A Triumph of Fear Mongering Over Facts

On Jan. 1, 2021, the Senate joined the House in an override of President Trump’s veto of the National Defense Authorization Act (NDAA).  The NDAA contained amendments introduced by Congresswomen Carolyn Maloney (D-NY) directed at a number of Anti-Money Laundering (AML) initiatives.  As a result of that amendment to the House version of the NDAA incorporated into the legislation that passed both Houses after a conference with the Senate, "person[s] engaged in the sale of antiquities" (however "antiquities" might be defined) now find themselves subject to the provisions of the Bank Secrecy Act (BSA) and its regulatory requirements to create and maintain an anti-money laundering program, prepare an annual independent audit, and file where appropriate “suspicious activity reports.”  Such AML programs typically cost thousands of dollars per year to implement  as well as the time and effort required to comply with such regulations.  The costs to small and micro business are substantial.  Furthermore, it is impossible to “fly under the radar screen” of such requirements; such regulations are enforced by the banks which will close accounts which do not comply. 

The exact scope of these obligations for antiquities dealers will be determined in  yet to be promulgated regulations to be prepared by FINCEN (the Financial Crimes Enforcement Network), a Treasury entity.  Those proposed regulations will be subject to “notice and comment” rule making.  Notice and comment rule making should require FINCEN  to respond to concerns raised in public comments before the regulations are finalized.  That process, which will probably not happen until later in the year, will be an opportunity to ask FINCEN to define “antiquities” narrowly as possible and to adopt high monetary thresholds before bureaucratic requirements kick in. 

 In that regard, Congress supplied the Treasury Department with the following specific guidelines for the regulations: 

• having the regulations vary by the size of the business, the size of the transaction being conducted, and whether the transaction takes place in the United States or elsewhere;
• whether the regulations should focus on the high-value trade in antiquities in a different way than lower-value objects;
• whether the antiquities dealer must identify the actual purchaser of an antiquity when the seller or buyer is working through an agent or intermediary;
• the need, if any, to identify trade seller or buyers, such as other dealers, advisors, consultants, or other persons trading in antiquities as a business;
• whether volume or financial thresholds should apply in determining whether an antiquities dealer or a specific transaction should be regulated; and,
• whether certain transactions should be exempted from the regulations.

These guidelines were added to the Maloney Amendment during the Conference with the Senate.  Presumably, they are the result of  Global Heritage Alliance and other advocacy groups for collectors and the businesses of the antiquities and art trade raising these issues with Senate Finance. 

The law also requires a further study to be conducted by Treasury solely with input from law enforcement agencies as to whether the larger art market should also be regulated.

Despite some effort to require FINCEN to focus its efforts on more problematic actors and transactions, this law represents a triumph of fear mongering over fact and intensive lobbying, chiefly by archaeological advocacy groups with an axe to grind against private collecting and the trade, along with AML compliance contractors looking for a new line of business.  This effort was led by the Antiquities Coalition, a well-funded and politically connected archaeological advocacy organization, and AML Right Source, an AML compliance contractor.  Their advocacy is also reflected in the New York Times Coverage of the issue:  https://www.nytimes.com/2021/01/01/arts/design/antiquities-market-regulation.html  It is indeed unfortunate that neither Congress nor the Times paid much attention to serious questions raised about the claims behind this advocacy:  https://culturalpropertynews.org/rand-corp-report-demolishes-assumptions-on-antiquities-and-terror/

 It will be absolutely essential for collectors and the small businesses of the antiquities trade to comment on these regulations if we are to have any impact on how hard they will be on collecting and the industry.  There also is at least the possibility that  FINCEN will propose very broad regulations by treating “antiquities” the same way as “antiques.”  (There is some precedent for this in other U.S. statutes.)  Obviously, if “antiquities” are treated as “antiques” much of the art and collectibles business will be subject to these regulations.  Certainly, we can expect the archaeological lobby and AML contractors to push to have these regulations to cover as many dealers as is possible.  However, while the Antiquities Coalition and AML Right Source may be well funded and have both political influence and the ability to place favorable coverage in the NY Times, what they lack is the ability to generate large numbers of comments.  Of course, we will see if collectors and the trade turn out in force to protect their hobby and their businesses.  The numbers are certainly there if these groups can be motivated. 

Germany's Controversial Cultural Heritage Law Passes Lower House

Germany's controversial cultural heritage law has passed  the lower house of the German Parliament, apparently with opposition parties abstaining from voting on the measure.

The German Government hopes the upper house will take up the measure before recess on July 8th.

While additional regulation was probably inevitable, the assumption that an artifact is "stolen" because a dealer or collector cannot produce an export permit from a postulated "country of origin" where an artifact was made hundreds, if not thousands, of years ago brings back bad memories of Germany's totalitarian past.

So, small wonder the law lacks popular support.  Rather, the restrictions against collecting appear to be a special interest measure being pushed by the the German Federal Foreign Office (which--like our own State Department-- views repatriation as a "soft power" opportunity, domestic interests be damned), the German Archaeological Institute (a Federal Foreign Office entity, whose members depend on excavation permits from source countries to excavate),  and a small group of  countries with cultural nationalist pretensions (mostly undemocratic or even dictatorial regimes that view anything "old" as state property).

Germany's coalition government is already deeply unpopular due to its mishandling of the economy, immigration, and the Greek bail-out. 

Hopefully, Brexit (which was voted on the same day) and what it says about the people's distrust of  government "experts" has scared the politicians enough that at even this late date, Germany's upper house will consider the due process rights of Germans before requiring such non-existent documentation. 

After all, Germany's ancient coin and antiquities trade is not only good for Germany's economy, but it helps encourage people to people contacts and appreciation of other cultures. 

Image:  Monika Grutters, Germany's Cultural Minister, pitching her "soft power" initiative

Overkill

There are good reasons to ban the trade in modern ivory products.  But what of antiques with historical and artistic value?  Or, ancient artifacts like Byzantine ivory diptychs?  That's where overkill comes in.   And that's exactly what's now happening in New York State where New York's Governor, at the behest of Hillary Clinton and wildlife advocates, has pushed through a bill that bans the sale of any antique with an ivory content over 20%.  The provision in the bill should be rethought-- the idea that sales of antique ivory encourage the sale of modern ivory is without evidentiary support.

Rule Happy

The Competitive Enterprise Institute has drawn attention to the vast increase in the number of Federal Regulations Americans must comply with on a whole host of issues.   Of course, collectors, museums, auction houses and small businesses of the antiquities and numismatic trade now have to comply with a confusing list of foreign and domestic regulations and it would seem neither Congress nor the Courts are willing or even able to tamp down on government overreach in this area or others. One group appears to be largely unregulated though-- the archaeological community.  Perhaps, it's time to ensure that they too are complying with their own obligations to report, publish and preserve artifacts through a host of new regulations.

Running Amok

Overregulation based on politically correct thinking is damaging ancient coin collecting in the United States.  Even worse, cultural bureaucrats within our State Department and Customs Service don't seem much to care that the exact same sorts of coins are freely available for import without restriction into the exact same countries for which MOUs have been granted.

But perhaps this is part of a much larger problem facing our country.  Leaving politics aside, it's easy to see how a mentality that considers a peanut butter and jelly sandwich as racist would think nothing wrong with this state of affairs.   Instead of narrowly targeting any restrictions to help protect archaeological sites,  political correctness dictates that the government must restrict all artifacts made millennia ago on the territory of a modern nation state as a moral imperative to expiate our "guilt" for being a wealthy market country for antiquities and coins.

German High Court Rules Export Permits Not Required for Collectors' Coins in Trade

Germany's highest regulatory court has ruled  that coins in trade will not be treated as archaeological objects requiring an export permit under EU law. The court said that because they are objects created in quantity, they have lost any archaeological value, and to require export permits for them would put an unreasonable restraint on trade. The decision in its entirety can be read here.   

UPDATE 5/4/13:  Not surprisingly, archaeo-blogger Paul Barford is in denial about the implications of Court's ruling and has even implied the court's decision-making was corrupted by "commercial interests."  As to the former, I think a well known numismatist said it best:

Of course Mr. Barford is in denial of the court's actual ruling: “coins coming from Antiquity generally have no archeological value and thus are not archeological objects”. It doesn’t come much clearer than that. Nor is this “the Bavarian judiciary” as Mr. Barford would like to believe; it is the supreme court of Germany for cases involving customs and taxes.

As to the latter, I think Mr. Barford should compare what Transparency International says about Germany and places whose views of cultural property matters he champions, like Greece, Cyprus, Italy and China.

Nanny State Empowered to Regulate Hemingway's Cats

The Eleventh Circuit Court of Appeals has affirmed a decision allowing the Department of Agriculture to regulate how the Hemingway Museum treats the descendants of Hemingway's cats that live on the property.  In so doing, the Court concluded that the Museum met the definition of an an animal exhibitor and that agency regulations and advertisements featuring the cats were enough to provide the necessary nexus to interstate commerce.  Now, the DOA can force the Hemingway Museum to cage the cats individually at night, to construct a higher electrified fence or to hire a night watchman, and to build additional cat resting areas.  As with coin collecting, even if the Government has the right to regulate something, one can still question its stupidity in doing so. Perhaps the Supreme Court might consider taking both the Hemingway cat case and ACCG coin case.  Each would present a good opportunity for the Court to consider Government overreach at its most ridiculous. 

Over-regulated America

The Economist Magazine, Feb. 18th 2012, states, "The home of laissez-faire is being suffocated by excessive and badly written regulation."

After reviewing the dismal situation, the Economist suggests,

"America needs a smarter approach to regulation. First, all important rules should be subjected to cost-benefit analysis by an independent watchdog. The results should be made public before the rule is enacted. All big regulations should also come with sunset clauses, so that they expire after, say, ten years unless Congress explicitly re-authorises them.

More important, rules need to be much simpler. When regulators try to write an all-purpose instruction manual, the truly important dos and don’ts are lost in an ocean of verbiage. Far better to lay down broad goals and prescribe only what is strictly necessary to achieve them. Legislators should pass simple rules, and leave regulators to enforce them."

For more, see http://www.economist.com/node/21547789 and

http://www.commongood.org/blog/entry/philip-k.-howard-on-the-need-for-results-based-regulation

A smarter approach certainly needs to be tried with respect to import restrictions on cultural artifacts.

Currently, the US State Department and US Customs apply a one size fits all approach to all artifacts, i.e., the same onerous documentation is required to import the $1o million dollar statue as the $10 coin. Moreover, the regulations restrict artifacts by their "country of origin" or manufacture, giving lip service to the statutory requirement that any restricted artifact must be "first discovered" in and be "subject to the export control" of a specific country. Finally, it was never thought that restrictions would be renewed over and over again every five years. Rather, the point of the governing legislation was to give source countries time to get their own house in order, not to forever ban imports of cultural goods from a given country.

Instead, why not target restrictions better, get rid of the one size fits all approach, and sunset restrictions after giving source countries a reasonable time to get their act together?

It should be about conservation not control. The current system has failed because the real costs to our museums, collectors and businesses that deal in cultural goods are not factored into the equation whatsoever. Instead, it's all about making foreign cultural bureaucracies "look good" rather than really encouraging them to "do good" for their own cultural treasures and citizens.

Generally Pro MOU Media Outlets Question Greek MOU

The Art Newspaper and "Culture Grrl" have been generally supportive of repatriation efforts, but each has expressed some misgivings about the recently announced MOU with Greece. See http://www.theartnewspaper.com/articles/Clinton+signs+memorandum+with+Greece+restricting+import+of+antiquities/24369
and http://www.artsjournal.com/culturegrrl/2011/07/greek_cultural-property_agreem.html

And no wonder. The articles point to the lack of transparency, the apparent overbreath of the coming restrictions and Greece's own abysmal record in protecting its own cultural patrimony.

They might have also mentioned that approximately 70% of the public comment posted on the regulations.gov website either opposed the MOU in toto or the extension of import restrictions to coins.

Apparently, Secretary Clinton considers "confidence building measures" for the bankrupt Greeks to be more important than the views of American citizens or the legal limitations the governing statute places on such MOUs. But does the ordinary Greek citizen really care? See http://safecorner.savingantiquities.org/2011/07/repatriation-effects-greeces-national.html

And what will American voters who collect ancient art and coins think about these new restrictions? The ever political Hillary Clinton should also consider that as well.

Will the State Department Follow Our Political Leaders' Call to End Job Killing Regulations on Small Business?

Both President Obama and the Republican Majority in the House have announced their desire to curb job killing regulations, particularly when they impact small business. See
http://www.cnbc.com/id/41131176 and http://www.politico.com/news/stories/0111/47064.html

We'll find out tomorrow when the Federal Register is set to announce the renewal of the State Department's MOU with Italy whether the Bureau of Educational and Cultural Affairs has gotten the message.

The Archaeological Institute of America has been pushing the State Department to extend new import restrictions to ancient coins from Italy, even though restrictions on such common place items would only discriminate against American collectors and small businesses, who cannot realistically be expected to comply with the cultural restriction's extensive documentation requirements.

The State Department has certainly been out of touch with the President's and Republicans' calls for greater government transparency. And recent restrictions on Chinese and Cypriot coins suggest that State is equally tone deaf about the effect of its regulations on ordinary Americans.

Anyway, we should know more tomorrow.

Spanish Inquisition?

This story was posted on an ancient coins discussion list:

This is a letter that Antonio (from Lucernae) in Spain wrote to a good friend of mine detailing what occurred late last year.

Antonio (lucernae) writes:

On december 1 I had one of the worse experiences in my life because police come into my home and office searching all the ancient coins I had. They remove all my stock and account balances, documents, pendrives with info and pictures, computers, all my work material. They say that I buy the coins from not legal sellers and suppliers and it is a lie. I always buy my coins from Ancient Auction Houses and I have my invoices and all the info available but they did not listened to me. I have in a judicial process and it is so large here in Spain, maybe it could take more than 2 years in the way and I´m inocent. I´m sure that they finally send me back all but the financial damage is incredible, more than 40.000 euros have been confiscated (coins, computers, material, all!!!!!!!!!!!!!!!) and around 3.500 of my nice late roman coins for clean too. I´m always buying large lots of uncleaned roman coins from Ancient Coins Auction Houses in all Europe and this is my fault!!!!!!!!!!!!! HORRIBLE!! This is an stupid and crazy actuation againt me, maybe a formal complaint of an envious seller?? I do not what happened really but all my coins are blocked and confiscated and the sumary is secret yet. I think that with God help all must to be clare in the next months but I repeat, Justice here in Spain is slow as a tortle.

Archaeo-Blogger Paul Barford and friends are already gloating about the story, see http://paul-barford.blogspot.com/2011/01/coin-dealer-in-trouble.html and perhaps mixing it up with another crack-down on Spanish Metal Detectorists, but I've heard other similar stories from Germany, Italy and the United States where the authorities ultimately return all the material after holding it for months for an "investigation." Hopefully, that will happen here.

Ultimately, there is a danger for archaeologists and law enforcement that there will be a backlash against such heavy-handed tactics. Such a backlash against the Spanish Inquisition eventually brought reform to the Church. Hopefully, reform of Spain's laws (which have been overly-restrictive since 1985) may ultimately occur here as well.