Shouldn't Art and Antiquities Sellers Be Subject to Anti-Money Laundering/Counter-Terrorist Financing Laws?

Banks, casinos, and high value asset sellers are subject to federal laws that flush out terrorist financiers and money launderers. So why aren't art and antiquities sellers subject to the same statutes?

Terrorists and criminals launder money by hiding dirty cash under the covers of seemingly legitimate business transactions. Money raised from illegal drug or weapons sales, for example, can be washed by purchasing luxury cars, yachts, mansions, or jewels. These newly bought assets either can be sold for cash or used as collateral to secure bank loans, thereby cleaning the cash of its sinful stains.

Dealers and auction houses sell art and antiquities that include high value works worth thousands or millions of dollars. At least one auction house issues loans, according to a report by Bloomberg titled An Auction House Learns the Art of Shadow Banking.

But while art and antiquities sellers are required to file Form 8300like any other business that accepts a $10,000+ payment from a client or customer, they are not subject to the same rigid requirements of anti-money laundering/counter-terrorist financing laws like the Bank Secrecy Act, the Foreign Assets Control Regulations, the Financial Record Keeping and Reporting of Currency and Foreign Transactions law, and the USA PATRIOT Act.

Yet dealers in precious metals, stones, or jewels; sellers of automobile, planes, and boats; real estate professionals; pawnbrokers; travel agencies; and casinos are all regulated the same way that banks, credit unions, securities and commodities brokers, and credit card systems are. Federal law classifies these industries as “financial institutions” under 31 U.S.C. § 5312 and 31 CFR 1010.100(t). Noticeably absent from this list, however, are businesses operating in the cultural property marketplace.

Dealers and auction houses in this marketplace clearly have what the Bank Secrecy Act is looking for, namely “certain reports or records where they have a high degree of usefulness in criminal, tax, or regulatory investigations or proceedings, or in the conduct of intelligence or counterintelligence activities, including analysis, to protect against international terrorism.” 31 U.S. Code § 5311. That is why federal law should require art and antiquities sellers to file Suspicious Activity Reports with the Financial Crimes Enforcement Network (FinCEN).

It's time for the Secretary of the Treasury, under authority of 31 U.S.C. § 5312(a)(2)(Z),to designate art and antiquities dealers and auction houses as businesses “whose cash transactions have a high degree of usefulness in criminal, tax, or regulatory matters,” and therefore subject to the anti-money laundering/ counter-terrorist financing requirements of federal law. This is one of six law enforcement recommendations CHL has prposed to combat transnational cultural heritage trafficking.

Photo credit: Manuel De La Pena / freeimages.com

Text and original photos copyrighted by Cultural Heritage Lawyer, a blog commenting on matters of cultural property law, art law, cultural heritage policy, antiquities trafficking, and museum risk management. Blog url: culturalheritagelawyer.blogspot.com. Any unauthorized reproduction or retransmission of any blog post without the express written consent of CHL is prohibited. CHL is a service of Red Arch Cultural Heritage Law & Policy Research, Inc.

Prosecutors, Detector Dogs, and Laws: 6 Law Enforcement Recommendations to Combat Transnational Cultural Heritage Trafficking

Transnational cultural heritage trafficking thrives on an opaque art and antiquities market. Attractive features of this marketplace include discretion surrounding business transactions, easy creation of shell corporations, the high probability that smuggled imports won't be detected, clever mechanisms to move money, infrequent prosecutions of traffickers, and limited regulatory resources.

Police and prosecutors need additional tools to build capacity, spot contraband, and capture the criminals. Here are six recommendations.

#1  Specialized federal prosecutors

At least two federal prosecutors should be assigned to focus exclusively on cultural heritage trafficking. One might be placed in the U.S. Department of Justice in Washington , DC and another in the criminal division at the U.S. Attorney's Office for the Southern District of New York, the heart of America's art and antiquities marketplace.

Only federal prosecutors have authority to prosecute federal felony crimes like importing goods illegally or falsifying import paperwork, crimes which are typically part of antiquities trafficking.

While there have been several commendable cases where federal authorities have seized contraband antiquities and sent them back to their country of origin--particularly in New York City--few have resulted in criminal convictions. This "seize and send" policy must mature into an "investigate and indict" objective, where authorities hold individuals accountable through convictions and criminal penalties. Otherwise thieves, smugglers, fences, and their accomplices will continue to experience no specific deterrence or general deterrence that the criminal justice system uses to curb criminal conduct.

Already the seizure and forfeiture of cultural property in federal court depends on a U.S. Attorney proving that a criminal statute was violated. So it only makes sense that the individuals who commit the underlying crime should be prosecuted too. Once cultural objects are sent away to their country of origin through the seizure and forfeiture process, there is no case left to prosecute because the primary evidence has been sent away, an outcome that occurred even in a case where investigators suspected terrorist financing.

Without federal prosecutions, U.S. attorneys fail to develop the trial or investigative skills needed to uncover and describe to juries criminal networks and their subtle money trails, clandestine trafficking routes, and shell corporations used to move contraband cultural property into the American marketplace.

Specialized prosecutors would be expected to work together to support Homeland Security Investigations and the FBI, which in turn would sharpen prosecutors' white collar crime skills to help guide investigations, craft search warrants, present cases before grand juries, and try cases in the courtroom. The art and cultural property theft cases successfully handled by the team of former Assistant U.S. Attorney Robert Goldman and former FBI Special Agent Robert Wittman serve as an illustration. Roger Atwood's Stealing History tells some of their stories.

#2  State prosecutions

Matthew Bogdanos, a prosecutor at the New York County District Attorney’s Office, is pioneering efforts to apply state law to cultural property crimes. One example is the conviction he secured in the case of People v. Aaron Freedman. Manager of Subhash Kapoor's Art of the Past gallery in New York City, Freedman pleaded guilty in 2013 to felony conspiracy and five counts of felony criminal possession of stolen property. But we need more state prosecutors focused on these types of crimes.

While federal law has jurisdiction over illegal import cases, state law is best used to prosecute sellers of stolen cultural property. Since 2005, CHL’s author has discussed how district and county attorneys--who generally have lots of experience prosecuting property cases--may rely on state receiving stolen property statutes to target culpable sellers of cultural heritage objects.

Every state has enacted a receiving stolen property statute in some form, and these laws generally prohibit a person from selling, transporting, or receiving stolen property. State receiving stolen property laws are fundamentally similar to the National Stolen Property Act (NSPA), the federal statute that outlaws different forms of theft. But many states' laws give distinct advantages to district and county attorneys, allowing them to more easily hold dirty dealers accountable.

For example, over two-thirds of state laws require lower mental states. Where the NSPA requires proof that a criminal defendant had full knowledge that a cultural object was stolen, most state laws only require proof that the offender should know, had reason to know, had reason to believe, or simply believed that the property in a dealer's possession or offered for sale was stolen or probably stolen. A federal prosecutor would need to prove that a dealer actually knew an object was stolen, but a state prosecutor may simply need to prove that a dealer had reason to believe that an artifact had been stolen, which is a much lower legal burden.

More importantly, almost one quarter of the states have a built-in legal assumption that a dealer in goods is presumed to know an object was stolen when (a) the dealer did not reasonably gather information about whether the good was lawfully sold or delivered to the dealer, (b) acquired the good far below reasonable value, or (c) purchased or sold the good outside the regular course of business. New York Penal Law § 165.55(2) is an apt example: "A … person in the business of buying, selling or otherwise dealing in property who possesses stolen property is presumed to know that such property was stolen if he obtained it without having ascertained by reasonable inquiry that the person from whom he obtained it had a legal right to possess it."

In New York, like in other states, it is no defense that somebody else stole the property or that the property was stolen from out of state. And states, for the most part, don't require the stolen property to be valued at $5,000 or more, in contrast to the federal NSPA statute.

All these legal advantages give district and county prosecutors an edge to hold antiquities and other cultural property dealers accountable when a crime has been committed.

#3  Detector dog research

Detector dogs that could sniff out smuggled cultural heritage objects, particularly archaeological artifacts, certainly would help customs agents at U.S. ports of entry.

Huge numbers of commodities pore across America's borders each day. For customs agents to spot illicit art, antiquities, and collectibles arriving by cargo ship or air freight among the countless illegal drugs, guns, bird feathers, mangos, jellyfishes, seeds, counterfeit NFL jerseys, and the like can be overwhelming. Remember too that their highest priority is intercepting radiological, biological, and other explosives before they can cripple the homeland. That is why cultural property detector dogs could prove useful.

Sniffer dogs already have demonstrated their worth to U.S. Customs and Border Protection agents by detecting pests and illegal agricultural goods. That is why research must be undertaken to see if detector dogs can be trained to identify smuggled antiquities and other cultural objects. Preliminary inquiries by Red Arch in consultation with relevant experts suggests that such a research project is worthwhile.

#4  Recordkeeping laws

When a healthy trade becomes a black market temptation for stolen and smuggled cultural heritage, new recordkeeping laws could assist prosecutors and police. These laws would require dealers, galleries, and auction houses to record the identities and transactions of suppliers and buyers of cultural property while upholding legitimate business privacy interests. See the detailed proposal here.

When pawn shops became magnets for stolen property, states overwhelmingly passed recordkeeping laws to help police as well as crime victims. States similarly passed scrap metal recordkeeping rules when stolen copper and aluminum flooded the marketplace. For banks, the USA Patriot Act enacted another kind of recordkeeping rule called Know Your Customer, which helps identify money launderers, terrorist financiers, and foreign corrupt practices within the financial industry. In like manner, law enforcement should have access to business records that would help uncover perpetrators of cultural heritage trafficking.

#5  Enhanced AML/CTF statutes

To zero in on untraceable shell corporations, laundered money, and terror financing associated with cultural heritage trafficking, existing anti-money laundering and counter-terrorist financing laws (AML/CTF) need to be enhanced to include the cultural property market.

Current statutes are designed to root out criminal exploitation of highly susceptible commercial and financial industries. Yet the marketplace for art, antiquities, fossils, ancient coins, and other cultural property remain absent from this list.

The Financial Action Task Force (FATF), the seminal inter-governmental organization focused on AML/CTF, specifically identifies illicit trafficking of cultural goods, counterfeiting of antiquities, and the illegal trade of antiquities as facilitators of money laundering and terrorist financing. Moreover, the U.S. Department of State's Bureau of International Narcotics and Law Enforcement Affairs Office of Anti-Crime Programs specifically refers to "art dealers" when  discussing AML/CTF  objectives. The Basel Art Trade Guidelines also point out, "Far more serious than shady dealings in a legal gray area, the sector’s shadow economy encompasses issues ranging from looted art, professional counterfeiting and fake certificates to the use of art sales for the purpose of money laundering.

Pawnbrokers, car dealers, dealers in precious metals and jewels, travel agents, and other NBFI's (non-bank financial institutions) are identified by AML/CTF laws as industries where criminals are known to clandestinely move large amounts of money or discreetly convert cash into high value goods. But the art and antiquities marketplace is not included in the Bank Secrecy Act, the USA Patriot Act, and other AML/CTF statutes. This needs to change.

An additional legislative change is needed to expose cultural property smugglers who set up a myriad shell corporations to discreetly hide their business operations. They create untraceable companies that only exist on paper and whose officers remain unknown, or they use layers of shell corporations to transfer cultural contraband through a maze of paper trails to throw off investigators.

One proposal currently wending its way through the U.S. Senate seeks a solution. The Trade Facilitation and Trade Enforcement Act (S. 1269 and similar companion bills) calls on the Department of Homeland Security to assign a single registration number to an importers of record. That way importers can't set up multiple import companies to hide their identities or their trade activities.

[Sidebar: Setting up a separate, companion corporation is not per se illegal. But hiding illegal business transactions in a shell corporation is not. Cases involving "Bactrian Global Enterprises" and Nimbus Import Export are two examples where separate corporations were maintained. Were they for legitimate reasons or not?]

#6  Adding the cultural property market to attorneys’ general consumer protection watch lists

Cultural property crimes impact consumers who may pay substantial amounts for ancient Greek vases, Egyptian sculptures, and similar cultural heritage objects. The objects might be looted, stolen, or smuggled, or they might be fakes. Because cultural property markets contain a number of recently surfaced artifacts without documented collecting histories, or with thinly veiled collecting histories, or with entirely false histories, consumers risk purchasing illegal or fake heritage objects. That is why state attorneys general should instruct their consumer protection divisions to be watchful.

Attorneys general typically enforce laws that protect consumers against deceptive, unfair, unconscionable, and/or unlawful business practices, and they are endowed with civil and criminal legal tools to investigate illegal misconduct by a particular company or by an entire industry.

New York General Business Law § 349(a) is one statutory example that proclaims, "Deceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in this state are hereby declared unlawful." Executive Law § 63(12) gives the Empire State's attorney general power to investigate and issue subpoenas, even in cases where there was no actual intent to deceive. Where representations or omissions may reasonably have misled consumers, the NY attorney general can bring an action on behalf of the affected consumers.

An example of an industry-wide consumer protection investigation is NY Attorney General Eric Schneiderman's recent probe into abuses found within the concert and sports ticket industry. Other investigations might focus instead on a single business. Oftentimes, state attorneys general will partner each other and/or with federal consumer protection agencies to confront systematic problems that are widespread.

So when the National Association of Attorneys General meets this month, its Consumer Protection Committee should add the cultural property market to its watch list.

Photo credits: Pixabay / David Mark, Freeimages.com / Marc Dorsett, Freeimages.com / Joe Zlomec, Freeimages.com / dgood007, Freeimages.com / Bob Smith, Pixabay / Edward Lich

Text copyrighted 2016 by Cultural Heritage Lawyer, a blog commenting on matters of cultural property law, art law, cultural heritage policy, antiquities trafficking, and museum risk management. Blog url: culturalheritagelawyer.blogspot.com. Any unauthorized reproduction or retransmission of any blog post without the express written consent of CHL is prohibited. CHL is a service of Red Arch Cultural Heritage Law & Policy Research, Inc.

"Antiques" from Iraq: Trade Stats Raise Questions

Iraq has been identified as a source of conflict antiquities, which is why the International Council of Museums refreshed its Red List of endangered Iraqi cultural property in June 2014 and why the United Nations Security Council last February unanimously adopted a resolution targeting heritage trafficking in the region as a source of terror funding.

With this in mind, it is surprising that “antiques" ranked as the #4 declared import to the United States from Iraq by value in 2014, the latest date for which complete data is available from the U.S. International Trade Commission (USITC). In fact, there were more antiques imported from Iraq than goods like lambskin leather, dates and figs, fruit juices, and even spices.

Totaling $3,378,296 in general customs value, these antique imports “of an age exceeding 100 years” were outpaced in value only by America’s largest and most predictable import from Iraq, namely crude oil (#1) and non-crude oil (#2), as well as reimports of various articles originally exported from the U.S. (#3).

Importers of record are legally responsible for declaring goods on customs entry forms by supplying information such as proper value, correct country of origin, accurate Harmonized Tariff Schedule (HTS) classification, and complete product description. Of course there are many examples of traffickers who try to skirt their obligations in an effort to smuggle cultural heritage objects into the U.S. illegally, which is why antiques imports from Iraq should be scrutinized.

It is not known how many legal or illegal antiquities importers brought into the U.S. from Iraq last year. What is known is that declared imports of  "antiques" classified under HTS 9706 originated from a war zone where cultural heritage is in jeopardy. What commodities were exactly shipped to American ports of entry and why, in fact, did the bulk of declared HTS 9706 commodities originating from Iraq--$3,330,619 worth--get shipped to New York City remains a mystery, at least for now.

Were these imports deliberately misclassified to plausibly conceal illegally dug-up ancient tablets, foundation cones, sculptures, and more? Possibly. Or did a legal trade in vintage trays and antique coffee pots actually spike for some reason because of the conflict? Customs officials should find out for certain, particularly given the identified threat posed to archaeological site looting and museum and storehouse theft as a result of the unrest in Iraq.

There is another interesting observation. Among the 37 kinds of commodities imported into the U.S. from Iraq in 2014, antiques, together with with three other types of goods categorized under the broad import category of HTS 97 Works of Art, Collectors’ Pieces and Antiques, exceeded all other imports by value of primary Iraqi origin, except oil. The declared value of the HTS 97 commodities together totaled $3,554,595. So customs officials should also find out what goods importers actually classified as collections and collectors’ pieces of historical, archaeological, or numismatic interest under HTS 9705; as original sculptures and statuary under HTS 9703; and as paintings under HTS 9701.

One armed group operating in both Iraq and Syria is the terror organization ISIS, which reportedly has exploited cultural property as an important revenue stream. Suspiciously, the #1 U.S. category of imports by value from Syria in 2014 was “Antiques.” And now USITC trade data show that American imports from Iraq unveil further red flags.

Until the fighting subsides, and until customs officials learn more about the unanswered questions swirling around American imports of Iraqi cultural heritage goods, collectors would be well-advised not to buy heritage material from the region, or at least exercise rigorous due diligence when buying, in order to steer clear of acquiring potential ISIS loot.

Photo credit: Sam LeVan

Copyright notice: Although the data presented here is sourced from publicly available information, it is an original work of authorship that has been carefully selected, coordinated, arranged, and analyzed so that it is an original work of authorship subject to copyright protection as a compilation and/or a derivative work by CHL. The publication, retransmission, or broadcast of this compiled data is strictly prohibited without CHL's express consent.

Text copyrighted 2016 by Cultural Heritage Lawyer, a blog commenting on matters of cultural property law, art law, cultural heritage policy, antiquities trafficking, and museum risk management. Blog url: culturalheritagelawyer.blogspot.com. Any unauthorized reproduction or retransmission of any blog post without the express written consent of CHL is prohibited. CHL is a service of Red Arch Cultural Heritage Law & Policy Research, Inc.

"Antiques" from Syria: U.S. Cultural Property Import Stats Raise Suspicion

Imports of Syrian goods into the United States have fallen dramatically since war broke out in the Mideast nation in 2011 and since the White House expanded the Syria Sanctions Program. Yet, despite the decline in U.S. imports from Syria, there are now disquieting trade statistics from 2014--the most recent complete data available--that should stir the attention of customs officials, police, and policymakers concerned about looted archaeology, stolen mosaics, and illicitly excavated coins trafficked illegally into the U.S.

Overall, America imported about $429.3 million worth of declared goods from Syria in 2010. Last year, that total collapsed to roughly $12.4 million, a stark decline over the five year period.

Moving in the opposite direction for a period of time were U.S. imports of antiques over 100 years old from Syria, which spiked to $11 million in 2013, a spectacular 133% increase in declared customs value over the previous year. While this figure noticeably fell last year to roughly $4.9 million, the value is similar to the $4.7 million worth of imported antiques recorded in 2012.

The 2014 statistic on antiques is striking because the five year trend line for imports of Syrian antiques failed to fade to black like other U.S. imports of Syrian goods. Instead, as the graphic above demonstrates, antiques constituted a decidedly large slice of the American import pie last year. They accounted for a whopping 40% of the value of all imports of every kind from Syria. In fact, goods classified by importers as Antiques of an Age Exceeding 100 Years under Harmonized Tariff Schedule (HTS) 9706 were the #1 import into the U.S. from Syria. There simply was no other import category that ranked higher in value than antiques, including the #2 import of Syrian anise and cumin seeds and juniper berries classified under HTS 0909.

Notably, every Syrian import classified as an HTS 9706 antique was shipped to the customs district of New York City, the location of one of the largest and most important art and antiquities markets in the world.

What we do not know is what kind of objects these "antiques" were. They may have been at-risk archaeological objects like cuneiform tablets or ancient pottery, deliberately mislabeled by smugglers as being "of an age exceeding 100 years." Customs officials need to find out.

Enforcement officials also need to investigate the #3 American import from Syria in 2014, commodities classified by a code smugglers might use to disguise imports of ancient mosaics. Mosaics, of course, are architectural features made of stone, glass, and/or ceramic. They are spotlighted in the International Council of Museum's Emergency Red List of Syrian cultural property, which is why the import of $1.4 million worth of HTS 6802 goods--11% of the total value of all Syrian imports to the U.S.--is concerning. HTS 6802 is intended to cover worked monumental or building stone; mosaic cubes of natural stone; and artificially colored granules, chippings and powder of natural stone. Yet the code may have been used by traffickers to unlawfully classify 5th century mosaics.

Together,  the declared imports of HTS 9706 and HTS 6802 goods accounted for 51% of the total imports of all Syrian commodities by value in 2014, a striking statistic that simply cannot be overlooked by cultural property watchers focused on spotting trafficked heritage objects that may have illegally piggybacked on legitimate international trade.

Classified by HTS 9705 and amounting to approximately $303,000, collections of historical and archaeological material of Syrian origin was the #5 import by value in 2014. This number was almost a triple increase from the $118,000 imported the year before.

Looking deeper into this trade category, we find that the bulk of HTS 9705 imports from Syria to the United States consisted of Numismatic (Collectors') Coins, Except Gold, classified by HTS 9705.00.0060, having a declared import value of approximately $265,000, which was a quarter of a million dollar jump from the exiguous value of $12,064 declared in 2013. Just like imports of Syrian antiques, every Syrian collectors' coin declared under this HTS category went through the New York City customs district. Were these coins ancient Roman, Byzantine, or Islamic like the ones identified on the Red List? Customs enforcement officials need to find out.

Given the reasonable articulable suspicion that Syrian cultural contraband may be moving to the U.S. through ordinary channels of international trade, police and customs investigators are justified in scrutinizing import paperwork and asking detailed questions of importers and customs brokers that will confirm or dispel this suspicion. To protect cultural heritage in jeopardy, to defend against money laundering, and to protect against terror financing in Syria, it is vital to know exactly what cultural property has been shipped to the U.S. from Syria under the HTS 9705, 9706, and 6802 classifications and why heritage goods makes up such a large portion of imported Syrian commodities.
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Data source: CHL compiled, arranged, and assessed the import figures presented here using raw data collected by the U.S. International Trade Commission and the U.S. Bureau of the Census.

Copyright notice: Although the data presented here is sourced from publicly available information, it is an original work of authorship that has been carefully selected, coordinated, arranged, and analyzed so that it is an original work of authorship subject to copyright protection as a compilation and/or a derivative work by CHL. The publication, retransmission, or broadcast of this compiled data is strictly prohibited without CHL's express consent.


Note: Import data is reported to U.S. Customs and Border Protection by the owner, purchaser, or licensed broker of the consignee. They file the entry documents, not the customs officials who are unable to inspect and document every cargo shipment. So whether cultural commodities are properly classified as HTS 9705 archaeological material or HTS 9706 antiques is the responsibility of the importer. In fact whether imports are falsely classified so that they can be smuggled across the border or whether they are mistakenly classified because of an error in judgment is a function of the importing party. The import classification process is a self-reporting system, part of a shared compliance program overseen by U.S. Customs that obliges the trade community to regulate itself and follow federal law. Shared compliance allows the U.S. to competitively engage the world in global commerce. Smugglers, nevertheless, will try to exploit gaps and loopholes.

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Text copyrighted 2015 by Cultural Heritage Lawyer, a blog commenting on matters of cultural property law, art law, cultural heritage policy, antiquities trafficking, and museum risk management. Blog url: culturalheritagelawyer.blogspot.com. Any unauthorized reproduction or retransmission of any blog post without the express written consent of CHL is prohibited. CHL is a service of Red Arch Cultural Heritage Law & Policy Research, Inc.

Culture Under Threat Conference in Cairo: Red Arch Raises Important Questions Posed by U.S. Imports of Art, Collectors' Pieces, and Antiques

Why did the declared value of U.S. general imports of antiques over 100 years old from Syria climb 133% between 2012 and 2013, from approximately $4.7 million to $11 million?

Why did the declared value of U.S. general imports of antiques over 100 years old from Iraq skyrocket 1302% between 2009 and 2013, from $322,564 to $4,523,126?

These were some of the questions posed by Red Arch Cultural Heritage Law & Policy Research at an historic international summit held in Cairo on May 13 and 14.

Antiquities Coalition co-founder and Red Arch board member Peter Herdrich
(far left) stands with delegates and organizers of the Cultural Property Under Threat conference.
Antiquities Coalition Chair Deborah Lehr (7th from right) spearheaded the historic gathering.

Titled Culture Under Threat and cooperatively organized by the Washington, D.C.-based Antiquities Coalition and the Middle East Institute, the conference featured government ministers from ten nations. Together, they signed the Cairo Declaration, a document proposed by Egyptian Minister of Antiquities Mamdouh Eldamaty, calling for:

• the establishment of a high-level task force to coordinate regional and international efforts against cultural heritage trafficking,
• the creation of a public awareness campaign against the black market trade, and
• the formation of an independent center to combat antiquities laundering.

Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Oman, Saudi Arabia, Sudan, and the United Arab Emirates proffered the Declaration in the wake of widespread plunder and destruction of archaeological, historical, and religious treasures located in the Middle East and North Africa (MENA).

“Criminal networks and terrorist groups have systematically looted historic sites and profited from the sales of these antiquities in international black markets,” the government ministers decried. They further denounced the sale of “blood antiquities,” which help fund ISIS and other terror groups.

In light of the extensive cultural heritage looting in the MENA region and because transnational commodities traffickers have been known to penetrate complex trade systems in order to turn contraband into cash, international trade data presented by Red Arch Research sparked important discussions among conference participants. The data highlighting U.S. imports of nondescript antiques from war-torn Syria and Iraq may prompt law enforcement and customs authorities to confirm or dispel any suspicions raised by the numbers.

Additional questions posed by the trade data include:

Why did the declared value of U.S. general imports of archaeological, historical, or ethnographic pieces from Egypt jump 105.5%, from approximately $5.2 million in 2012 to $10.7 million in 2013, which made Egypt the #2 source of such commodities by value behind the United Kingdom at $11.4 million?

Why did the declared value of U.S. general imports of archaeological, historical, or ethnographic goods from Lebanon spike 4,483%, from $6,546 in 2012 to $300,000 in 2013?

Why did the declared value of U.S. general imports of collectors’ coins (excluding gold coins) surge
- 82% from Turkey, from approximately $1.7 million in 2012 to $3 million in 2013?
- 417% from Lebanon, from $54,651 in 2012 to $282,434 in 2013?
- 2,604% from Libya, from $4,793 in 2012 to $129,620 in 2013?

UN Office of Drugs and Crime Regional Representative
Masood Karimipour listens as Red Arch Director Rick St. Hilaire
addresses the Cairo conference delegates.

Smugglers have been known to over-value or under-value invoices to disguise money transfers—a practice called trade based money laundering. Criminals also have been known to create shell import and export companies to hide the origins and transfers of illegally trafficked cultural goods. In past years, the CHL blog has chronicled cases where traffickers surreptitiously described Hindu sculptures as "handicrafts” on customs forms, affixed "Made in Thailand" stickers on ancient Ban Chiang pots to make them appear modern, manipulated the description of a Tyrannosaurus bataar skeleton from Mongolia as a fossil reptile from Great Britain on import paperwork, or falsely declared ancient Egyptian artifacts as “original sculptures and statuary” from Turkey, the UAE, and other nations. These cases illustrate the Basel Art Trade Guidelines (2012) warning that:

In comparison with other trade sectors, the art market faces a higher risk of exposure to dubious trade practices. This is due to the volume of illegal or legally questionable transactions, which is noticeably higher in this sector than in other globally active markets. Far more serious than shady dealings in a legal grey area, the sector’s shadow economy encompasses issues ranging from looted art, professional counterfeiting and fake certificates to the use of art sales for the purpose of money laundering.

Because the legal art and antiquities marketplace nurtures opacity, placing excessive emphasis on discretion over transparency, a black market temptation exists among smugglers, fences, and launderers to hide drops of illegally acquired goods deep within the sea of legitimate commerce. And the sea is vast. Declared American imports of art, collectors’ pieces, and antiques alone totaled over $9 billion in 2013, crowning the U.S. as the top global importer of commodities classified by this customs heading.

Answers are required to the critical questions lurking behind the import statistics: Who is importing the cultural heritage material? Who are the exporters? Exactly what “antiques,” “archaeological pieces,” and “collectors’ coins” are being shipped to the U.S.? From which archaeological sites and through what transshipment countries? And which imports are legal versus illegal? Indeed, uncovering black market trading pipelines, supply chains, and distribution networks navigating within the legitimate stream of commerce should be a key goal of the Cairo conference delegates as well as INTERPOL, the World Customs Organization, dealers and auction houses, and other stakeholders. 
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Invaluable research assistance supplied by Keegan Trace Brooks, JD Candidate, Georgia State University. Data assembled by Red Arch Research from statistics collected by the U.S. Department of Commerce and the U.S. International Trade Commission. Photos courtesy of the Antiquities Coalition.


Copyright note: Although the data presented here is sourced from publicly available information, it has been carefully selected, coordinated, arranged, and analyzed so that it is subject to copyright as a compilation by CHL. The publication, retransmission, or broadcast of this compiled data is strictly prohibited without CHL's express consent.

Text copyrighted 2015 by Cultural Heritage Lawyer. Blog url: culturalheritagelawyer.blogspot.com. Any unauthorized reproduction or retransmission of this post without the express written consent of CHL is prohibited. CHL is a service of Red Arch Cultural Heritage Law & Policy Research, Inc.

U.N. Report: Destruction of Heritage Flagged as Risk Factor Related to Atrocity Crimes

The destruction of objects of cultural or religious heritage is a signature feature of  genocide, crimes against humanity, and war crimes. That is the assessment offered by a recent United Nations report examining, what are collectively called, atrocity crimes.

Published by The Office of the Special Adviser on the Prevention of Genocide, Framework of Analysis for Atrocity Crimes: A Tool for Prevention describes risk factors associated with grave criminal conduct directed toward specific groups, civilians, and legally protected populations.

Several threats to cultural and religious heritage are listed by the report "that point to the likelihood that certain actors are taking steps towards a scenario of mass violence and possibly atrocity crimes." The risk factors include:

• The "[d]estruction or plundering of ... property related to cultural and religious identity;"
• "Attacks against or destruction of ... cultural or religious symbols and property;
• "Signs of patterns of violence against civilian populations, or against members of an identifiable group, their property, livelihoods and cultural or religious symbols;" and
• "Threats or appropriation, seizure, pillaging or intentional destruction or damage of ... property that belong, represent or are part of the cultural, social or religious identity of those protected under international humanitarian law, unless used for military purposes."

The report should prompt collectors of cultural property, who fail to use rigorous due diligence when purchasing objects, to carefully evaluate how their acquisitions of conflict antiquities or wartime looted art contribute to atrocity crimes.

Text copyrighted 2015 by Cultural Heritage Lawyer. Blog url: culturalheritagelawyer.blogspot.com. Any unauthorized reproduction or retransmission of this post without the express written consent of CHL is prohibited. CHL is a project of Red Arch Cultural Heritage Law & Policy Research, Inc.

Arts and Artifacts Indemnity Program for Museum Exhibitions: New Budget Law Sets Higher Limits

The Arts and Artifacts Indemnity Program received a significant boost from lawmakers on Capitol Hill this week, and museums are sure to take note.

Tucked within the 1600 pages of the $1.1 trillion budget bill signed into law on Tuesday is a section that raises the indemnity limits for America's largest art insurance program.

Administered by the National Endowment for the Arts, the Arts and Artifacts Indemnity Program protects temporary museum exhibitions against loss or damage and saves nonprofit cultural institutions $30 million dollars a year in costs they otherwise would have spent on expensive commercial liability policies.

That estimate is given by Ford Bell, president of the American Alliance of Museums, who told senators in May that only $100,000 has ever been paid from the federal treasury over the last four decades of the art insurance program's existence.

Congress originally passed the indemnity law in 1975 to cover foreign art on loan to American museums. The statute was expanded in 2007 to cover domestic artworks as well. The law's text is codified at 20 U.S.C. Chapter 26A and 45 C.F.R. Part 1160.

The newly enacted Consolidated and Further Continuing Appropriations Act of 2015 increases the aggregate of loss or damage to art or artifacts from $10 billion to $15 billion for international exhibitions and from $5 billion to $7.5 billion for domestic exhibitions. Coverage for a single international exhibition, meanwhile, goes from $1.2 billion to $1.8 billion. The indemnity limit for a single domestic exhibition rises from $750 million to $1 billion.

The new indemnity limits reflect the higher prices that have been paid in recent years for objects sold on the fine arts and antiquities marketplaces.

Photo credit: Anna Hunter

Text copyrighted 2014 by Cultural Heritage Lawyer. Blog url: culturalheritagelawyer.blogspot.com. Any unauthorized reproduction or retransmission of this post without the express written consent of CHL is prohibited. CHL is a service of Red Arch Cultural Heritage Law & Policy Research, Inc.

Conflict and the Heritage Trade: Rise in U.S. Imports of Middle East "Antiques" and "Collectors' Pieces" Raises Questions

American imports of art, collections and collectors' pieces, and antiques from Egypt, Iraq, Lebanon, Syria, and Turkey increased sharply between 2011 and 2013, prompting questions about whether trafficked heritage has piggybacked onto the mainstream marketplace.

War, mass looting, and other grave threats to heritage greatly expand the risk that smuggled cultural contraband will slide into the stream of international commerce undetected. Because art and antiquities transactions often lack transparency or fail to undergo rigorous due diligence, examining published trade data is one way to potentially spot trafficked cultural material hiding under the cover of everyday imports.

One region that has witnessed grave threats to cultural heritage is the Middle East. The intelligence community and the academic community both report that antiquities trafficking has generated revenue for the so-called Islamic State of Iraq and Syria (ISIS). More investigation needs to be conducted to measure the scope of the terror group's earnings activity, but the American Schools of Oriental Research and others have confirmed that archaeological site looting has been a wellspring for pillaged artifacts spilling out of Syria and Iraq, a result of both Syria's civil war and ISIS' sprawl. Spoils from the region reportedly have transited through the neighboring countries of Lebanon and Turkey. And in nearby Egypt, the country has suffered its own cultural heritage crisis amid unrest, prompting the nation to petition for an agreement with the United States that would help protect ancient archaeological and ethnological materials in jeopardy.

Given the cultural heritage emergency that has erupted in the Middle East, U.S. International Trade Commission figures documenting an upsurge in imports of Harmonized Tariff Schedule 97 goods from Egypt, Iraq, Lebanon, Syria, and Turkey flag concerns about whether conflict antiquities have entered America's stream of commerce. HTS 97 is the customs classification for works of art, collectors' pieces and antiques.

Total American imports of HTS 97 goods from the five countries rapidly escalated from $51.1 million in 2011 to $95.2 million in 2013--an astonishing 86% rise. The across-the-board spike can be gleaned from the table below, which displays hefty individual percentage increases of cultural imports from each of the five countries.

HTS - 97: WORKS OF ART, COLLECTORS' PIECES AND ANTIQUES
Customs Value

U.S. Imports for Consumption

Country	2011	2012	2013	Percent Change 2012 - 2013
	In Actual Dollars
Turkey	22,778,794	24,799,487	44,715,936	80.3%
Egypt	19,546,035	20,201,597	31,383,502	55.4%
Syria	4,553,364	4,759,212	11,148,782	134.3%
Iraq	2,871,141	780,688	4,625,057	492.4%
Lebanon	1,382,136	2,120,696	3,351,462	58.0%

Goods declared by importers to be antiques of an age exceeding 100 years (HTS 9706) or collections and collectors' pieces of zoological, botanical, mineralogical, historical, archaeological, numismatic and other interest (HTS 9705) made up large portions of the broader category of HTS 97 imports.*

For example, HTS 97 imports from Egypt totaling $34.1 million in 2013 largely derived from a combination of $19 million worth of objects labeled by importers as antiques over 100 years old and $11.5 million of goods labeled as collections and collectors' pieces.

HTS 97 imports from Syria totaling $11.1 million in 2013 almost entirely came from $11 million worth of goods classified as antiques.

Remarkable too is that 93% of the 2013 total of HTS 97 imports from Iraq, Lebanon, and Syria were declared to be antiques over 100 years old, begging the question of whether nearly $18 million worth of great grandmothers' rocking chairs and similar items were shipped to America or whether the imports may have been ancient archaeological artifacts misclassified as "antiques."

The table below illustrates, among other information, that commodities declared by importers to be antiques from Iraq and Syria rocketed skyward by 672% and 133%, respectively, from 2012 to 2013.

HTS - 9706: ANTIQUES OF AN AGE EXCEEDING ONE HUNDRED YEARS

Customs Value

U.S. Imports for Consumption

Country	2011	2012	2013	Percent Change 2012 - 2013
	In Actual Dollars
Turkey	15,979,030	17,553,638	19,257,308	9.7%
Egypt	16,793,409	13,817,236	19,043,410	37.8%
Syria	4,141,235	4,714,962	11,000,869	133.3%
Iraq	2,832,384	585,682	4,523,126	672.3%
Lebanon	708,461	1,392,005	2,218,073	59.3%

Declared imports of collections and collectors' pieces of zoological, botanical, mineralogical, historical, archaeological, numismatic and other interest goods, meanwhile, grew from $8.9 million in 2011, to $10.8 million in 2012, and then to $19 million in 2013--the final amount constituting a 113% jump from 2011 through 2013. The table below breaks down the individual numbers that chart this ascent. What kinds of objects actually made up these "collections and collectors' pieces?

HTS - 9705: COLLECTIONS AND COLLECTORS' PIECES OF ZOOLOGICAL, BOTANICAL, MINERALOGICAL, HISTORICAL, ARCHAEOLOGICAL, NUMISMATIC OR OTHER INTEREST
Customs Value
U.S. Imports for Consumption

Country	2011	2012	2013	Percent Change 2012 - 2013
	In Actual Dollars
Egypt	2,375,694	5,746,759	11,518,231	100.4%
Turkey	5,875,218	4,919,196	6,651,262	35.2%
Lebanon	241,345	82,365	597,982	626.0%
Syria	330,129	34,250	117,913	244.3%
Iraq	30,757	8,509	97,931	1,050.9%

Traffickers have imported cultural material into the U.S. in clever ways in the past, surreptitiously labeling Hindu idols as "handicrafts," affixing "Made in Thailand" stickers on ancient Ban Chiang pots to make them appear modern, or manipulating the description of a Tyrannosaurus bataar skeleton from Mongolia on customs documentation. That is why scrutinizing the art, collectors pieces, and antiques that underlie the customs data described above would go far toward confirming or dispelling the suspicion that smuggled ancient artifacts from the Mideast may have been embedded within America's conventional global trade.

Among the questions requiring answers are what kinds of objects were specifically imported, and why did imports of "antiques" and "collectors' pieces" skyrocket in many instances? Were the imports classified properly or improperly? Who were the importers of record, and where did they sell their merchandise? Who were the buyers? What can the customs forms reveal about the commodities' actual countries of origin and their transshipment locations?


Data source: U.S. International Trade Commission Interactive Trade DataWeb (USITC DataWeb), as compiled by the Commission from official data retrieved from the U.S. Bureau of the Census (accessed October 2014).


Copyright note: Although the data presented here is sourced from publicly available information, it has been carefully selected, coordinated, arranged, and analyzed so that it is subject to copyright as a compilation by CHL. The publication, retransmission, or broadcast of this compiled data is strictly prohibited without CHL's express consent.

Photo credit: Svilen Milev
________________

*Import data is reported to U.S. Customs and Border Protection by the owner, purchaser, or licensed broker of the consignee. They file the entry documents, not the customs officials who are unable to inspect and document every cargo shipment. So whether cultural commodities are properly classified as HTS 9705 archaeological material or HTS 9706 antiques is the responsibility of the importer. In fact whether imports are falsely classified so that they can be smuggled across the border or mistakenly classified because of a judgment error is a function of the importing party. The import classification process is a self-reporting system, part of a shared compliance program overseen by U.S. Customs that obliges the trade community to regulate itself and follow federal law. Shared compliance allows the U.S. to competitively engage the world in global commerce. But smugglers will try to exploit the gaps and loopholes.

By Rick St. Hilaire
Text copyrighted 2014 by Cultural Heritage Lawyer. Blog url: culturalheritagelawyer.blogspot.com. Any unauthorized reproduction or retransmission of this post without the express written consent of CHL is prohibited.