Monday, January 25, 2021

State Department Excludes Jewish Religious or Ceremonial Objects from Moroccan Designated List, but More Coins, Even Rope Embargoed.

 On January 22, 2021, U.S. Customs announced new State Department import restrictions on Moroccan cultural goods.  The extensive designated list may be found here.

For the first time, the regulations include a statement that the designated list of ethnological objects does not include Jewish ceremonial or religious objects.  While this is good news, it does raise a few issues.  First, it contradicts prior State Department claims to Jewish groups and coin collectors that it is impossible to grant such “exemptions.”  Second, none of the other MENA import restrictions have such language and in fact several (the MOU with Egypt comes to mind) explicitly include Jewish items.  Finally, it is unclear whether this exemption will be applied elsewhere. Unlike most MENA  countries, Morocco has good relations with the Jewish community.  As much as they would like to hope this is a trend, Jewish groups probably cannot assume the same exemption will be applied to all new MOU's or renewals of current MENA MOU's, particularly where Jewish populations have been forcibly displaced.

There are exceptionally broard restrictions placed on everything else again including “rope.”  (Sort of an inside joke at this point).  The restrictions on coins appear exceptionally broad too:

10. Coins—This category includes

coins of Numidian, Mauretanian, Greek/

Punic, Roman, Byzantine, Islamic, and

Medieval Spanish types that circulated

primarily in Morocco, ranging in date

from the fifth century B.C. to A.D. 1750.

Coins were made in copper, bronze,

silver, and gold. Examples may be

square or round, have writing, and show

imagery of animals, buildings, symbols,

or royal figures.

Yet, they are also essentially meaningless; with a few possible exceptions, coins that circulated within Morocco "primarily circulated" not there, but elsewhere.  

Oddly, Spanish coins are also mentioned, though Spain occupies two ports, Ceuta and Melilla on the Moroccan coast.  Portugal first captured Ceuta in 1415. Spanish rule began in 1581 when the Portuguese kingdom merged with the Spanish Kingdom. Melilla has been Spanish since 1497. Perhaps, the Moroccans wish the Spanish were not there, but to recognize Moroccan rights to claim Spanish coins can only be viewed as the State Department Cultural Heritage Center and U.S. Customs treading in areas that should be reserved for other parts of the U.S. State Department.  

Sunday, January 3, 2021

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:  It is indeed unfortunate that neither Congress nor the Times paid much attention to serious questions raised about the claims behind this advocacy:

 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.