US Congress Decides to Regulate the Art Market
Last week, Congress decided to apply the Bank Secrecy Act to antiquities dealers. The new law, once signed by the President, will require antiquities dealers to adopt anti-money laundering programs to detect illegal practices by consignors and buyers. The bill requires the Treasury Department to write regulations on the specific policies to be implemented by antiquities dealers. Congress supplied the Treasury Department with specific guidelines for the regulations:
- having the regulations vary by the size of the business, the size of the transaction being conducted, and whether the transaction takes place in the United States or elsewhere;
- whether the regulations should focus on the high-value trade in antiquities in a different way than lower-value objects;
- whether the antiquities dealer must identify the actual purchaser of an antiquity when the seller or buyer is working through an agent or intermediary;
- the need, if any, to identify trade seller or buyers, such as other dealers, advisors, consultants, or other persons trading in antiquities as a business;
- whether volume or financial thresholds should apply in determining whether an antiquities dealer or a specific transaction should be regulated; and,
- whether certain transactions should be exempted from the regulations.
In addition, the bill also requires the Treasury Department with the help of the FBI, the Attorney General, and Department of Homeland Security to conduct a study to determine if there is evidence of money laundering in the broader art market. The study must be completed within one year and will be used by the Senate Banking Committee to determine whether the same anti-money laundering provisions being applied to antiquities dealers should apply to the whole art market.
We think the outcome of the study is a foregone conclusion: an alliance of government regulators, class-conscious legislators, and art market critics will seize upon the opportunity to convince the Biden Cabinet to regulate the art business.
We have been working on anti-money landing programs for auction houses and galleries for over twenty years. Many of the international auctioneers and galleries have been regulated in Europe for several years and already have adopted a single international standard for dealing with new clients and for scrutinizing financial transaction. The rest of the market will have to catch-up- next year for antiquities dealers and the following year for the rest of the US art market.
The most difficult aspect of creating a workable anti-money laundering policy is finding the right balance between complying with law and continuing to honor a client’s need for discretion and privacy. Hiring an adviser who has never worked in an art business will almost certainly result in lost clients and frustrated staff.
We have developed several anti-money laundering programs for auctioneers and galleries. Please contact us if we can be of any assistance to you.
The Appraisal Foundation Appoints Michael McCullough
We are pleased to announce that the Appraisal Foundation has appointed Michael McCullough to its Personal Property Resource Panel for 2021.
The Personal Property Resource Panel (PPRP) provides information, advice, and recommendations to the Appraisal Foundation’s Board of Trustees to promote the Appraisal Foundation’s mission to maintain and enhance the public trust in the valuation profession.
Our firm works with appraisers, collectors, art sellers, and insurance companies on the issues surrounding appraisal standards and valuations methods. Art appraisal is a complex and growing field in these times of volatility and uncertainty in the art market, and we hope to provide our clients with more insights into the changes that are likely to come about when the art market rebounds in 2021-2022.
Please let us know if you have any topics that you think we should be writing about, and if we don’t speak with you soon, we wish you a happy holiday and much success in the coming year!
Happy Holidays,
William and Michael