Anti-Money Laundering Regulations for Dealers in Antiquities, 53021-53024 [2021-20731]
Download as PDF
<![CDATA[
Federal Register / Vol. 86, No. 183 / Friday, September 24, 2021 / Proposed Rules
Department look only at the customer’s
location or also at the location of the
services or infrastructure being
provided?
i. How do U.S. IaaS providers expect
to implement this special measure?
Definitions:
(12) E.O. 13984 defines ‘‘United States
person’’ to mean ‘‘any United States
citizen, lawful permanent resident of
the United States as defined by the
Immigration and Nationality Act, entity
organized under the laws of the United
States or any jurisdiction within the
United States (including foreign
branches), or any person located in the
United States.’’ 10 It also defines ‘‘United
States Infrastructure as a Service
Provider’’ to mean ‘‘any United States
Person that offers any Infrastructure as
a Service Product.’’ 11
a. What should the Department
consider when determining whether a
foreign subsidiary of a parent U.S. IaaS
provider entity would be subject to the
regulations implementing E.O. 13984?
What implications for international
commerce would there be, if any, if
foreign subsidiaries were covered by the
rule?
Overarching Inquiries:
(13) What key differences in industry
makeup, market dynamics, and general
business practices should be taken into
consideration when drafting E.O.
13984’s proposed rule language
compared with similar regulatory
frameworks in other industries (such as
the Financial Crimes Enforcement
Network’s Customer Due Diligence and
311 Special Measure regulations)?
(14) Foreign malicious cyber actors
often are able to acquire and provide
fake names, government documents,
and other identification records, making
it increasingly difficult for IaaS
providers to verify identities in a timely
fashion. Do commenters believe that the
Department should place more
emphasis on ongoing customer-duediligence efforts instead of initial
Account creation requirements? How
might this approach better accomplish
E.O. 13984’s goals to deter foreign
malicious cyber actors’ use of United
States IaaS products, and to assist in the
investigation of transactions involving
foreign malicious cyber actors?
(15) Are there fraud-prevention
regimes—whether regulatory or
technical—used in other industries (e.g.,
finance) that would enable the more
consistent discovery of the use of fake
names, government documents, and
other identification records when
10 E.O.
13984 at 6841.
11 Id.
VerDate Sep<11>2014
16:14 Sep 23, 2021
Jkt 253001
establishing Accounts with U.S. IaaS
providers?
Dated: September 16, 2021.
Trisha B. Anderson,
Deputy Assistant Secretary, Intelligence &
Security, U.S. Department of Commerce.
[FR Doc. 2021–20430 Filed 9–23–21; 8:45 am]
BILLING CODE 3510–20–P
DEPARTMENT OF THE TREASURY
Financial Crimes Enforcement Network
31 CFR Chapter X
RIN 1506–AB50
Anti-Money Laundering Regulations
for Dealers in Antiquities
Financial Crimes Enforcement
Network (FinCEN), Treasury.
ACTION: Advance notice of proposed
rulemaking.
AGENCY:
FinCEN is issuing this
advance notice of proposed rulemaking
(ANPRM) to solicit public comment on
the implementation of Section 6110 of
the Anti-Money Laundering Act of 2020
(the AML Act). AML Act Section 6110
amends the Bank Secrecy Act (BSA) to
include in the 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 [of the Treasury].’’ The AML
Act requires the Secretary of the
Treasury (the Secretary) to issue
proposed rules to carry out that
amendment not later than 360 days after
enactment of the AML Act. This
ANPRM seeks initial public comment
on questions that will assist FinCEN in
preparing the proposed rules.
DATES: Written comments are welcome,
and must be received on or before
October 25, 2021.
ADDRESSES: Comments may be
submitted, identified by Regulatory
Identification Number (RIN) 1506–AB50
by any of the following methods:
Federal E-rulemaking Portal: https://
www.regulations.gov. Follow the
instructions for submitting comments.
Include RIN 1506–AB50 in the
submission. Refer to Docket Number
FINCEN–2021–0006.
Mail: Financial Crimes Enforcement
Network, Policy Division, P.O. Box 39,
Vienna, VA 22183. Include 1506–AB50
in the body of the text. Refer to Docket
Number FINCEN–2021–0006.
Please submit comments by one
method only.
SUMMARY:
PO 00000
Frm 00009
Fmt 4702
Sfmt 4702
53021
FOR FURTHER INFORMATION CONTACT:
FinCEN: The FinCEN Regulatory
Support Section at 1–800–767–2825 or
electronically at https://
www.fincen.gov/contact.
SUPPLEMENTARY INFORMATION:
I. Scope of the ANPRM
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.’’ 2 Section
6110(b)(1) requires the Secretary to
issue proposed rules not later than 360
days after enactment of the AML Act to
carry out that amendment.
II. Background
A. The BSA
Enacted in 1970 and amended most
recently by the AML Act, the BSA aids
in the prevention of money laundering,
terrorism financing, and other illicit
financial activity. The purposes of the
BSA include, among other things,
‘‘requir[ing] certain reports or records
that are highly useful in—(A) criminal,
tax, or regulatory investigations, risk
assessments, or proceedings; or (B)
intelligence or counterintelligence
activities, including analysis, to protect
against terrorism.’’ 3
Congress has authorized the Secretary
to administer the BSA. The Secretary
has delegated to the Director of FinCEN
the authority to implement, administer,
and enforce compliance with the BSA
and associated regulations.4 Pursuant to
this authority, FinCEN is authorized to
impose anti-money laundering (AML)
and countering the financing of
terrorism (CFT) program requirements
for financial institutions. Specifically, to
guard against money laundering and the
financing of terrorism through financial
institutions, the BSA requires financial
institutions to establish AML/CFT
programs that, at a minimum, include:
(1) The development of internal
1 The AML Act was enacted as Division F, Section
6001–6511, of the William M. (Mac) Thornberry
National Defense Authorization Act for Fiscal Year
2021, Public Law 116–283, 134 Stat 3388 (2021).
2 The BSA is codified at 12 U.S.C. 1829b, 12
U.S.C. 1951–1959 and 31 U.S.C. 5311–5314, 5316–
5336. Implementing regulations are codified at 31
CFR Chapter X. Section 6110(a)(1) of the AML Act
amends 31 U.S.C. 5312(a)(2).
3 31 U.S.C. 5311(1).
4 Treasury Order 180–01 (Jan. 14, 2020).
E:\FR\FM\24SEP1.SGM
24SEP1
53022
Federal Register / Vol. 86, No. 183 / Friday, September 24, 2021 / Proposed Rules
policies, procedures, and controls; (2)
the designation of a compliance officer;
(3) an ongoing employee training
program; and (4) an independent audit
function to test programs.5 The BSA
further requires that, when prescribing
minimum standards for AML/CFT
programs, the Secretary shall prescribe
regulations that ‘‘consider the extent to
which the requirements imposed under
[the AML program requirement] are
commensurate with the size, location,
and activities of the financial
institutions to which such regulations
apply.’’ 6 The Secretary shall
additionally take into account certain
factors, such as: (1) Financial
institutions are spending private
compliance funds for a public and
private benefit, including protecting the
United States financial system from
illicit finance risks; (2) the extension of
financial services to the underbanked
and the facilitation of financial
transactions, including remittances,
coming from the United States and
abroad in ways that simultaneously
prevent criminal persons from abusing
formal or informal financial services
networks are key policy goals of the
United States; and (3) effective AML/
CFT programs safeguard national
security and generate significant public
benefits by preventing the flow of illicit
funds in the financial system and by
assisting law enforcement and national
security agencies with the identification
and prosecution of persons attempting
to launder money and undertake other
illicit activity through the financial
system.7
For certain categories of financial
institutions, FinCEN has included
explicit requirements to conduct
customer due diligence and to identify
and verify the identity of beneficial
owners of legal entity customers, subject
to certain exclusions and conditions.8 In
addition, the Secretary is required to
prescribe regulations that require
financial institutions to establish
procedures for account opening that, at
a minimum, include: (1) Verifying the
identity of any person seeking to open
an account, to the extent reasonable and
practicable; (2) maintaining records of
the information used to verify the
person’s identity, including name,
address, and other identifying
information; and (3) consulting lists of
known or suspected terrorists or
terrorist organizations provided to the
5 31
U.S.C. 5318(h).
Patriot Act, Public Law 107–56, 352(c), 115
Stat. 272, 322 (2001) (codified at 31 U.S.C. 5318
note).
7 31 U.S.C. 5318(h)(2)(B).
8 31 CFR 1010.230.
6 USA
VerDate Sep<11>2014
16:14 Sep 23, 2021
Jkt 253001
financial institution by any government
agency to determine whether the person
seeking to open an account appears on
any such list.9
In addition, under 31 U.S.C.
5318(g)(1), the Secretary is authorized to
require financial institutions to report
any suspicious transaction relevant to a
possible violation of law or regulation.
The Secretary is further authorized
under 31 U.S.C. 5313 to require
domestic financial institutions to report
transactions of United States coins,
currency, or other monetary instruments
the Secretary prescribes, in an amount
or circumstances the Secretary
prescribes by regulation.
B. Application of the BSA To Trade in
Antiquities
The BSA defines ‘‘financial
institution’’ to include specific
categories of institutions.10 Section
6110(a)(1) of the AML Act amends 31
U.S.C. 5312(a)(2) to include as a type 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.’’ Section 6110(b)(1) directs
the Secretary to issue proposed rules
implementing this amendment not later
than 360 days after enactment of the
AML Act, i.e., by December 27, 2021.
This amendment to the BSA’s definition
of ‘‘financial institution’’ takes effect on
the effective date of the final rules
issued by the Secretary pursuant to
Section 6110(b)(1).11
Before issuing a proposed rule, the
Secretary (acting through the Director of
FinCEN), in coordination with the
Federal Bureau of Investigation (FBI),
the Attorney General, and Homeland
Security Investigations (HSI), is required
to consider:
(A) The appropriate scope for the
rulemaking, including determining
which persons should be subject to the
rulemaking, by size, type of business,
domestic or international geographical
locations, or otherwise;
(B) the degree to which the
regulations should focus on high-value
trade in antiquities, and on the need to
identify the actual purchasers of such
antiquities, in addition to the agents or
intermediaries acting for or on behalf of
such purchasers;
(C) the need, if any, to identify
persons who are dealers, advisors,
consultants, or any other persons who
9 31
U.S.C. 5318(l).
U.S.C. 5312(a)(2), (c)(1).
11 AML Act Section 6110(a)(2).
10 31
PO 00000
Frm 00010
Fmt 4702
Sfmt 4702
engage as a business in the trade in
antiquities;
(D) whether thresholds should apply
in determining which persons to
regulate;
(E) whether certain exemptions
should apply to the regulations; and
(F) any other matter the Secretary
determines is appropriate.12
FinCEN has engaged with the FBI, the
Department of Justice, HSI, and other
agencies in considering these matters
during the development of this ANPRM,
and welcomes any additional comments
from the law enforcement community
on these specific matters or any other
aspect of the ANRPM.
C. The Potential for Money Laundering,
Terrorist Financing, and Other Illicit
Financial Activity Through Trade in
Antiquities
Certain characteristics of the trade in
antiquities may be exploited by money
launderers and terrorist financiers to
evade detection by law enforcement.
These characteristics include client
confidentiality; varying practices across
the industry in, and challenges
associated with, accurately
documenting provenance; the use of
intermediaries; and unregulated
customer due diligence practices. In
addition, the potentially small size, ease
of transport, and subjectivity of prices of
antiquities, among other things, provide
an opportunity to use these items to
transport value across borders without
reporting to authorities or detection by
customs agents or law enforcement
agencies. Illicit actors may exploit these
or other features of the antiquities trade
to launder funds through the U.S.
financial system.
Terrorist organizations, transnational
criminal networks, and other malign
actors may also seek to exploit
antiquities to transfer value to acquire
new sources of funds, evade detection,
and launder proceeds from their illicit
activities. Some terrorist groups have
generated revenue from permitting or
facilitating the illegal extraction or
trafficking of antiquities in territories
where they operate.13
On March 9, 2021, FinCEN issued a
Notice informing financial institutions
about Section 6110(a) of the AML Act
and explaining that financial
institutions with existing BSA
obligations, including the reporting of
suspicious activity, should be aware
that illicit activity associated with the
12 AML
Act Section 6110(b)(2).
e.g., U.S. House of Representatives,
Committee on Financial Services, Task Force to
Investigate Terrorist Financing, Stopping Terror
Finance: Securing the U.S. Financial Sector,
December 20, 2016, at 10–12.
13 See,
E:\FR\FM\24SEP1.SGM
24SEP1
Federal Register / Vol. 86, No. 183 / Friday, September 24, 2021 / Proposed Rules
trade in antiquities and art may involve
their institutions.14 In the Notice,
FinCEN explained that crimes relating
to antiquities and art may include
looting or theft, the illicit excavation of
archaeological items, smuggling, and the
sale of stolen or counterfeit objects.
They may also include money
laundering and sanctions violations,
and have been linked to transnational
criminal networks, international
terrorism, and the persecution of
individuals or groups on cultural
grounds.
III. Issues for Comment
FinCEN seeks comment from
members of the antiquities industry, law
enforcement, civil society groups, and
the broader public regarding the
potential for money laundering,
financing of terrorism, and other illicit
financial activity in the antiquities
industry; the existence of any safeguards
in the industry to guard against this
potential; the effect that compliance
with BSA requirements could have on
the antiquities industry; what additional
steps may be necessary to protect the
industry from abuse by money
launderers and other malign actors; and
which actors within the antiquities
trade should be subject to BSA
requirements.
FinCEN invites comments on all
aspects of this ANPRM, and specifically
seeks comments on the questions listed
below. Commenters should reference
specific question numbers to facilitate
FinCEN’s review of comments.
A. The Antiquities Market
1. Please identify and describe the
roles, responsibilities, and activities of
persons engaged in the trade in
antiquities, including, but not limited
to, advisors, consultants, dealers, agents,
intermediaries, or any other person who
engages as a business in the solicitation
or the sale of antiquities. Are there
commonly understood definitions of
particular roles within the industry?
Who would be considered within or
outside such definitions?
2. How are transactions related to the
trade in antiquities typically financed
and facilitated? What are the typical
sources and types of funds used to
facilitate the purchase of items in the
antiquities market? How common are
leveraged or financed purchases in the
antiquities market? How common are
cash transactions in the trade in
antiquities?
14 See FIN–2021–NTC2, FinCEN Informs
Financial Institutions of Efforts Related to Trade in
Antiquities and Art, March 9, 2021.
VerDate Sep<11>2014
16:14 Sep 23, 2021
Jkt 253001
3. Can the antiquities market be
broken down to show the percentage of
transactions that fall in a given
monetary range (e.g., 50% of all
transactions fall below $X-value)? If so,
please provide a breakdown of those
ranges.
4. What, if any, information does a
buyer typically learn about the seller,
cosigner, or intermediary involved in
the sale of antiquities? When a seller,
cosigner, or intermediary offers an item
for sale, why might a person involved in
the antiquities trade withhold the name
of the seller, consigner, or intermediary
from the buyer? What, if any, business
purpose does this serve? Should the
buyer have the right to learn this
information to determine whether the
provenance of an item is legitimate?
Why or why not?
5. How do foreign-based participants
in the antiquities market operate in the
United States? Do they operate directly
as advisors, consultants, dealers, agents,
intermediaries, or others? Or do they
work with domestic advisors,
consultants, dealers, agents,
intermediaries, or others?
6. When advisors, consultants,
dealers, agents, intermediaries, or others
receive payment from overseas
accounts, what steps do they take, if
any, to determine whether the payment
comes from a legitimate source?
7. What are the money laundering,
terrorist financing, sanctions, or other
illicit financial activities risks
associated with the trade in antiquities?
What is the industry experience with
money laundering, terrorist financing,
and other illicit financial activity?
Which parts of the market are most
vulnerable to these risks? In which
geographical locations do those
vulnerabilities tend to take place? Are
there certain types of persons engaged
in the trade in antiquities whose
activities present lower money
laundering, terrorist financing, and
other illicit financing risks and for
whom the application of BSA
requirements is less critical? Are there
certain types of persons engaged in the
trade in antiquities whose activities
present greater money laundering,
terrorist financing, and other illicit
financing risks and for whom the
application of BSA requirements is
more critical?
8. Which participants involved in the
trade in antiquities are in positions in
which they can effectively identify and
guard against money laundering, the
financing of terrorism, and other illicit
financing risks in connection with the
transactions they conduct? For example,
do these participants have access to
information regarding the nature and
PO 00000
Frm 00011
Fmt 4702
Sfmt 4702
53023
purpose of the transactions at issue and
the participants’ involvement in
completion of the transactions?
9. What, if any, safeguards does the
industry currently have in place to
protect against business loss and fraud?
For example, how, if at all, do market
participants currently identify and
verify the identity of the buyer, seller,
or ultimate beneficial owner of an
antiquity to guard against money
laundering, terrorist financing, or other
illicit financial activity? To what extent
do market participants conduct due
diligence on agents and other
intermediaries involved in purchases
and sales of antiquities? To what extent
do safeguards vary depending on the
size, nature of the transactions, and
whether the transaction involves foreign
jurisdictions? To what extent are the
safeguards voluntary or required by
contractual arrangements, trade
associations, or other forms of industry
self-regulation? Could these safeguards
be leveraged and modified to detect and
prevent money laundering, terrorist
financing, and other illicit financial
activities, or to better detect and prevent
such activities?
B. Regulation of the Industry
10. How should ‘‘antiquities’’ be
defined for the purposes of FinCEN’s
regulations? Should jurisdictional or
territorial considerations be taken into
account when determining how
antiquities should be defined (e.g.,
foreign cultural heritage laws)?
11. How is an antiquity distinct from
a work of art?
12. How should ‘‘trade of antiquities’’
be defined for the purposes of FinCEN’s
regulations? Should FinCEN distinguish
between the commercial, for-profit trade
of antiquities and non-commercial, notfor-profit activity? If so, how?
13. Are there any other terms that
FinCEN should consider addressing and
defining as part of a rulemaking on the
trade in antiquities? If so, what are those
terms, why should they be addressed,
and how should they be defined?
14. Should FinCEN establish a
monetary threshold for activities
involving trade in antiquities that would
subject persons involved in such
activities above that threshold to
FinCEN’s regulations, but exempt
persons whose activities fall below that
threshold? What is an appropriate dollar
value for such a threshold and should
it be set as an annual or per-transaction
threshold? Should there be a different
threshold—including potentially a zerodollar threshold—for legal entities as
opposed to natural persons?
15. Should there be any other
exemptions for categories or types of
E:\FR\FM\24SEP1.SGM
24SEP1
53024
Federal Register / Vol. 86, No. 183 / Friday, September 24, 2021 / Proposed Rules
persons engaged in the trade of
antiquities beyond the consideration of
a monetary threshold?
16. Which aspects of the current
regulatory framework applicable to
financial institutions should apply to
persons engaged in the trade in
antiquities?
a. Should FinCEN consider extending
all or only some elements of AML/CFT
program requirements now applicable to
financial institutions to the trade in
antiquities, including: (i) A system of
internal controls to ensure ongoing
compliance, (ii) independent testing for
compliance to be conducted by internal
financial institution personnel or by an
outside party, (iii) designation of an
individual or individuals responsible
for coordinating and monitoring day-today compliance, or (iv) training for
appropriate personnel?
b. How could know-your-customer
requirements, such as customer due
diligence or customer identification
programs, apply in the transaction
process in the trade in antiquities? What
would be the effect on industry of
imposing customer verification and
identification requirements on sellers,
purchasers, and others involved in the
trade in antiquities? How would the
application of know-your-customer
requirements to this industry assist in
preventing money laundering, terrorist
financing, and other illicit financial
activity?
c. What, if any, difficulties are
associated with requiring the disclosure
of or otherwise obtaining beneficial
ownership information for legal entities
engaged in the trade of antiquities,
including foreign legal entities that may
be outside the scope of current or future
U.S. beneficial ownership reporting
requirements?
d. What should be the requirements
for filing SARs related to antiquities?
What should FinCEN consider in
implementing any requirements for
filing SARs related to antiquities?
e. How many natural persons and
legal entities might be affected by
FinCEN’s application of BSA
requirements to persons engaged in the
trade in antiquities, and what is the
estimated hourly and annual burden, if
any, for each such person, for each of
the obligations described above? How
could FinCEN minimize the burdens
associated with these obligations, if any,
through its decisions about the form or
content of the rule while still ensuring
the appropriate management and
mitigation of AML/CFT risk?
B. Regulatory Planning and Review
This ANPRM is a significant
regulatory action under Executive Order
VerDate Sep<11>2014
16:14 Sep 23, 2021
Jkt 253001
12866 and has been reviewed by the
Office of Management and Budget.
C. Conclusion
With this ANPRM, FinCEN seeks
input on the questions set forth above.
FinCEN welcomes comments on all
aspects of the ANPRM, and all
interested parties are encouraged to
provide their views.
Dated: September 20, 2021.
Himamauli Das,
Acting Director, Financial Crimes
Enforcement Network.
[FR Doc. 2021–20731 Filed 9–23–21; 8:45 am]
BILLING CODE 4810–02–P
ENVIRONMENTAL PROTECTION
AGENCY
40 CFR Part 52
[EPA–R04–OAR–2021–0430; FRL–9060–01–
R4]
Air Plan Approval; North Carolina;
Minor Revisions to Cotton Ginning
Operations Rule
Environmental Protection
Agency (EPA).
ACTION: Proposed rule.
AGENCY:
The Environmental Protection
Agency (EPA) is proposing to approve a
revision to the North Carolina State
Implementation Plan (SIP) submitted by
the State of North Carolina Department
of Environmental Quality, Division of
Air Quality, via a letter dated April 13,
2021, and received by EPA on April 14,
2021. This revision contains minor
clarifying and typographical edits to
North Carolina’s cotton ginning
operations rule. EPA is proposing to
approve these changes pursuant to the
Clean Air Act (CAA or Act).
DATES: Comments must be received on
or before October 25, 2021.
ADDRESSES: Submit your comments,
identified by Docket ID No. EPA–R04–
OAR–2021–0430 at
www.regulations.gov. Follow the online
instructions for submitting comments.
Once submitted, comments cannot be
edited or removed from Regulations.gov.
EPA may publish any comment received
to its public docket. Do not submit
electronically any information you
consider to be Confidential Business
Information (CBI) or other information
whose disclosure is restricted by statute.
Multimedia submissions (audio, video,
etc.) must be accompanied by a written
comment. The written comment is
considered the official comment and
should include discussion of all points
you wish to make. EPA will generally
SUMMARY:
PO 00000
Frm 00012
Fmt 4702
Sfmt 4702
not consider comments or comment
contents located outside of the primary
submission (i.e., on the web, cloud, or
other file sharing system). For
additional submission methods, the full
EPA public comment policy,
information about CBI or multimedia
submissions, and general guidance on
making effective comments, please visit
www2.epa.gov/dockets/commentingepa-dockets.
FOR FURTHER INFORMATION CONTACT:
Pearlene Williams, Air Regulatory
Management Section, Air Planning and
Implementation Branch, Air and
Radiation Division, U.S. Environmental
Protection Agency, Region 4, 61 Forsyth
Street SW, Atlanta, Georgia 30303–8960.
The telephone number is (404) 562–
9144. Ms. Williams can also be reached
via electronic mail at
williams.pearlene@epa.gov.
SUPPLEMENTARY INFORMATION:
I. Overview
On April 14, 2021, the State of North
Carolina submitted changes to the North
Carolina SIP for EPA approval. EPA is
proposing to approve these changes to
15A North Carolina Administrative
Code (NCAC) Subchapter 02D,1 Rule
.0542—Control of Particulate Emissions
from Cotton Ginning Operations which
establishes control requirements for
particulate emissions from cotton
ginning operations.
II. Analysis of North Carolina’s SIP
Revision
North Carolina’s SIP revision contains
minor clarifying and typographical edits
to the text of Rule .0542.2 For example,
the revision adjusts the citation format
for cited rules; corrects several
typographical errors; adds text clarifying
the meaning of certain words and
phrases; and corrects a citation error.
EPA has preliminarily determined that
these changes do not interfere with
attainment and maintenance of the
national ambient air quality standards
or any other applicable requirement of
the Act because they are minor in
nature. For these reasons, EPA is
proposing to approve the changes to this
rule.
III. Incorporation by Reference
In this document, EPA is proposing to
include in a final EPA rule regulatory
1 In the table of North Carolina regulations
federally approved into the SIP at 40 CFR
52.1770(c), 15A NCAC 02D is referred to as
‘‘Subchapter 2D Air Pollution Control
Requirements.’’
2 See North Carolina’s April 14, 2021 SIP revision
at pp. 82–86 (of the pdf file available in the docket
for this proposed rulemaking) to review a redline
version of the rule showing all of the proposed
changes.
E:\FR\FM\24SEP1.SGM
24SEP1
]]>Agencies
[Federal Register Volume 86, Number 183 (Friday, September 24, 2021)]
[Proposed Rules]
[Pages 53021-53024]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-20731]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Financial Crimes Enforcement Network
31 CFR Chapter X
RIN 1506-AB50
Anti-Money Laundering Regulations for Dealers in Antiquities
AGENCY: Financial Crimes Enforcement Network (FinCEN), Treasury.
ACTION: Advance notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: FinCEN is issuing this advance notice of proposed rulemaking
(ANPRM) to solicit public comment on the implementation of Section 6110
of the Anti-Money Laundering Act of 2020 (the AML Act). AML Act Section
6110 amends the Bank Secrecy Act (BSA) to include in the 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 [of the Treasury].''
The AML Act requires the Secretary of the Treasury (the Secretary) to
issue proposed rules to carry out that amendment not later than 360
days after enactment of the AML Act. This ANPRM seeks initial public
comment on questions that will assist FinCEN in preparing the proposed
rules.
DATES: Written comments are welcome, and must be received on or before
October 25, 2021.
ADDRESSES: Comments may be submitted, identified by Regulatory
Identification Number (RIN) 1506-AB50 by any of the following methods:
Federal E-rulemaking Portal: https://www.regulations.gov. Follow the
instructions for submitting comments. Include RIN 1506-AB50 in the
submission. Refer to Docket Number FINCEN-2021-0006.
Mail: Financial Crimes Enforcement Network, Policy Division, P.O.
Box 39, Vienna, VA 22183. Include 1506-AB50 in the body of the text.
Refer to Docket Number FINCEN-2021-0006.
Please submit comments by one method only.
FOR FURTHER INFORMATION CONTACT:
FinCEN: The FinCEN Regulatory Support Section at 1-800-767-2825 or
electronically at https://www.fincen.gov/contact.
SUPPLEMENTARY INFORMATION:
I. Scope of the ANPRM
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.'' \2\
Section 6110(b)(1) requires the Secretary to issue proposed rules not
later than 360 days after enactment of the AML Act to carry out that
amendment.
---------------------------------------------------------------------------
\1\ The AML Act was enacted as Division F, Section 6001-6511, of
the William M. (Mac) Thornberry National Defense Authorization Act
for Fiscal Year 2021, Public Law 116-283, 134 Stat 3388 (2021).
\2\ The BSA is codified at 12 U.S.C. 1829b, 12 U.S.C. 1951-1959
and 31 U.S.C. 5311-5314, 5316-5336. Implementing regulations are
codified at 31 CFR Chapter X. Section 6110(a)(1) of the AML Act
amends 31 U.S.C. 5312(a)(2).
---------------------------------------------------------------------------
II. Background
A. The BSA
Enacted in 1970 and amended most recently by the AML Act, the BSA
aids in the prevention of money laundering, terrorism financing, and
other illicit financial activity. The purposes of the BSA include,
among other things, ``requir[ing] certain reports or records that are
highly useful in--(A) criminal, tax, or regulatory investigations, risk
assessments, or proceedings; or (B) intelligence or counterintelligence
activities, including analysis, to protect against terrorism.'' \3\
---------------------------------------------------------------------------
\3\ 31 U.S.C. 5311(1).
---------------------------------------------------------------------------
Congress has authorized the Secretary to administer the BSA. The
Secretary has delegated to the Director of FinCEN the authority to
implement, administer, and enforce compliance with the BSA and
associated regulations.\4\ Pursuant to this authority, FinCEN is
authorized to impose anti-money laundering (AML) and countering the
financing of terrorism (CFT) program requirements for financial
institutions. Specifically, to guard against money laundering and the
financing of terrorism through financial institutions, the BSA requires
financial institutions to establish AML/CFT programs that, at a
minimum, include: (1) The development of internal
[[Page 53022]]
policies, procedures, and controls; (2) the designation of a compliance
officer; (3) an ongoing employee training program; and (4) an
independent audit function to test programs.\5\ The BSA further
requires that, when prescribing minimum standards for AML/CFT programs,
the Secretary shall prescribe regulations that ``consider the extent to
which the requirements imposed under [the AML program requirement] are
commensurate with the size, location, and activities of the financial
institutions to which such regulations apply.'' \6\ The Secretary shall
additionally take into account certain factors, such as: (1) Financial
institutions are spending private compliance funds for a public and
private benefit, including protecting the United States financial
system from illicit finance risks; (2) the extension of financial
services to the underbanked and the facilitation of financial
transactions, including remittances, coming from the United States and
abroad in ways that simultaneously prevent criminal persons from
abusing formal or informal financial services networks are key policy
goals of the United States; and (3) effective AML/CFT programs
safeguard national security and generate significant public benefits by
preventing the flow of illicit funds in the financial system and by
assisting law enforcement and national security agencies with the
identification and prosecution of persons attempting to launder money
and undertake other illicit activity through the financial system.\7\
---------------------------------------------------------------------------
\4\ Treasury Order 180-01 (Jan. 14, 2020).
\5\ 31 U.S.C. 5318(h).
\6\ USA Patriot Act, Public Law 107-56, 352(c), 115 Stat. 272,
322 (2001) (codified at 31 U.S.C. 5318 note).
\7\ 31 U.S.C. 5318(h)(2)(B).
---------------------------------------------------------------------------
For certain categories of financial institutions, FinCEN has
included explicit requirements to conduct customer due diligence and to
identify and verify the identity of beneficial owners of legal entity
customers, subject to certain exclusions and conditions.\8\ In
addition, the Secretary is required to prescribe regulations that
require financial institutions to establish procedures for account
opening that, at a minimum, include: (1) Verifying the identity of any
person seeking to open an account, to the extent reasonable and
practicable; (2) maintaining records of the information used to verify
the person's identity, including name, address, and other identifying
information; and (3) consulting lists of known or suspected terrorists
or terrorist organizations provided to the financial institution by any
government agency to determine whether the person seeking to open an
account appears on any such list.\9\
---------------------------------------------------------------------------
\8\ 31 CFR 1010.230.
\9\ 31 U.S.C. 5318(l).
---------------------------------------------------------------------------
In addition, under 31 U.S.C. 5318(g)(1), the Secretary is
authorized to require financial institutions to report any suspicious
transaction relevant to a possible violation of law or regulation. The
Secretary is further authorized under 31 U.S.C. 5313 to require
domestic financial institutions to report transactions of United States
coins, currency, or other monetary instruments the Secretary
prescribes, in an amount or circumstances the Secretary prescribes by
regulation.
B. Application of the BSA To Trade in Antiquities
The BSA defines ``financial institution'' to include specific
categories of institutions.\10\ Section 6110(a)(1) of the AML Act
amends 31 U.S.C. 5312(a)(2) to include as a type 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.'' Section 6110(b)(1) directs the Secretary
to issue proposed rules implementing this amendment not later than 360
days after enactment of the AML Act, i.e., by December 27, 2021. This
amendment to the BSA's definition of ``financial institution'' takes
effect on the effective date of the final rules issued by the Secretary
pursuant to Section 6110(b)(1).\11\
---------------------------------------------------------------------------
\10\ 31 U.S.C. 5312(a)(2), (c)(1).
\11\ AML Act Section 6110(a)(2).
---------------------------------------------------------------------------
Before issuing a proposed rule, the Secretary (acting through the
Director of FinCEN), in coordination with the Federal Bureau of
Investigation (FBI), the Attorney General, and Homeland Security
Investigations (HSI), is required to consider:
(A) The appropriate scope for the rulemaking, including determining
which persons should be subject to the rulemaking, by size, type of
business, domestic or international geographical locations, or
otherwise;
(B) the degree to which the regulations should focus on high-value
trade in antiquities, and on the need to identify the actual purchasers
of such antiquities, in addition to the agents or intermediaries acting
for or on behalf of such purchasers;
(C) the need, if any, to identify persons who are dealers,
advisors, consultants, or any other persons who engage as a business in
the trade in antiquities;
(D) whether thresholds should apply in determining which persons to
regulate;
(E) whether certain exemptions should apply to the regulations; and
(F) any other matter the Secretary determines is appropriate.\12\
---------------------------------------------------------------------------
\12\ AML Act Section 6110(b)(2).
---------------------------------------------------------------------------
FinCEN has engaged with the FBI, the Department of Justice, HSI,
and other agencies in considering these matters during the development
of this ANPRM, and welcomes any additional comments from the law
enforcement community on these specific matters or any other aspect of
the ANRPM.
C. The Potential for Money Laundering, Terrorist Financing, and Other
Illicit Financial Activity Through Trade in Antiquities
Certain characteristics of the trade in antiquities may be
exploited by money launderers and terrorist financiers to evade
detection by law enforcement. These characteristics include client
confidentiality; varying practices across the industry in, and
challenges associated with, accurately documenting provenance; the use
of intermediaries; and unregulated customer due diligence practices. In
addition, the potentially small size, ease of transport, and
subjectivity of prices of antiquities, among other things, provide an
opportunity to use these items to transport value across borders
without reporting to authorities or detection by customs agents or law
enforcement agencies. Illicit actors may exploit these or other
features of the antiquities trade to launder funds through the U.S.
financial system.
Terrorist organizations, transnational criminal networks, and other
malign actors may also seek to exploit antiquities to transfer value to
acquire new sources of funds, evade detection, and launder proceeds
from their illicit activities. Some terrorist groups have generated
revenue from permitting or facilitating the illegal extraction or
trafficking of antiquities in territories where they operate.\13\
---------------------------------------------------------------------------
\13\ See, e.g., U.S. House of Representatives, Committee on
Financial Services, Task Force to Investigate Terrorist Financing,
Stopping Terror Finance: Securing the U.S. Financial Sector,
December 20, 2016, at 10-12.
---------------------------------------------------------------------------
On March 9, 2021, FinCEN issued a Notice informing financial
institutions about Section 6110(a) of the AML Act and explaining that
financial institutions with existing BSA obligations, including the
reporting of suspicious activity, should be aware that illicit activity
associated with the
[[Page 53023]]
trade in antiquities and art may involve their institutions.\14\ In the
Notice, FinCEN explained that crimes relating to antiquities and art
may include looting or theft, the illicit excavation of archaeological
items, smuggling, and the sale of stolen or counterfeit objects. They
may also include money laundering and sanctions violations, and have
been linked to transnational criminal networks, international
terrorism, and the persecution of individuals or groups on cultural
grounds.
---------------------------------------------------------------------------
\14\ See FIN-2021-NTC2, FinCEN Informs Financial Institutions of
Efforts Related to Trade in Antiquities and Art, March 9, 2021.
---------------------------------------------------------------------------
III. Issues for Comment
FinCEN seeks comment from members of the antiquities industry, law
enforcement, civil society groups, and the broader public regarding the
potential for money laundering, financing of terrorism, and other
illicit financial activity in the antiquities industry; the existence
of any safeguards in the industry to guard against this potential; the
effect that compliance with BSA requirements could have on the
antiquities industry; what additional steps may be necessary to protect
the industry from abuse by money launderers and other malign actors;
and which actors within the antiquities trade should be subject to BSA
requirements.
FinCEN invites comments on all aspects of this ANPRM, and
specifically seeks comments on the questions listed below. Commenters
should reference specific question numbers to facilitate FinCEN's
review of comments.
A. The Antiquities Market
1. Please identify and describe the roles, responsibilities, and
activities of persons engaged in the trade in antiquities, including,
but not limited to, advisors, consultants, dealers, agents,
intermediaries, or any other person who engages as a business in the
solicitation or the sale of antiquities. Are there commonly understood
definitions of particular roles within the industry? Who would be
considered within or outside such definitions?
2. How are transactions related to the trade in antiquities
typically financed and facilitated? What are the typical sources and
types of funds used to facilitate the purchase of items in the
antiquities market? How common are leveraged or financed purchases in
the antiquities market? How common are cash transactions in the trade
in antiquities?
3. Can the antiquities market be broken down to show the percentage
of transactions that fall in a given monetary range (e.g., 50% of all
transactions fall below $X-value)? If so, please provide a breakdown of
those ranges.
4. What, if any, information does a buyer typically learn about the
seller, cosigner, or intermediary involved in the sale of antiquities?
When a seller, cosigner, or intermediary offers an item for sale, why
might a person involved in the antiquities trade withhold the name of
the seller, consigner, or intermediary from the buyer? What, if any,
business purpose does this serve? Should the buyer have the right to
learn this information to determine whether the provenance of an item
is legitimate? Why or why not?
5. How do foreign-based participants in the antiquities market
operate in the United States? Do they operate directly as advisors,
consultants, dealers, agents, intermediaries, or others? Or do they
work with domestic advisors, consultants, dealers, agents,
intermediaries, or others?
6. When advisors, consultants, dealers, agents, intermediaries, or
others receive payment from overseas accounts, what steps do they take,
if any, to determine whether the payment comes from a legitimate
source?
7. What are the money laundering, terrorist financing, sanctions,
or other illicit financial activities risks associated with the trade
in antiquities? What is the industry experience with money laundering,
terrorist financing, and other illicit financial activity? Which parts
of the market are most vulnerable to these risks? In which geographical
locations do those vulnerabilities tend to take place? Are there
certain types of persons engaged in the trade in antiquities whose
activities present lower money laundering, terrorist financing, and
other illicit financing risks and for whom the application of BSA
requirements is less critical? Are there certain types of persons
engaged in the trade in antiquities whose activities present greater
money laundering, terrorist financing, and other illicit financing
risks and for whom the application of BSA requirements is more
critical?
8. Which participants involved in the trade in antiquities are in
positions in which they can effectively identify and guard against
money laundering, the financing of terrorism, and other illicit
financing risks in connection with the transactions they conduct? For
example, do these participants have access to information regarding the
nature and purpose of the transactions at issue and the participants'
involvement in completion of the transactions?
9. What, if any, safeguards does the industry currently have in
place to protect against business loss and fraud? For example, how, if
at all, do market participants currently identify and verify the
identity of the buyer, seller, or ultimate beneficial owner of an
antiquity to guard against money laundering, terrorist financing, or
other illicit financial activity? To what extent do market participants
conduct due diligence on agents and other intermediaries involved in
purchases and sales of antiquities? To what extent do safeguards vary
depending on the size, nature of the transactions, and whether the
transaction involves foreign jurisdictions? To what extent are the
safeguards voluntary or required by contractual arrangements, trade
associations, or other forms of industry self-regulation? Could these
safeguards be leveraged and modified to detect and prevent money
laundering, terrorist financing, and other illicit financial
activities, or to better detect and prevent such activities?
B. Regulation of the Industry
10. How should ``antiquities'' be defined for the purposes of
FinCEN's regulations? Should jurisdictional or territorial
considerations be taken into account when determining how antiquities
should be defined (e.g., foreign cultural heritage laws)?
11. How is an antiquity distinct from a work of art?
12. How should ``trade of antiquities'' be defined for the purposes
of FinCEN's regulations? Should FinCEN distinguish between the
commercial, for-profit trade of antiquities and non-commercial, not-
for-profit activity? If so, how?
13. Are there any other terms that FinCEN should consider
addressing and defining as part of a rulemaking on the trade in
antiquities? If so, what are those terms, why should they be addressed,
and how should they be defined?
14. Should FinCEN establish a monetary threshold for activities
involving trade in antiquities that would subject persons involved in
such activities above that threshold to FinCEN's regulations, but
exempt persons whose activities fall below that threshold? What is an
appropriate dollar value for such a threshold and should it be set as
an annual or per-transaction threshold? Should there be a different
threshold--including potentially a zero-dollar threshold--for legal
entities as opposed to natural persons?
15. Should there be any other exemptions for categories or types of
[[Page 53024]]
persons engaged in the trade of antiquities beyond the consideration of
a monetary threshold?
16. Which aspects of the current regulatory framework applicable to
financial institutions should apply to persons engaged in the trade in
antiquities?
a. Should FinCEN consider extending all or only some elements of
AML/CFT program requirements now applicable to financial institutions
to the trade in antiquities, including: (i) A system of internal
controls to ensure ongoing compliance, (ii) independent testing for
compliance to be conducted by internal financial institution personnel
or by an outside party, (iii) designation of an individual or
individuals responsible for coordinating and monitoring day-to-day
compliance, or (iv) training for appropriate personnel?
b. How could know-your-customer requirements, such as customer due
diligence or customer identification programs, apply in the transaction
process in the trade in antiquities? What would be the effect on
industry of imposing customer verification and identification
requirements on sellers, purchasers, and others involved in the trade
in antiquities? How would the application of know-your-customer
requirements to this industry assist in preventing money laundering,
terrorist financing, and other illicit financial activity?
c. What, if any, difficulties are associated with requiring the
disclosure of or otherwise obtaining beneficial ownership information
for legal entities engaged in the trade of antiquities, including
foreign legal entities that may be outside the scope of current or
future U.S. beneficial ownership reporting requirements?
d. What should be the requirements for filing SARs related to
antiquities? What should FinCEN consider in implementing any
requirements for filing SARs related to antiquities?
e. How many natural persons and legal entities might be affected by
FinCEN's application of BSA requirements to persons engaged in the
trade in antiquities, and what is the estimated hourly and annual
burden, if any, for each such person, for each of the obligations
described above? How could FinCEN minimize the burdens associated with
these obligations, if any, through its decisions about the form or
content of the rule while still ensuring the appropriate management and
mitigation of AML/CFT risk?
B. Regulatory Planning and Review
This ANPRM is a significant regulatory action under Executive Order
12866 and has been reviewed by the Office of Management and Budget.
C. Conclusion
With this ANPRM, FinCEN seeks input on the questions set forth
above. FinCEN welcomes comments on all aspects of the ANPRM, and all
interested parties are encouraged to provide their views.
Dated: September 20, 2021.
Himamauli Das,
Acting Director, Financial Crimes Enforcement Network.
[FR Doc. 2021-20731 Filed 9-23-21; 8:45 am]
BILLING CODE 4810-02-P
