Page:2020-07-29 PSI Staff Report - The Art Industry and U.S. Policies that Undermine Sanctions.pdf/42

 new or further guidance could have broader implications. Nevertheless, we are taking the concerns you have expressed seriously in the context of that review. We will update you as soon as we are in a position to do so.

On July 22, 2020, the Treasury Department provided the update and stated:

Our review confirmed that Treasury does not believe the Berman Amendment is a categorical bar to the application of IEEPA-based sanctions to transactions involving artwork. Evaluation of a specific license application relating to designated persons-including one that implicates Berman Amendment materials—must depend on the particular facts and circumstances presented. OFAC intends to issue additional public guidance on this issue in the near term.

The Subcommittee has continued to examine money laundering vulnerabilities in the U.S. art market in order to gauge the extent of the problem, how sanctioned individuals may be exploiting the market's vulnerabilities to launder suspect funds, and what action should be taken to detect, stop, and prevent ongoing misuse of the U.S. art market.

4. Shell Companies

Shell companies play a significant role in contributing to anti-money laundering vulnerabilities in the U.S. art industry. Treasury's Financial Crimes Enforcement Network ("FinCEN") defines shell companies as "typically non-publicly traded corporations or limited liability companies ("LLCS") that have no physical presence beyond a mailing address and generate little-to-no independent economic value."

Shell companies are generally straightforward and inexpensive to create in all 50 states and offshore jurisdictions. This process involves completing online forms and making an online payment, functions that can be executed by