer filed in Kansas federal court on June 6.

Importer Restored Ancient Mosaic. FBI Seized It. Now U.S. Attorney Seeks Forfeiture.

Defendant mosaic seized by the FBI that prosecutors say measures
18 ft. x 8 ft. and weighs approximately one ton.

In a recently filed civil forfeiture case involving cultural property, prosecutors in the U.S. Attorney’s Office for the Central District of California say that an importer failed to meet the obligations of 19 U.S.C. §§ 1481 and 1484, which require true and accurate information on invoices and entry documents.

Government lawyers allege in United States v. One Ancient Mosaic (18-CV-04420) that the importer failed to supply an accurate description of the ancient mosaic, listed a false value for the artifact, entered a false country of origin, failed to classify the mosaic under the correct Harmonized Tariff Schedule, and failed to declare the artifact as an antiquity. Simply put, prosecutors say that “the defendant mosaic was illegally imported and entered into the United States in violation of United States law.”

Proposed Bill Enlists Art & Antiquities Dealers in the Fight Against Money Laundering

The U.S. House of Representatives will consider a bill that adds art and antiquities dealers to the Bank Secrecy Act (BSA). Introduced last Friday by Representative Luke Messer (R-IN-6), H.R. 5886 would aid law enforcement's effort to uncover money laundering and terrorist financing schemes.

Titled the "Illicit Art and Antiquities Trafficking Prevention Act," the bill replies "yes" to the question, Shouldn't Art and Antiquities Sellers Be Subject to Anti-Money Laundering/Counter-Terrorist Financing Laws?, and it satisfies one of the six proposed recommendations to combat cultural heritage crime.

America's anti-money laundering and counter-terrorist finance laws (AML/CTF) such as the BSA generally require luxury and cash-intensive industries to satisfy recordkeeping requirements to identify and report possible criminal activity. Banks and casinos are just some of the sectors already required to file Suspicious Activity Reports (SARs) with U.S. Treasury's Financial Crimes Enforcement Network (FinCEN). Under the terms of the legislation proposed last week, art and antiquities dealers also would be included.

New European AML/CTF Legislation Includes Art Dealers and Flags Cultural Artifacts Transactions

European Parliament

Members of the European Parliament have adopted a legislative resolution endorsing a December 2017 agreement with the European Council that, for the first time, includes art dealers and auction houses in the European Union's anti-money laundering/counter-terrorist financing (AML/CTF) compliance rules.

Directive (EU) 2015/849 is the EU's primary legal weapon to combat money laundering and terrorist financing. It has been updated four times. The Directive regulates designated high-cash sectors (e.g., banks, casinos) to prevent them from being financially co-opted by organized crime groups and terrorists. The legislation approved by the Parliament on April 19 seeks to broaden the Directive by including cultural property dealers on the list of regulated sectors.

Cultural Property Groups Weigh In on China MoU (including how to watch the May 2, 2018 CPAC hearing live)

CLICK HERE TO WATCH CPAC'S PUBLIC HEARING ON MAY 2, 2018 AT 3PM EDT.

The cultural property Memorandum of Understanding (MoU) between the United States and China is up for renewal.

The MoU memorializes the two nations' bilateral agreement--first adopted in 2009 and later renewed in 2014--that imposes American import restrictions on endangered Chinese archaeological objects. These protections are authorized by the Convention on Cultural Property Implementation Act (CPIA), the federal law that gives effect to the 1970 UNESCO Convention on the Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership of Cultural Property.

The MoU renewal under consideration covers artifacts dating from 75,000 B.C. through 907 A.D., as well as monumental and wall art 250+ years old.

AUSA Calls Baltimore Test Case "A Numismatic Fantasy"

AUSA Molissa Farber

"It's not a case about coins that the Guild wants. This is a case about regulations that the Guild doesn't want." That's how Assistant United States Attorney Molissa Farber characterized the Ancient Coin Collectors Guild's (ACCG) latest argument before the Fourth Circuit Court of Appeals in the Baltimore test case.

Both the ACCG and federal government offered oral arguments to the appeals court on March 22, marking the case's ninth year winding through the court system.

Listen to the arguments presented in U.S. v. Three Knife-Shaped Coins et al. here. Attorney Peter Tompa argued for the Guild, and Attorney Farber for the government.

[VIDEO] A First: Police Make Antiquities Trafficking Arrests in Terrorist Financing Case

Police have arrested two men in Barcelona, Spain for their alleged role in financing ISIS terrorism by acquiring and selling blood antiquities.

Georgi Kantchev of The Wall Street Journal reported that "Spanish police are holding two men suspected of trading in antiquities looted by groups linked to Islamic State, the first publicly announced detentions by Western authorities working to dismantle the terrorist group’s trade in plundered art."

The Ministerio del Interior issued a statement explaining that the men, both Spanish nationals and antiquities experts, were detained on crimes of terrorist financing, belonging to a criminal organization, receiving stolen property, smuggling, and falsification of documents.

Video courtesy of Policia Nacional, Ministerio del Interior, Government of Spain.

"The detainees were part of a network based in Catalonia and international branches dedicated to the acquisition and sale of works of historical-archaeological value from territories that were under siege from groups related to the organization, DAESH," the ministry revealed. DAESH is the Arabic acronym for ISIS.

How to Secure an Archaeological Site: ASIS Releases New Case Study on Clunia

Click on the pic above and read the ASIS CRISP Report.

Protecting heritage during times of war is a topic that receives significant attention. Just read about last October's Preserving Cultural Heritage in Times of Conflict conference at Colgate University, or Sam Hardy's recent article about "Curbing the Spoils of War," or Neil Brodie's and Isber Sabrine's new publication titled "The Illegal Excavation and Trade of Syrian Cultural Objects: A View from the Ground."

Make no mistake, this issue deserves a spotlight because violent conflict creates fresh opportunities to sharply increase the trafficking of cultural heritage objects ravaged from archaeological sites.

But what about protecting archaeological sites during times of peace?

Rubin v. Iran: Supreme Court Says Persepolis Collection Will Stay at the Oriental Institute

The University of Chicago no longer is in danger of losing ancient Iranian artifacts following Wednesday's United States Supreme Court decision in the case of Jenny Rubin, et al. v. Islamic Republic of Iran.

The university's Oriental Institute (OI) holds the "Persepolis Collection," which consists of approximately 30,000 archaeological artifacts on loan from the National Museum of Iran since 1937.

The cultural objects became the target of a civil suit after American terrorist victims tried to execute a multi-million dollar court judgment against Iran. When Iran failed to pay, the plaintiffs sought to execute their judgment by trying to acquire the Iranian artifacts at OI and others located at various cultural institutions throughout the United States.

[VIDEO] "Moxie" Sniffs Out the Scent of Antiquities

Moxie is one of the working dogs spearheading the K-9 Artifact Finders project. The program aims to equip customs officers with a new tool to nab heritage traffickers by finding target scents linked to illegally looted artifacts.

The research is sponsored by Red Arch Cultural Heritage Law & Policy Research.

Penn Vet Working Dog Center is conducting the study with the assistance of the Penn Museum and includes the following project experts:

Dr. Cynthia M. Otto, Principal Investigator
Executive Director of the Penn Vet Working Dog Center.

Attorney Ricardo "Rick" St. Hilaire, Project Creator and Co-Investigator
Founder and Executive Director of Red Arch Cultural Heritage Law & Policy Research

Dr. Michael Danti, Principal Consultant
Principal Investigator and Academic Director of ASOR Cultural Heritage Initiatives and a Penn Museum Consulting Scholar

Domenic DiGiovanni, Consultant
US Customs and Border Protection Officer (Ret.) and antiquities specialist, featured in the documentary The Real-Life Indiana Jones. Read his insights about K-9 A.F. here.

Peter Herdrich, Consultant
Chief Executive Officer at Cultural Capital Group, LLC

Dr. David "Lou" Ferland, Consultant
Executive Director of The United States Police Canine Association and retired police chief

Text and original photos copyrighted 2010-2018 by Cultural Heritage Lawyer, a blog commenting on matters of cultural property law, art law, cultural heritage policy, antiquities trafficking, museum risk management, and archaeology. Blog url: culturalheritagelawyer.blogspot.com. Any unauthorized reproduction or retransmission without the express written consent of CHL is strictly prohibited.

Can Canines Sniff Out Smuggled Artifacts? Working Dogs Join Fight to Save Cultural Heritage

Red Arch Cultural Heritage Law & Policy Research and the University of Pennsylvania’s Penn Vet Working Dog Center, in collaboration with the Penn Museum (University of Pennsylvania Museum of Archaeology and Anthropology), have launched the K-9 Artifact Finders research program. The project aims to fight cultural heritage crime with the help of working dogs.

“We must stop the crime of transnational antiquities trafficking,” says CHL's Rick St. Hilaire, founder and executive director of Red Arch Research. “And dogs may be the right law enforcement partner to get the job done,” adds Dr. Lou Ferland, retired police chief and head of The United States Police Canine Association, who serves as an advisor to the K-9 Artifact Finders project.

Supreme Court Hears Rubin v. Iran. Feds Say Taking Cultural Property A "Big Deal." Petitioners Want Justice, Arguing "It's Not About Antiquities."

Can American victims of terrorism seize and sell ancient Persian antiquities located at the University of Chicago to satisfy a court judgment against Iran? That's the question the United States Supreme Court considered on Monday in the case of Rubin v. Islamic Republic of Iran, a case examining the mechanics of the Foreign Sovereign Immunities Act (FSIA).

Foreign countries generally are immune from lawsuits filed in American courts. But the FSIA outlines exceptions to this rule, including a terrorism exception codified at 28 U.S. Code § 1605A. Congress penned this section in 2008 to allow plaintiffs to sue designated state sponsors of terror that caused injury, harm, or death.

Government Watchdog Says Goals Lacking for Key Cultural Heritage Committee; State Department Pledges to Fix Problem

"[W]e found that there was no consensus and no clear delineation of the specific roles and responsibilities of the entities on the CHCC and its working groups." - GAO


The Cultural Heritage Coordinating Committee (CHCC) is "the principal body for coordination and implementation of cultural heritage protection and preservation initiatives across the U.S. government." That's how the U.S. State Department characterized the CHCC at a G-7 cultural ministers summit in March. Yet Congress' independent watchdog, the General Accountability Office (GAO), finds that the CHCC lacks goals and has failed to clarify participants' roles.

The CHCC is the federal interagency committee set up last year when Congress authorized import restrictions on at-risk cultural property from war-torn Syria. Signed into law by the president in May 2016, the bipartisan backed Protect and Preserve International Cultural Property Act suggested the creation of a cultural property coordinating committee, which lawmakers found to be an acceptable alternative after Congress failed to create a cultural property czar.

State Attorneys General Should Address the Scam of Illegal Antiquities in the Marketplace

State attorneys general should address the ballooning scam of criminals using the art and antiquities marketplace to sell faked, forged, looted, stolen, and smuggled cultural property. This hijacking of the trade presents a widespread consumer protection problem that demands a concerted law enforcement response.

War, Antiquities, and Responses: Colgate University Conference on Preserving Cultural Heritage in Times of Conflict

Monuments Men author Robert Edsel speaking at Colgate University.

From the looters shovel to the auction gavel, large scale cultural property theft and destruction occur during times of instability. That is how Dr. Michael Danti framed the discussion for last week's conference titled Preserving Cultural Heritage in Times of Conflict, sponsored by Colgate University and the Penn Museum–Near Eastern Section.

Danti is a classics professor at Colgate, a consulting scholar with the University of Pennsylvania Museum, and an archaeologist with expertise in the destruction of cultural heritage in Iraq and Syria. He described the current wave of cultural property crime from conflict zones as "voracious."

US Announces Intent to Withdraw from UNESCO

The United States will withdraw from the United Nations Educational Scientific and Cultural Organization, (UNESCO), effective December 31, 2018.

Today's announcement comes as no surprise to cultural property watchers. The US Mission to the United Nations said in July that "[t]he United States is currently evaluating the appropriate level of its continued engagement at UNESCO," prompted by the UN cultural agency's decision "to designate the Old City of Hebron and the Tomb of the Patriarchs as part of Palestinian territory and a World Heritage site despite protests by the United States, Israel, and other countries," according to the US Mission.

Nikki Haley, America's ambassador to the UN, remarked this past summer that UNESCO's vote was "tragic." "It undermines the trust that is needed for the Israeli-Palestinian peace process to be successful. And it further discredits an already highly questionable UN agency," she said.

The longstanding tension between the US and UNESCO is described in CHL's 2013 blog post, No Money, No Vote: A Closer Look at the Strained Relationship Between the U.S. and UNESCO. The events it chronicles set the stage for today's notification by the US State Department to UNESCO Director-General Irina Bokova of its intent to set up an American permanent observer mission after officially withdrawing from the UN agency next year.

Penn Vet Working Dog Center Celebrates Five Years of Success

Sunny, a Labrador retriever in training,
with his Penn Vet handler during
a luggage search demonstration

Today marks the fifth anniversary of the Penn Vet Working Dog Center. At a special celebration held this weekend on the campus of the University of Pennsylvania, Penn Vet showcased its dogs to an enthusiastic crowd of guests.

Penn Vet’s successful research is a tribute to the energy and vision of Executive Director Dr. Cynthia Otto and her dedicated team of professionals and volunteers. Their important work has mitigated threats to the homeland and saved lives with the help of trained canines like “Hoke,” “Rookie,” “Zoe,” and “Thunder,” dogs carefully taught to sniff out fire accelerants, explosives, narcotics, and disaster victims.

Red Arch Cultural Heritage Law & Policy Research soon hopes to join Penn Vet to discover whether working dogs can spot antiquities traffickers by intercepting smuggled cultural artifacts at ports of entry.

Learn more about the K-9 Artifact Finders program at www.redarchresearch.org..

Text and original photos copyrighted 2010-2017 by Cultural Heritage Lawyer, a blog commenting on matters of cultural property law, art law, cultural heritage policy, antiquities trafficking, museum risk management, and archaeology. Blog url: culturalheritagelawyer.blogspot.com. Any unauthorized reproduction or retransmission without the express written consent of CHL is strictly prohibited.

Museum Loss Prevention: Apply Rigorous Due Diligence

What due diligence can museums take to protect their collections of artifacts from risks of legal seizure?

Museums routinely and successfully protect their archaeological collections from threats of loss posed by theft, fire, natural disaster, and infrastructure failure. But do they effectively shield these collections from legal confiscation?

Watch CPAC Live on July 19, 2017 at 1PM EDT

The Roman Libyan site of Leptis Magna.

The Cultural Property Advisory Committee (CPAC) meets today to consider a request to erect American import protections on endangered cultural property from Libya.

The meeting will take place today at 1 p.m.  EDT. Viewers can watch live by clicking here.

The May 30 request asks the United States to impose import restrictions on archaeological and ethnological objects objects dating from prehistoric, Greek, Roman, Islamic, and Ottoman times.