Anti-Money Laundering Regulations for Dealers in Antiquities, 53021-53024 [2021-20731]

Download as PDF 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]


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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.

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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.
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    \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).
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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\
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    \3\ 31 U.S.C. 5311(1).
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    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\
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    \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).
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    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\
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    \8\ 31 CFR 1010.230.
    \9\ 31 U.S.C. 5318(l).
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    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
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