[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
PREVENTING CULTURAL GENOCIDE:
COUNTERING THE PLUNDER AND
SALE OF PRICELESS CULTURAL
ANTIQUITIES BY ISIS
=======================================================================
HEARING
BEFORE THE
TASK FORCE TO INVESTIGATE
TERRORISM FINANCING
OF THE
COMMITTEE ON FINANCIAL SERVICES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTEENTH CONGRESS
SECOND SESSION
__________
APRIL 19, 2016
__________
Printed for the use of the Committee on Financial Services
Serial No. 114-83
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
_________
U.S. GOVERNMENT PUBLISHING OFFICE
23-891 PDF WASHINGTON : 2017
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For sale by the Superintendent of Documents, U.S. Government Publishing Office,
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HOUSE COMMITTEE ON FINANCIAL SERVICES
JEB HENSARLING, Texas, Chairman
PATRICK T. McHENRY, North Carolina, MAXINE WATERS, California, Ranking
Vice Chairman Member
PETER T. KING, New York CAROLYN B. MALONEY, New York
EDWARD R. ROYCE, California NYDIA M. VELAZQUEZ, New York
FRANK D. LUCAS, Oklahoma BRAD SHERMAN, California
SCOTT GARRETT, New Jersey GREGORY W. MEEKS, New York
RANDY NEUGEBAUER, Texas MICHAEL E. CAPUANO, Massachusetts
STEVAN PEARCE, New Mexico RUBEN HINOJOSA, Texas
BILL POSEY, Florida WM. LACY CLAY, Missouri
MICHAEL G. FITZPATRICK, STEPHEN F. LYNCH, Massachusetts
Pennsylvania DAVID SCOTT, Georgia
LYNN A. WESTMORELAND, Georgia AL GREEN, Texas
BLAINE LUETKEMEYER, Missouri EMANUEL CLEAVER, Missouri
BILL HUIZENGA, Michigan GWEN MOORE, Wisconsin
SEAN P. DUFFY, Wisconsin KEITH ELLISON, Minnesota
ROBERT HURT, Virginia ED PERLMUTTER, Colorado
STEVE STIVERS, Ohio JAMES A. HIMES, Connecticut
STEPHEN LEE FINCHER, Tennessee JOHN C. CARNEY, Jr., Delaware
MARLIN A. STUTZMAN, Indiana TERRI A. SEWELL, Alabama
MICK MULVANEY, South Carolina BILL FOSTER, Illinois
RANDY HULTGREN, Illinois DANIEL T. KILDEE, Michigan
DENNIS A. ROSS, Florida PATRICK MURPHY, Florida
ROBERT PITTENGER, North Carolina JOHN K. DELANEY, Maryland
ANN WAGNER, Missouri KYRSTEN SINEMA, Arizona
ANDY BARR, Kentucky JOYCE BEATTY, Ohio
KEITH J. ROTHFUS, Pennsylvania DENNY HECK, Washington
LUKE MESSER, Indiana JUAN VARGAS, California
DAVID SCHWEIKERT, Arizona
FRANK GUINTA, New Hampshire
SCOTT TIPTON, Colorado
ROGER WILLIAMS, Texas
BRUCE POLIQUIN, Maine
MIA LOVE, Utah
FRENCH HILL, Arkansas
TOM EMMER, Minnesota
Shannon McGahn, Staff Director
James H. Clinger, Chief Counsel
Task Force to Investigate Terrorism Financing
MICHAEL G. FITZPATRICK, Pennsylvania, Chairman
ROBERT PITTENGER, North Carolina, STEPHEN F. LYNCH, Massachusetts,
Vice Chairman Ranking Member
PETER T. KING, New York BRAD SHERMAN, California
STEVE STIVERS, Ohio GREGORY W. MEEKS, New York
DENNIS A. ROSS, Florida AL GREEN, Texas
ANN WAGNER, Missouri KEITH ELLISON, Minnesota
ANDY BARR, Kentucky JAMES A. HIMES, Connecticut
KEITH J. ROTHFUS, Pennsylvania BILL FOSTER, Illinois
DAVID SCHWEIKERT, Arizona DANIEL T. KILDEE, Michigan
ROGER WILLIAMS, Texas KYRSTEN SINEMA, Arizona
BRUCE POLIQUIN, Maine
FRENCH HILL, Arkansas
C O N T E N T S
----------
Page
Hearing held on:
April 19, 2016............................................... 1
Appendix:
April 19, 2016............................................... 41
WITNESSES
Tuesday, April 19, 2016
Al-Azm, Amr, Associate Professor, Shawnee State University....... 11
Edsel, Robert M., Founder and Chairman, Monuments Men Foundation
for the Preservation of Art.................................... 6
Fanusie, Yaya J., Director of Analysis, Center on Sanctions and
Illicit Finance, Foundation for Defense of Democracies......... 7
Gerstenblith, Patty, Distinguished Research Professor, DePaul
University College of Law...................................... 9
Shindell, Lawrence M., Executive Chairman, ARIS Title Insurance
Corporation.................................................... 13
APPENDIX
Prepared statements:
Waters, Hon. Maxine.......................................... 42
Al-Azm, Amr.................................................. 47
Edsel, Robert M.............................................. 63
Fanusie, Yaya J.............................................. 71
Gerstenblith, Patty.......................................... 82
Shindell, Lawrence M......................................... 96
Additional Material Submitted for the Record
Waters, Hon. Maxine:
Written responses to questions for the record submitted to
Yaya J. Fanusie............................................ 112
Written responses to questions for the record submitted to
Lawrence M. Shindell....................................... 116
PREVENTING CULTURAL GENOCIDE:
COUNTERING THE PLUNDER AND
SALE OF PRICELESS CULTURAL
ANTIQUITIES BY ISIS
----------
Tuesday, April 19, 2016
U.S. House of Representatives,
Task Force to Investigate
Terrorism Financing,
Committee on Financial Services,
Washington, D.C.
The task force met, pursuant to notice, at 10:10 a.m., in
room 2128, Rayburn House Office Building, Hon. Michael G.
Fitzpatrick [chairman of the task force] presiding.
Members present: Representatives Fitzpatrick, Pittenger,
Stivers, Ross, Wagner, Barr, Rothfus, Schweikert, Williams,
Poliquin, Hill; Lynch, Himes, Foster, Kildee, and Sinema.
Ex officio present: Representative Hensarling.
Also present: Representative Royce.
Chairman Fitzpatrick. The Task Force to Investigate
Terrorism Financing will come to order.
The title of today's task force hearing is, ``Preventing
Cultural Genocide: Countering the Plunder and Sale of Priceless
Cultural Antiquities by ISIS.''
Without objection, the Chair is authorized to declare a
recess of the task force at any time.
Also, without objection, members of the full Financial
Services Committee who are not members of the task force may
participate in today's hearing for the purposes of making an
opening statement and questioning the witnesses.
The Chair now recognizes himself for 3 minutes for an
opening statement.
I want to thank everyone for joining us today for the
eighth hearing of the House Financial Services Committee's Task
Force to Investigate Terrorism Financing. I would again like to
thank Chairman Hensarling and Ranking Member Waters, as well as
my colleagues here, for their unwavering support as we continue
to investigate the threat of terror finance.
Since it has surfaced, ISIS has remained substantially
different than many terror organizations in its ability to
self-finance due to its diversified revenue streams, pulling in
funds from ransoms to oil production. One of the most discussed
methods has been the exploitation of art and antiquities from
Syria and Iraq. While not as lucrative as oil or extortion,
Iraqi officials believe that ISIS could be generating as much
as $100 million from the sale and trafficking of antiquities
alone.
Recent events have attributed this illicit practice
exclusively to IS, but make no mistake: The plunder of art and
antiquities has regularly been utilized by transnational groups
operating around the world. It has been estimated that the
profit of the traffic and sale of these cultural properties may
range anywhere from $3.4 billion and $6.3 billion annually.
This crime has and will continue to be a global problem,
which requires a coordinated international effort to combat.
Furthermore, this issue hits close to home. The FBI has
credible reports that U.S. persons have been offered cultural
property that has appeared to have been removed from Syria.
The United States must do its part in curbing the demand
for these cultural and artistic pieces by taking another look
at customer due diligence and improving coordination with our
international partners. This is a revenue stream exploited by
illicit actors around the world, and it cannot continue
unabated.
I believe that today's hearing, with the expert panel of
witnesses, will help illustrate the scale and severity of this
issue as well as offer measures to best combat and diminish
this despicable practice.
At this time, I would like to recognize this task force's
ranking member, my colleague, Mr. Lynch from Massachusetts, for
4 minutes.
Mr. Lynch. Thank you, Mr. Chairman.
I also want to thank Chairman Hensarling and Ranking Member
Waters, as well as Vice Chairman Pittenger, for holding today's
hearing.
And I would like to welcome and thank our distinguished
panel of experts this morning for helping our task force with
this important work.
Today's hearing will focus on how the United States can
counter the plunder and sale of priceless cultural antiquities
by the Islamic State and others. The relevant themes of today's
hearing, while focused on antiquities, are analogous to what we
have seen throughout our task force hearings, especially those
concerns related to trade-based money laundering.
To cut off the flow of financing to terrorist
organizations, we need better information-sharing on all
fronts, and this includes improvements in information-sharing
between government agencies, between countries, and with the
private sector.
We also need to be able to track the true owners of
property, whether that property is an ancient artifact or a
high-rise apartment building. We need to cut off trade routes
that terrorist organizations use to funnel illicit goods, and
we need a network of trade transparency units for proper
Customs enforcement.
Thus, the same strategies we need to combat antiquities
trafficking can be used in a broader strategy to combat ISIS.
For example, in a previous hearing on trade-based money
laundering, this task force discussed the routes that ISIS used
to smuggle cash in and out of the territory it controls. We
learned that many of these routes run through Turkey and
Jordan.
In his prepared remarks for today's hearing, Yaya Fanusie
indicated that ISIS is using similar routes to smuggle
antiquities out of its territory. In addition, he notes that
Lebanon as well as the Balkan route, through Greece and
Bulgaria, are being used to smuggle antiquities and other
illicit commodities.
Currently there is ample opportunity for terrorist groups
to exploit these routes with low risk of being caught. We need
to do a better job policing these routes so that ISIS can no
longer smuggle antiquities and other contraband out of the
territory that it controls.
Furthermore, we must curtail the laundering of antiquities
that make it out of the ISIS-controlled territory so these
goods cannot be integrated in legitimate markets. As Lawrence
Shindell and Dr. Patty Gerstenblith mention in their prepared
remarks as well, ISIS' ability to profit from the sale of
antiquities is only possible because of a systematic problem of
trade-based money laundering in the art industry.
We need to bring together greater rules of transparency to
this industry so that antiquities trafficking is no longer
profitable for terrorist organizations. And as Dr. Gerstenblith
suggests, to better track art and antiquities that enter the
United States we should require export declarations for art and
antiquities worth more than $10,000, and also consider a tariff
on imports of these items.
I look forward to hearing the testimony from our witnesses
so we can further examine this issue in greater detail.
And I yield back the balance of my time.
Chairman Fitzpatrick. I now recognize for an opening
statement the vice chairman of the task force, Mr. Pittenger of
North Carolina, for 2 minutes.
Mr. Pittenger. Thank you, Mr. Chairman. And thank you for
your dedication and hard work on these important issues.
I would like to also thank Ranking Member Lynch, Chairman
Hensarling, Ranking Member Waters, and as well as our
professional staff, Joe Pinder, for assembling for such an
esteemed group of witnesses we have here today.
Over the last year we have gained important insight into
the threats facing our Nation, how they are funded, and the
many obstacles we face to intercepting these funds. Recently, I
had the opportunity to travel to South America to witness
firsthand the problems they face with regard to illicit
financing operations and the emerging presence of Iran
Hezbollah and other terror financers.
While the problems are great, I was inspired by the
dedicated officials in Argentina, Panama, Colombia, and
Paraguay, who are tasked with a heavy burden of combating
sophisticated criminal financial networks. We must continue
working with these countries and sharing our own resources and
expertise to ensure these countries do not become overrun by
well-financed criminal and terror organizations.
Today, we address ISIS financing through illegal
antiquities sales. ISIS remains the world's most dominant and
barbaric terror organization.
According to our Government's National Security Strategy,
it is the objective of the United States to degrade and defeat
ISIS. While this Administration's overall strategy remains
questionable, both parties can agree that preventing the flow
of dollars to fund ISIS and its caliphate must remain a top
priority of our government.
With this hearing, Congress is signaling the importance of
identifying and combating each element of ISIS financing,
whether it be extortion, cross-border cash smuggling, trade-
based money laundering, or, in this case, antiquities sales.
Thank you, Mr. Chairman, for holding this important hearing
on such a pertinent issue, and I yield back.
Chairman Fitzpatrick. I now recognize the gentlelady from
Arizona, Ms. Sinema, for 1 minute.
Ms. Sinema. Thank you, Chairman Fitzpatrick and Ranking
Member Lynch.
Terrorism is an undeniable threat to our country's security
and global stability. Terrorist networks constantly develop new
ways to finance their deadly operations and threaten America.
The Islamic State is one of the world's most violent,
dangerous, and well-financed terrorist groups.
Within the past year, amid greater pressure on its other
financial resources, IS has ratcheted up the extraction and
sale of antiquities to fund its militant violence. In 2015, IS
generated millions of dollars from trafficking in antiquities.
Funds are raised from direct looting as well as through
imposing taxes and requiring permits for criminal smugglers who
operate in IS-controlled territory.
The impact of these actions goes beyond the financing of
terrorism. The destruction or sale of these antiquities is also
part of IS's apocalyptic worldview in which anything outside of
its perverse and disgusting vision of Islam must be destroyed.
The loss of these historical treasures is a tragedy. To
keep our country safe we must be one step ahead of IS, cutting
off its funding and stopping its efforts.
I appreciate hearing from our witnesses about addressing
this threat and defeating ISIS.
I yield back.
Chairman Fitzpatrick. We now welcome our witnesses.
Mr. Robert Edsel is our first witness today. Mr. Edsel is
the author of several nonfiction books, including, ``Rescuing
Da Vinci,'' ``The Monuments Men: Allied Heroes, Nazi Thieves,
and the Greatest Treasure Hunt in History,'' as well as
``Saving Italy: The Race to Rescue a Nation's Treasures from
the Nazis.''
He is co-producer of the documentary film, ``The Rape of
Europa,'' and the founder and chairman of the Monuments Men
Foundation for the Preservation of Art. Most famously, Academy
Award-winner George Clooney directed and starred in a film
based on Mr. Edsel's book, ``The Monuments Men,'' which was
released on February 7, 2014.
Raised in Dallas, Texas, Mr. Edsel graduated from St.
Mark's School of Texas and Southern Methodist University. He
has been awarded the Texas Medal of Arts Award, the President's
Call to Service Award, and the Hope for Humanity Award,
presented by the Dallas Holocaust Museum.
In 2014, he was presented with the Records of Achievement
Award from the Foundation for the National Archives, which
recognizes an individual whose work has fostered a broader
national awareness of the history and identity of the United
States through the use of original records. He serves as
trustee of the National World War II Museum in New Orleans.
Mr. Yaya Fanusie is the director of analysis at the Center
on Sanctions and Illicit Finance at the Foundation for Defense
of Democracies. Yaya spent 7 years as both an economic and
counterterrorism analyst in the CIA, where he regularly briefed
White House-level policymakers, U.S. military personnel, and
Federal law enforcement.
After government service, Yaya worked in a small consulting
firm where he led a team of analysts working on a multibillion-
dollar recovery effort involving a global corruption ring. He
then operated his own consulting practice training firm,
specializing in strategic analysis and business due diligence.
Yaya received an M.A. in International Affairs from
Columbia University's School of International and Public
Affairs, and a B.A. in Economics from U.C. Berkeley.
Dr. Patty Gerstenblith is a distinguished research
professor at the DePaul University School of Law. She is also
director of its Center for Art, Museum, and Cultural Heritage
Law. She is also the founding president of the Lawyers'
Committee for Cultural Heritage Preservation, a director of the
U.S. Committee of the Blue Shield, and a senior advisor to the
ABA's Art and Cultural Heritage Law Committee.
In 2011, she was appointed by President Obama to serve as
the Chair of the President's Cultural Property Advisory
Committee at the U.S. Department of State. Previously, she was
editor-in-chief of the International Journal of Cultural
Property.
Dr. Gerstenblith received her bachelor's degree from Bryn
Mawr College, a Ph.D. in Art History and Anthropology from
Harvard University, and a J.D. from Northwestern University.
Dr. Amr Al-Azm is an associate professor at Shawnee State
University in Ohio. He was educated in the U.K., reading
Archeology of Western Asiatics at the University College
London, and graduated with a doctoral degree in 1991.
He was the director of scientific and conservation
laboratories at the General Department of Antiquities and
Museums in Syria, and taught at the University of Damascus
until 2006. From 2006 until 2009, he was visiting assistant
professor at Brigham Young University.
Dr. Al-Azm is an active member of the Syrian opposition and
serves on the executive committee of The Day After project.
Mr. Lawrence Shindell is executive chairman of the U.S. New
York-headquartered ARIS Title Insurance Corporation, a division
of the NASDAQ-traded Argo Group, an international insurance
company. ARIS Title Insurance Corporation is the world leader
in securing legal ownership to non-real-estate property assets
for multiple industry sectors.
Mr. Shindell regularly advises, speaks, and writes
internationally on the legal title risks inherent in the global
art and collectibles market for a range of industry
stakeholders and participants.
Mr. Shindell holds a bachelor's degree from the University
of Wisconsin-Madison, and a juris doctorate from Emory
University School of Law.
The witnesses will now be recognized for 5 minutes each to
give an oral presentation of your written remarks. And without
objection, each of your written statements will be made a part
of the record.
Once each of the witnesses have finished presenting their
testimony, the members of the task force will have 5 minutes
within which to ask questions.
On your table, there are three lights: green; yellow; and
red. Yellow means that you have 1 minute remaining, and red
means your time is up.
And with that, Mr. Edsel, you are recognized for 5 minutes.
Thank you, sir.
STATEMENTS OF ROBERT M. EDSEL, FOUNDER AND CHAIRMAN, MONUMENTS
MEN FOUNDATION FOR THE PRESERVATION OF ART
Mr. Edsel. I would like to extend my thanks to Chairman
Fitzpatrick, Ranking Member Lynch, and the members and staff of
the task force, for including me in these important
deliberations.
Evidence that ISIS has sanctioned the looting and sale of
antiquities to generate revenue for terrorism is a game-
changer. It compels us to think about the ownership of art, the
responsibility of the art trade and collectors, and the role of
the Federal Government differently than ever before.
We cannot say we weren't warned. As recently as 1981,
Monuments Man Mason Hammond, the only Monuments Officer to see
duty in Italy and Germany, and an important advisor to General
Eisenhower's staff, urged all those willing to listen that,
``Planners for future hostilities tend to think in terms of the
last conflict, but any consideration of the different ways in
which the First and Second World Wars were fought demonstrates
the fallacy of such an approach. If this generation wishes to
leave to its children the cultural treasures that it has
enjoyed, such planning should be encouraged.''
Hammond's warning went unheeded. But as events in Iraq in
2003, and more recently in Syria, have painfully demonstrated,
he was right.
The Monuments Men saw firsthand that the destruction of
cherished artistic and religious treasures is the starter gun
that precedes genocide and the human suffering that follows. It
proved true in Nazi Germany, in Bosnia-Herzegovina, in Al
Qaeda-controlled areas of Afghanistan and Mali, and now in
ISIS-administered portions of Syria and Iraq.
Ignoring this early warning sign denies our Nation the
chance to act; we can only react. Organizations that are
charged with preserving our cultural heritage are instead
relegated to bearing witness to its destruction.
Steps we as a Nation have taken to protect our homeland
following September 11th have not kept pace with developments
in the art world. Nowhere near.
Today, art is synonymous with money. The global explosion
of wealth these past 20 years has created more buyers with
greater resources chasing prized objects.
Prices have skyrocketed. Consider that a painting by
Picasso that sold for less than $200,000 in 1956 recently sold
for $180 million, a sculpture by Giacometti for $141 million,
and a drawing by Raphael for $50 million.
The sums are staggering, and yet regulatory authorities
have not created and applied the same level of control
procedures in the art market as we have in other areas of
commerce involving similar sums of money. This creates a
weakness that ISIS and others--tax cheats, those in possession
of looted paintings and objects, and smugglers--can exploit.
The very profitability of art and antiques and sometimes
their relatively small size facilitates movement, sometimes
into hiding places out of view by tax authorities, Nazi-looted
claimants, and other victims of theft. For example, just last
week the Panama Papers leak revealed that a Nazi-looted
painting by Modigliani worth upwards of $25 million was among
thousands of works of art stored in special tax zones known as
free ports.
While this art netherworld does provide privacy for the
honest, the lack of transparency also cloaks tax cheats,
thieves, and those aiding ISIS' business operation of
converting cultural treasures to cash to fund terrorism.
The art trade is a largely self-regulated, antiquated
business model operating in a digitized, near-invisible world.
Until the advent of the Internet in the late 1990s, few in the
art world paid attention to provenance--a fancy word for who
owned something in the past--unless it enhanced the value of
the object. Looted art traded hands, some of it openly.
Although there has been improvement in the scrutiny of
objects sold at public auction, there remains a high degree of
willful ignorance by some collectors eager to add to their
collections. Worse still is their lack of knowledge about the
history of what they already own. Some don't want to know.
Who can be against infusing the opaque system of the art
world with increased transparency? Tax cheats? Those who
possess stolen works of art? Smugglers? Terrorism networks?
Because privacy alone cannot be an argument for doing nothing
when the stakes for the common good are so high.
In closing, the policy of the Western Allies and the work
of the Monuments Men established the high bar for the
protection of cultural treasures during times of conflict. It
was a source of pride for General Eisenhower, who said, ``It is
our privilege to pass on to the coming centuries treasures of
past ages.''
What, then, will be our legacy?
[The prepared statement of Mr. Edsel can be found on page
63 of the appendix.]
Chairman Fitzpatrick. Mr. Fanusie, you are now recognized
for 5 minutes.
STATEMENT OF YAYA J. FANUSIE, DIRECTOR OF ANALYSIS, CENTER ON
SANCTIONS AND ILLICIT FINANCE, FOUNDATION FOR DEFENSE OF
DEMOCRACIES
Mr. Fanusie. Thank you. Good morning.
Chairman Fitzpatrick, Ranking Member Lynch, and members of
the task force, on behalf of the Foundation for Defense of
Democracies and its Center on Sanctions and Illicit Finance,
thank you for the opportunity to testify.
Before delving into the issue of Islamic State antiquities
trafficking, it is important first to clarify how the trade
fits into ISIS' overall economic goals. One way to understand
these goals is to look at some of the strategies guiding the
group's actions.
Now, one of ISIS' aims is to win over locals who may be on
the fence regarding submitting to jihadist rule. This approach
gives context to the antiquities trade in ISIS territory.
Although exactly how much ISIS earns from looting ancient
artifacts is difficult to assess, the group clearly encourages
and facilitates the trade. This facilitation appears to be part
of ISIS' economic strategy, not just for funding the group
itself, but for creating ways to bring funds to its subjected
population, whose hearts and minds the Islamic State is trying
to win.
ISIS has been dubbed the world's richest terrorist army,
and the illegal antiquities trade is one income stream which
gives the group significant strategic advantage against
existing counter-terror finance efforts. The trade's main
target buyers are, ironically, history enthusiasts and art
aficionados in the United States and Europe--representatives of
the societies which ISIS has pledged to destroy. This poses
several challenges to policymakers, but there may be
opportunities for us as well.
Now, ISIS has access to roughly 5,000 archaeological sites
and probably has earned several million dollars from
antiquities trafficking. And some of the looting appears to be
conducted by local populations who sell amid an economically
devastated environment where ISIS already taxes and confiscates
other earnings and possessions.
The importance of this trade for ISIS lies not just in the
funding, but in the market's strategic and operational
benefits. The illegal trade of artifacts generally doesn't risk
provoking outside military attacks--it is not likely that the
excavation sites are going to be bombed; or provoking local
rebellion.
The pipelines that move antiquities to market invariably
transit states bordering Syria and Iraq. Turkey and Lebanon are
the best-documented among these. European border states also
play an important role.
These pipelines are well-known for other illicit
commodities but less understood in the context of antiquities.
The Balkan route into Europe through Greece and Bulgaria is a
known path for drugs and migrants and probably plays a role in
antiquities trafficking.
So the global annual trade in illicit art and antiquities
is hard to stop. Looted objects are hidden away for long
periods, false documentation on their provenance is routine,
and transactions have proven difficult to track through
traditional Customs enforcement and financial intelligence.
The challenges are great, necessitating new means to
counter them. The following are some recommendations that may
help policymakers address this trade.
One, imposing terrorism sanctions on artifact smugglers and
dealers. Even a handful of strategic terror financing
designations by OFAC, the E.U., and the U.N. imposed on the
worst offenders would likely have a chilling effect on both
sellers and buyers, given the financial risks and fines
associated with sanctions.
Two, making antiquities looting an intelligence and law
enforcement priority. At present, it is unclear who in the U.S.
Government is even responsible for countering antiquities
trafficking. Reform can only come about by declaring this issue
a national security priority. The U.S. Government must
designate a lead organization and provide adequate
authorization and resources.
Three, incorporating cultural property crime awareness into
the intelligence community and U.S. Special Operation--Special
Forces training. Threat finance is already emphasized in
courses taught at the Joint Special Operations University, but
such courses do not appear to highlight antiquities despite
their role in terror finance. Antiquities trafficking should be
included in future coursework.
Four, expanding registries of art and antiquities. Now,
registries of stolen art and antiquities are commonplace, but
new technologies make it possible for art and artifacts to be
tagged and tracked in real time, even using DNA markers. So
over time, by tagging a large number of objects with unique
identifiers, a better chain of custody can be created.
These recommendations are just a few of the steps in what
will undoubtedly be a long, complex, and multifaceted battle.
Law enforcement and intelligence officials should pay close
attention to the antiquities trade emanating from Syria and
Iraq, not just because they need to know precisely how much
money ISIS brings in. What is important is that the trade
itself reveals something about Islamic State's operational
infrastructure, its links with partners and middlemen, and how
the group is exploiting the local civilian population. All of
this is critical to understanding how the United States and its
allies may defeat the group militarily, financially, and
ideologically.
Thank you.
[The prepared statement of Mr. Fanusie can be found on page
71 of the appendix.]
Chairman Fitzpatrick. Dr. Gerstenblith, you are now
recognized for 5 minutes.
STATEMENT OF PATTY GERSTENBLITH, DISTINGUISHED RESEARCH
PROFESSOR, DEPAUL UNIVERSITY COLLEGE OF LAW
Ms. Gerstenblith. Chairman Fitzpatrick, Ranking Member
Lynch, and members of the task force, thank you for this
opportunity to speak with you.
As was mentioned, I serve as the Chair of the Cultural
Property Advisory Committee in the State Department. However, I
am speaking to you today both in my personal capacity and on
behalf of the U.S. Committee of the Blue Shield.
The Blue Shield is the cultural equivalent of the Red Cross
and is used to mark protected cultural sites. Among the current
activities of our organization is the creation of no-strike
lists of cultural sites and repositories, and we liaise with
the Department of Defense to assist in fulfilling our
international obligations to protect cultural heritage during
armed conflict.
Syria and Northern Iraq are rich in historic remains
stretching over many millennia. This is where the Akkadian King
Hammurabi ruled at the beginning of the second millennium BCE,
and where the Hebrew prophet Jonah successfully preached
repentance to the Assyrian Ninevites 1,000 years later.
Historic remains represent the successive cultures of the
Greeks, the Romans, the Byzantines, and the Islamic and Ottoman
periods; as well as many faiths, including Judaism,
Christianity, and Islam; and minority groups such as the
Yazidis, Zoroastrians, and Druze. Syria is home to 6 world
heritage sites and 12 tentative world heritage sites.
When an archaeological site is looted, the contextual
relationship among the artifacts and other remains is
destroyed, thereby permanently preventing us from fully
understanding and reconstructing our past. Unfortunately, the
looting of archaeological sites is big business, often carried
out on an organized, industrialized scale, and in response to
market demands. And many of these sites are unknown before they
are looted.
As cultural objects move from source, transit, and
destination countries, different legal systems create obstacles
to interdiction of objects and prosecution of crimes, and they
allow the laundering of title to these artifacts.
The United States is the single largest market for art in
the world, with 43 percent of market share. Because of the
availability of the charitable tax deduction, the ability to
import works of art and artifacts without payment of tariffs,
and because of artistic preference, the United States is the
largest ultimate market for antiquities, particularly those
from the Mediterranean and the Middle East.
Antiquities freshly looted from the ground have no
established value and no documented history. They can be mined
from the ground as new commodities. Therefore, they are the
perfect vehicle for moving funds and value around the world and
for supporting illegal activities such as trade-based money
laundering, purchase of drugs and weapons, organized crime, and
terrorism.
Because of the unknown nature of recently looted
antiquities, databases of stolen art are for the most part
useless for regulating the antiquities trade. And technologies
that would tag cultural objects would, in my opinion, be
similarly ineffective.
Both ISIL and the Assad regime are participating in looting
and are realizing income from the sale of antiquities.
Diachronic studies of satellite images of archaeological sites
reveal historic patterns of looting pre-conflict.
For example, in this image of the site of Mari, which is
located in eastern Syria and fell under ISIL control in the
summer of 2014, pre-conflict you can see some looters' pits,
but not many. And in the fall of 2014, I hope you can see the
large numbers of looters' pits, many of which are marked with
the red circles around them, but there are additional ones as
well.
We know that ISIL earns income at several points of
intersection with the channels through which these artifacts
move. We also know that for propaganda purposes, ISIL destroys
on a large and public stage immovable structures, such as
ancient temples, churches, and shrines. They also destroy
artifacts that are documented in museum collections and that
are too well-known to sell or too large to move.
But away from public view, it orchestrates the looting of
antiquities, charging for licenses, taxing the smugglers, and
selling the artifacts or taxing their sale. You will hear more
about this from Dr. Al-Azm.
Yet, there are steps that the United States can take that
impose little cost and no risk to American citizens because
these are steps that we can take here in the United States but
that would also reduce the economic reward to ISIL.
First of all, returning to the House next week, I hope,
will be H.R. 1493, which will impose import restrictions on
cultural materials illegally removed from Syria after the
beginning of the rebellion in March of 2011. Second, take up
H.R. 2285, to improve Customs enforcement of existing law.
Third, encourage law enforcement to refocus attention away
from forfeiture and repatriation of objects and toward criminal
prosecutions so that criminal networks can be dismantled and
higher-level actors reached. Fourth, foster greater
transparency and accountability in the market by, among other
things, requiring documentation of ownership history upon sale
or donation to charitable institutions.
And finally, we should be looking prospectively towards
places where ISIL is moving, such as Libya, which is also home
to many archaeological sites. We need to develop a proactive,
rather than reactive, way of dealing with the problem of
antiquities looting and marketing.
Thank you for this opportunity to address the task force. I
look forward to answering your questions.
[The prepared statement of Dr. Gerstenblith can be found on
page 82 of the appendix.]
Chairman Fitzpatrick. Thank you, Doctor.
Dr. Al-Azm is now recognized for 5 minutes.
STATEMENT OF AMR AL-AZM, ASSOCIATE PROFESSOR, SHAWNEE STATE
UNIVERSITY
Mr. Al-Azm. I would like to begin by thanking the Financial
Services Committee and its task force for inviting me to
testify on such an important subject.
I will focus my remarks on three key points.
One, when ISIS took over large swaths of territory back in
2014 it essentially took over a preexisting situation of
looting. ISIS did not start the looting; it just carried it on.
Moreover, it actually institutionalized the process and
intensified it to a great degree.
In fact, what we can say is that ISIS sees cultural
heritage as a resource to be exploited like any other. And we
know this because ISIS has a dedicated department for the
administration of the looting of antiquities.
You can see here, for example, this is one of their offices
in the city of Manbij, and it is placed under the Diwan Al-
Rikaz. Diwan Al-Rikaz means the Office of Resources, which also
manages oil revenue, taxation, and any other source of revenue
that ISIS cares to use.
Through this office, licenses like this one are issued to
looters, which are then given--which allow the looters, gives
them permission to go out and loot archaeological sites. In
fact, the purchase of a looting license is a source of revenue,
as are extensions, as you see in this case here. This looter,
having dug up the site, decided he needed an extension, so he
purchased an extension, and then needed to use heavy machinery,
so in the second image on the right you can see that he
purchased an actual extension to his license to allow him to
use heavy machinery. The heavy machinery--you can see it here--
are now being used to gouge chunks of earth out of the site.
And if you don't think that this is producing good
material, here are some of the finds that came out of this one
licensed site that was being looted: not only these pieces of
pottery, but also, as you can see, these bronze and metal
items, all coming from a Bronze Age tomb complex.
We also know that when ISIS licenses these sites, it also
then requires the looter to sell the items. If he fails to sell
them, then ISIS will take them back and they will use their
major main auction in the city of Raqqa. We know that there is
a major auction in Raqqa. It operates on a regular basis,
sometimes as often as 3 times a week, when necessary.
These two items there were recently looted from the city of
Palmyra just before ISIS was forced out of the city, and they
were sold about 3 weeks ago in the Raqqa auction. I believe the
asking price was $150,000. I cannot confirm whether that was
the price that was achieved, but that was the asking price.
ISIS, as Patty mentioned, also destroys cultural heritage.
It does so, however, for propaganda purposes. It loots what it
can sell; it destroys what it cannot.
Large monuments like these end up being destroyed because
they allow ISIS to demonstrate its ability to act with impunity
and the impotence of the international community to do anything
about it. It is a powerful propaganda tool. ISIS exploits it
and uses it to great effect.
Also, just to point out to you that it is not just ISIS
that loots; looting was also done by the regime. These two
items were looted from Palmyra, but this was when it was under
regime control, and they are currently also on sale in Syria
and about to be exported to Turkey by the dealer who has them.
And he purchased them from an army officer 1 year before ISIS
took control of the site.
What can we do about this? Efforts are being made to
protect cultural heritage inside Syria. Seventy percent of
Syria's cultural heritage is actually outside regime-controlled
areas and outside the reach of its government institutions.
Therefore, it falls on non-state actors--local activists,
museum curators, archaeologists--to try and do something--and
NGOs like The Day After, with its Heritage Protection
Initiative.
We try to do what we can. We try to monitor this damage; we
try to monitor this destruction; we try to document any
activity that occurs related to this.
But at the end of the day, we are just civilians. We don't
have the institutional support.
We do get some help from organizations here in the United
States like the American School of Oriental Research (ASOR);
Penn Cultural Heritage Center has supported us; as does the
Antiquities Coalition, and others. But this support is actually
limited, and this hardly addresses the scale of the catastrophe
that we are facing.
I would also touch upon the importance of why it is
necessary to save this cultural heritage. I am out of time, so
I would be happy to answer that during questions.
Thank you.
[The prepared statement of Dr. Al-Azm can be found on page
47 of the appendix.]
Chairman Fitzpatrick. Thank you, Dr. Al-Azm.
Mr. Shindell, you are recognized for 5 minutes.
STATEMENT OF LAWRENCE M. SHINDELL, EXECUTIVE CHAIRMAN, ARIS
TITLE INSURANCE CORPORATION
Mr. Shindell. Chairman Fitzpatrick, Ranking Member Lynch,
and members of the committee and the task force, thank you for
inviting me to testify.
I also would like to thank the task force itself for its
work to highlight the complex nature of terrorism financing,
including the weekly news clips e-mailed to interested
stakeholders on the subject.
I submitted my more detailed written testimony for the
record, so I will focus on two points.
One, the problem with terrorism financing through conflict-
zone looting of cultural objects relates to the broader problem
of money laundering of the global art industry, as
Representative Lynch accurately pointed out.
The need is for improved AML compliance in connection with
art and cultural objects as an asset class, which can only
happen at the intersection of the art and financial industries.
If we remove the ability of terrorists to launder stolen and
looted art and cultural objects, then we remove the economic
motive to loot these objects, cut off a key source of terrorism
financing, and make great strides toward protecting important
parts of the world's cultural legacy.
Two, effective solutions are now within reach. ARIS has
been reviewing, with the trade and financial regulators in the
U.S., U.K., Switzerland, Luxembourg, and Belgium, information-
based technology solutions to bring transparency to global art
and antiquities transactions.
At home, ARIS believes that FinCEN has the ability to use
its authority to bring greater transparency and information-
sharing to the art and antiquities market through partnering
approaches with the U.S. Treasury and FinCEN, which I will
discuss in a moment, to detect and share information on
anomalistic patterns of behavior in art industry financial
sector transactions. These patterns, if identified, can signal
terrorism financing through looted art and cultural objects as
well as trade-based money laundering in the art industry
generally.
ARIS' lens on these issues stems from its role as the
leading title insurer in the industry, servicing the broad
range of stakeholders, from the financial markets lending
against the asset class, capital markets investing in the asset
class, and the nonprofit museum community as well as the trade.
The problem is, of course, the unregulated nature of the
industry, as you have heard, combined with a lack of
recordkeeping for transactions in source and market nations,
all of which obscures legal status and beneficial ownership. In
the AML context, this prevents market participants from
identifying patterns in illegal schemes, when identifying
patterns is the core of the AML enforcement and compliance.
Compounding the problem is the prevalence of free ports, as
you heard alluded to, which are tax-free zones designed to
serve as a way station in valid transactions so that the tax
ultimately assigned is levied at the final destination of the
object. But in fact, these become locations to store works
indefinitely that adds to the obfuscation in the art industry.
The Financial Action Task Force on Money Laundering identified
this problem as early as 2010.
And to be sure, good-faith, well-intended, responsible
operators of free ports in the market as a whole, as well as
regulators, seek better systemic means to close the gap between
AML's compliance regulations and practical barriers to
enforcing them.
So simply put, attacking terrorism financing using cultural
objects and art is impeded by the current inability to cross-
reference independently reported and organized pieces of
information to identify anomalies and suspicious activity.
Comptroller of the Currency Curry commented in March of 2015
that the need is for more accurate and timely information and
the use of technology to close information gaps. We believe
FinCEN has the authority to place art title insurance companies
under the BSA for information-sharing with safe harbor
protection to ignite this kind of solution in the industry that
would enable detecting effective patterns.
Lastly, I mentioned technology solutions which are now
underway to address the lack of accurate information reliably
linked to artistic and cultural objects. Currently, at the
State University of New York's campus at Albany, through a
nonprofit organization called the Global Center of Innovation
for i2M Standards, standards-based solutions similar to NIST,
ISO, ANSI, to enable technologies, the equivalent of a
nanoscale vehicle identification number for artistic objects
and cultural objects, is now within reach to anchor objects so
that this information can be generated in the industry and
provide reliable information.
Thank you.
[The prepared statement of Mr. Shindell can be found on
page 96 of the appendix.]
Chairman Fitzpatrick. Thank you, Mr. Shindell.
And I thank all the witnesses for their testimony here
today.
We are now going to move to the Members' questions. First,
I am going to recognize the gentlelady from Missouri,
Representative Ann Wagner, who had previously served as
ambassador to Luxembourg, which gives her a unique perspective
on this particular subject.
The gentlelady is recognized for 5 minutes.
Mrs. Wagner. Thank you. And I thank the chairman for his
courtesy in letting me jump ahead here.
Thank you all for appearing before the task force today to
discuss key elements that terrorists abroad are using in order
to obtain illicit financing.
Antiquity smuggling and the sale of cultural artifacts has,
frankly, been occurring since the 1980s and 1990s under the
regime of Saddam Hussein, as you well know, in order to avoid
international sanctions. And today the Islamic State is using
it to raise financing to fuel their operations and expand
terrorism worldwide. Understanding the prominence of this
activity and how it intersects with our financial institutions
and markets is critical to cutting off this source of funding
for terrorists and aiding in our efforts to eliminate ISIS.
Mr. Shindell, it is great to see you again.
Mr. Shindell came to meet with me in my office back, I
guess, in the beginning of 2015, and we have been exploring
this issue ever since.
In your testimony you note that anti-money laundering and
counter-terrorism financing laws are limited when it comes to
the trade of cultural property because they are not explicitly
covered in those laws' standards. How can we best address money
laundering through the art trade, sir?
Mr. Shindell. It really comes back to organizing the
information. So we have heard a lot of testimony, which is
important, about on-the-ground means to prevent the looting of
the object specifically; but once it leaves the ground and
enters the trade, it is the lack of a systemic system to
monitor what is happening to that object.
And so between gaps in information, unreliability of
information because of the lack of means to verify that an
export document may be a forged document. And so what happens
is there is a specific strategy in many circles of the industry
to move up the ladder from less important trade sources to more
important ones, and each step of the way creates a veneer of
credibility so that when the object gets to the good-faith
market, everything is out of control.
So a means that anchors information every step of the way
would shut down the problem.
Mrs. Wagner. Right. And I am sure you are keeping up with
current events. Was there an issue with stolen art involved in
the recent Panama Papers issue? And could you please briefly
discuss the details of that?
Mr. Shindell. The Panama Papers situation highlights what
effectively becomes the black hole in the industry because of
lack of transparency. So while none of us knows more than what
has been reported in the media so far, on many objects that are
implicated in that the real problem is what one doesn't know
because of the lack of transparency.
So yes, stolen objects may end up in tax-driven facilities
anchored in Panama, which enables hiding that kind of
information.
Mrs. Wagner. So a uniform system that all can be a part of
and buy into across-the-board is what is, I am assuming,
necessary in this space.
You mentioned briefly, Mr. Shindell, that your company
submitted a request to FinCEN, I believe in 2014, that art
title insurance be subject to the Bank Secrecy Act. Could you
please explain why you made that request, sir?
Mr. Shindell. It is a means to create information-sharing
in the financial sector. So let's suppose one of the large
banks in the United States is offered a basket of art objects,
whether cultural heritage objects or art as we might normally
think of it, for a loan transaction for $50 million.
Right now, because of the lack of information-sharing, that
financial institution would have no way of knowing whether that
same basket of assets was presented to 6 banks around the world
in the last 30 days, each of which on different information,
none of which is accurate, because their lens is limited to the
transaction that is in front of them. And because of a title
insurer's role, which is the keystone to asset integrity and
beneficial ownership information, it becomes, in effect, the
vortex to organize its information and take what would be
fractured noise to any individual institution and turn it into
reliable, curated, privacy-protected information that could be
deployed back to then generate suspicious activity reports and
so forth as the banks are trying to comply.
Mrs. Wagner. Thank you, Mr. Shindell.
Dr. Gerstenblith, the Financial Action Task Force in
February 2015 recommended that financial institutions and the
private sector should improve efforts to prevent suspicious
transactions. What progress has been made and what additional
steps--oh, I believe I have run out of time--can the private
sector take to improve these efforts?
Ms. Gerstenblith. I would like to start by pointing out
that at the moment it is not illegal--or not necessarily
clearly illegal--to bring antiquities from Syria into the
United States. They have not been included in the OFAC
sanctions and there is no general legal principle--
Mrs. Wagner. That is a huge hole, yes.
Ms. Gerstenblith. Yes.
Sorry. Yes, which would be, we hope, plugged very soon. And
that is not even the criminal provision; that is only going to
be something that leads to civil forfeiture. So before we go to
more advanced things, we need to do that.
Mrs. Wagner. I thank you.
And I yield back the remainder of none of my time that is
left and hope that my colleagues will explore that further.
Thank you very much.
Thank you, Mr. Chairman.
Chairman Fitzpatrick. The ranking member of the task force,
Mr. Lynch, is recognized for 5 minutes.
Mr. Lynch. Thank you.
And just following up on Mrs. Wagner's line of questioning,
it might be profitable for us to look at the Panama Papers side
of this, as well. And some suggested legislation, I know, in
the past on the issue of terrorist financing. We have gone to
Jordan, to Morocco, other places, where we have asked their
legislatures and their leadership to adopt anti-money
laundering or anti-terrorist financing legislation in those
countries so that we do have a means of enforcement.
Mr. Fanusie and also Mr. Shindell, I have a question. The
committee regularly travels to Iraq; we just came back last
week from Anbar Province and we spent some time--many of us,
numerous times--in Southern Turkey on the Syrian border. And we
have had an opportunity to meet with rebel groups operating in
Syria against Bashar Al-Assad.
A lot of those groups there, including ISIL, are using the
social media platform WhatsApp. And just going back to Mr.
Shindell's question about the chain of custody on some of these
artifacts, what is coming out of Syria and Iraq, and the source
of origin, that whole issue, is there a way for us to
interdict--I know they are marketing and selling these
antiquities in many cases on WhatsApp--the social media
platform. Is there any way for us to interdict that--
Mr. Fanusie. Maybe I will say something and then Dr. Al-
Azm, I know--
Mr. Lynch. Dr. Al-Azm, as well? Please, anybody who feels--
Mr. Fanusie. Go ahead, because I know you have been dealing
with--
Mr. Al-Azm. Let me just say at the outset, this is what we
do on a daily basis.
Mr. Lynch. Yes.
Mr. Al-Azm. We track these sales. We have people on the
ground who actually meet with these dealers. On my WhatsApp, I
receive dozens of these photos every day.
Mr. Lynch. Okay.
Mr. Al-Azm. The problem, however, is we receive this
information. What happens to it next, that is the big hole, and
I quite agree with Mr. Shindell. We have no means of then
moving this information on to be acted upon in any meaningful
way; it is just information that gets stacked up, and then it
goes down the rabbit hole and it disappears, never to be seen
again.
So there is a complete breakdown in terms of how this
information is used.
I can collect a lot of--I collect a lot of information
every day. This was collected by people on the ground who are
standing there photographing and then passing that information
on to us, and then what happens to that information afterwards
is really the big question--
Mr. Lynch. I see.
Mr. Al-Azm. --and how it is used effectively.
Mr. Lynch. Mr. Shindell?
Mr. Shindell. There are three ingredients to make these
solutions work: one is the means to anchor the object so
everyone knows this is the exact object we are talking about;
two, to then anchor verified information to that exact object
so one knows the image actually belongs to the object that is
moving in the market, and often there can be a disconnect
around that; and three, is a means to organize that information
to identify the anomalies--in the technology world today we
speak of it in terms of predictive analytics and other things
that can instantly say, through information generated at a
different timeline in a different part of the world, the object
that just came up on WhatsApp is at issue. So those are the
three ingredients.
Mr. Lynch. Okay.
Mr. Fanusie, anything to add?
Mr. Fanusie. And I will just add that there is an
opportunity there, too, because, as we know from law
enforcement that social media can be used to go after criminals
and to go after smugglers outside of antiquities. So there
actually are--if WhatsApp, eBay, Facebook--as these platforms
are being used to market the antiquities, the interdiction can
come from law enforcement getting involved on those platforms.
Mr. Lynch. Right. We have had some issues with the
encryption piece of that, and that is probably why it is a
platform of choice, I think, right now.
And I probably should have said this at the beginning.
Thank you. Thank you, each of you, for your work on this issue.
We have really benefited greatly by your expertise and your
willingness to work with the committee. Thank you.
I yield back.
Chairman Fitzpatrick. Thank you.
I now will yield 5 minutes to the chairman of the House
Committee on Foreign Affairs, Mr. Royce.
Mr. Royce. Thank you, Mr. Chairman. I want to thank you,
and I also want to thank Mr. Lynch, as well, for your work on
this issue.
I just returned from the Middle East, where I was honored
to speak at the Iraq Museum in Baghdad about the need to
counter ISIS' trafficking of priceless antiquities. And one of
the great shocks when you are in that part of the world is to
realize, just as the Third Reich in Germany tried to destroy so
much history with the book-burning and the history of the
German tribes, just tried to restart everything by destroying
evidence that went before it, here you have ISIS and you have
the Taliban and groups like that which are united in their
concept of just trying to destroy all evidence of Assyrian
civilization, Babylonian, any Christian examples of churches or
art in that region.
And I think the appalling aspect of it, when you consider
that you see some of these ISIS spokesmen and other Islamists
talk about taking the pyramids down brick by brick, you begin
to realize--from what we saw in Afghanistan, as well--when they
talk about wiping out evidence of Buddhist civilization, they
mean it. They really are committed to this goal. Palmyra would
be a case in point. But at the same time, for the smaller
antiquities that they can sell for the hard currency, they are
not beyond engaging in that kind of criminal activity.
And I was going to ask Dr. Gerstenblith, we have--Doctor, I
know how much we have worked on this over the years, and we
have the bill that Eliot Engel and I have introduced, H.R.
1493, to try to address this. This is coming back from the
Senate this week. Could you speak maybe about this concept of
protecting and preserving cultural property through this kind
of legislation?
Ms. Gerstenblith. Certainly. Thank you, Mr. Royce. And
thank you, of course, for your leadership on H.R. 1493.
As I mentioned before, currently there is no legal
mechanism clearly in place that would prohibit the import of
antiquities from Syria into the United States. And I will say
prospectively that same situation applies to Libya, where ISIL
seems to be moving next.
So in order to prevent these objects from coming to the
United States, but, perhaps more importantly, to convince the
middlemen and the dealers and the looters along the way that
they will not eventually be able to sell these things in the
United States, it is important that they understand that the
United States will not ultimately be a market for these looted
objects. And only by cutting down on market demand can we
convince those middlemen that they will earn less money or no
money, and it works its way back the chain to the people on the
ground. And in that way, if these objects are not saleable,
then ISIL will also earn less money from the antiquities
looting.
Mr. Royce. And we also were in North Africa, in Tunisia,
and we saw the results of the attack there on the museum in
Tunisia. This is ISIS now in Libya that comes over the border
and carries out attacks specifically against museums. And, of
course, in Libya also they are destroying these cultural
artifacts that date back to the Carthaginian period, or Roman
and Hellenic periods.
Maybe I could ask Mr. Fanusie, can you expand on why
terrorists and criminal groups like ISIS are so attracted to
antiquities smuggling as a means of getting that revenue, that
hard currency? And can we approach this in the same way as we
did on the legislation that we had authored on blood diamonds,
some methodology to try to shut down the ability to traffic in
this?
Mr. Fanusie. Yes. I think there are some parallels.
For the first part of your question, it is a unique
strategic resource, right? If you look at ISIL's--all of the
revenue that they get, much of what they have gotten early on
was from taking over territory and dispossessing the people
that they took over.
But antiquities provides this opportunity for them to
consistently continue to get new resources. There are so many
sites. So you have almost--it is maybe not a renewable
resource, but a flowing resource of revenue, and you have
willing partners or willing people who are there to loot.
So that is a real strategic benefit, something that they
can do. As someone said earlier, they institutionalized it and
have sort of intensified it.
In terms of blood diamonds, I think the parallel is we have
the ability to change the conversation to sort of shift the
perception in the public that you should understand how
diamonds are--where they were produced. I think we can, one,
learn from some of that approach; but two, with the blood
diamonds issue, there were some concerns about credibility and
accountability.
We could learn from--there are lessons learned from ways
that maybe didn't work well enough. So there are definitely
some parallels.
Mr. Royce. Mr. Chairman, the bill will be coming back this
week. We will have a chance to vote on the bill that Mr. Engel
and I authored. And I appreciate this forum to discuss the need
for us to act quickly.
Thank you very much.
Chairman Fitzpatrick. We look forward to it. And thank you,
as well, for your leadership on that important issue.
The gentleman from Michigan, Mr. Kildee, is recognized for
5 minutes.
Mr. Kildee. Thank you, Mr. Chairman.
And thank you, to the panel, for a very interesting and
important set of presentations.
I wonder if I could ask Mr. Shindell if you would spend a
minute or 2 expanding a bit on your comments on free ports, the
use of free ports as it relates to antiquities. I guess the
concern that I have is that it appears that--first of all, I
guess the main question would be to what extent are we seeing
free ports used as a method to sort of cloak the transactions
related to antiquities?
Are we seeing multiple transactions taking place in the
dark that make it more difficult to track the chain of title?
And what other difficulties do you see in terms of the way free
ports might be used in the context of this question?
Mr. Shindell. So within the category of free ports there
are also free zones, and in our written testimony there are
several thousand free zones around the world as well as art
industry-recognized free ports. And they are all way stations,
if you will, in the movement of these assets. And, of course,
most of the industry is using those facilities for correct and
legitimate purposes.
The problem is the nature of the industry and the rapidity
with which things move in the industry make it very difficult
for Customs and border officials around the world to know
whether the information that is being provided in the paperwork
as works go in and leave is valid. So it becomes a blanket that
obscures accurate information, which then drives trade-based
money laundering in general and the movement of cultural
artifacts, as well.
I would estimate that the use of free ports right now is
less for cultural artifacts than art in general, but it is also
on the rise as people sort of listen to the beating drums in
the industry, because they become challenging and, as a result,
holes of lack of clarity, and that enables the movement of the
asset.
Mr. Kildee. Would you be able to suggest any potential
changes that would mitigate against the use of free ports or
other tax havens in order to execute transactions related to
antiquities--for example, extending safe harbor protections to
brokers, dealers, other individuals involved in these forms of
transactions in order to provide information that could be
helpful to law enforcement authorities?
Mr. Shindell. The real problem is no one of those parties
has enough information to associate it with anything else, so
it becomes noise. And that is why we have been focusing so
much, and the State University of New York's global initiative
has been creating ways to organize that information.
So they are good pieces of a strategy, but until you create
a means to organize the information holistically, a very
complex amalgam of information, driven by the high mobility and
international nature of the market, becomes the ultimate
obstacle that has to be overcome.
Mr. Kildee. And I guess one last question, and I would
direct it to Dr. Gerstenblith, although others may comment, and
that is the question as to what extent is satellite imagery
available to those in academia in order to evaluate existing
sites--sites that might be currently under the control of ISIS
or others sort of before and after? Are you able to gain access
to satellite imagery in order to make evaluations as to the
extent of the work that is being done there?
Ms. Gerstenblith. Right. Several groups--private groups,
some in partnership with the State Department, the American
Association for the Advancement of Science--have had access,
through the government, to satellite imagery. One question is,
however, there are some gaps.
And we don't have some satellite imagery that would be very
useful--or they have not been made public, I should say, or
made available to researchers so far--for example, what the
condition of Palmyra was just before the offensive was taken
over. So it has been difficult to assess how much damage was
actually done by the Russians and perhaps the Assad regime as
they retook the site, as opposed to what was done earlier by
ISIL.
But the satellite images that have, at least to some
extent, been made available have been very important because
obviously people can't go in on the ground to find out what is
happening. It is not a perfect tool, but it is the tool that we
have accessible to us.
And from that, there is a group at the University of
Chicago that is working to actually quantify not only numbers
of holes in the ground, which, of course, there are many--
thousands and thousands--but also to determine, based on
excavation reports of those sites, how many objects are coming
out, and again, by using algorithms spread out over periods of
time and large quantities of data, to come up with an actual
assessment of how many and what types of artifacts have been
looted under ISIL control. In another phase, this group is
conducting in-depth market study, also over a large quantity of
data, to try to come up with a realistic number of--a dollar
figure of how much money are we talking about.
Mr. Kildee. Thank you.
Mr. Chairman, I see my time has expired. I thank you and
the ranking member for holding this hearing and I thank the
panel for your really important testimony.
With that, I yield back.
Chairman Fitzpatrick. Thank you, Mr. Kildee.
The Chair now recognizes the vice chairman of the task
force, the gentleman from North Carolina, Mr. Pittenger, for 5
minutes.
Mr. Pittenger. Thank you, Mr. Chairman.
Mr. Shindell or Dr. Al-Azm, what are the legal privacy laws
that would impede us in our ability to deal with the art
dealers, the financial institutions, auction houses, insurance
companies, in transfer of information on suspicious activity?
What can we do in that regard?
Mr. Shindell. I don't think the problem is the current
state of the privacy laws, but rather getting the core
information to then provide what the industry would refer to as
curated, privacy-protected information. So if we go back to the
example I used a minute ago of the bank loan scenario, were
there now a means to associate a series of transactions around
the world that were the same assets to provide a response back
to the current financial institution, that would then trigger
the AML suspicious activity reporting regime and all the
privacy issues around that with law enforcement.
So what would then happen is the system would know there is
suspicious activity around these particular objects that are
being used potentially for some problem or another, whether it
is trade-based money laundering or terrorist financing. And
then the system we have in place would trigger under its
existing rules and regulations.
So I don't think we need a change in what is private or
not, but organizing the information to provide curated,
privacy-protected but effective information for intervening.
Mr. Pittenger. Thank you. So this deals mostly with just
the transfer of information that would be compatible, that
would have access to certain data?
Mr. Shindell. Correct, from a high level. So you would
know--the bank would know, for example, the objects are at
risk. They would then have the information they--
Mr. Pittenger. --access to the same data. Thank you.
Targeted sanctions. Give me some insight into that, how we
would address that, considering the middlemen and private
collectors. They don't have anything to do with ISIS, but how
would we impose sanctions?
Ms. Gerstenblith. I think sanctions could be imposed on the
import. In other words, the antiquities from Syria should be
listed on the sanctions list. OFAC has been asked twice that I
know of to do that and has so far refused to do so.
If I could go back for just a moment to the last question
also?
Mr. Pittenger. Certainly.
Ms. Gerstenblith. There is a great deal of secrecy. The
name of a seller is never made public when sold through an
auction house. There are agency and fiduciary agreements with
an auction house. Those names are not public. It would require
a court order and a court process to get the name of a seller.
The buyers frequently are also not made public. Things are
sold through the Internet without names at all.
So I think there is a huge amount of secrecy. Maybe I am
looking at it on a more micro scale than Mr. Shindell is.
Mr. Pittenger. It is a real scale. I appreciate hearing
that.
Ms. Gerstenblith. But I think there is a lot that could be
done that would require that kind of information.
Mr. Pittenger. Thank you.
Mr. Al-Azm. I would just add that most of the material
coming on--actually coming out of the ground right now is not
even making the market; it is just being sold, transacted
between dealers, and it never sees the main market. So most of
this is actually academic when it comes to currently--material
currently being looted.
Mr. Shindell. If you wish, I could clarify the privacy
item--
Mr. Pittenger. Yes, sir. Please do.
Mr. Shindell. --a bit further.
Mr. Pittenger. We would like to know if it is necessary for
it to be public for law enforcement to be engaged in it.
Mr. Shindell. As a title insurance company, we function as
the safe haven or safe harbor where the information that is
kept secret market-wide is disclosed to us under
confidentiality provisions because we need to have that
transparency to do our job. And that information only becomes
relevant if there, in fact, is a problem or suspicious
activity. And that becomes the information-sharing element
under the BSA, for example.
We would agree the industry in many respects operates for
privacy reasons, many of which are legitimate, many of which
are not, and that can be managed. But it is not as though the
industry, from our standpoint--
Mr. Pittenger. Thank you very, very much.
Talk to me some more about money laundering and the art
trade, and what is--what could be done there to address that
issue.
Mr. Al-Azm. I believe that this is something like a bridge.
Militarily, to take a bridge you have to take it from both
ends. So obviously there is the buying end or the demand end,
but there is also the supply end.
And I can really only speak to you on the supply side
because that is the side I speak to and that is the side I work
with. Really, the best thing we can do right now is to try and
document as much as possible what is coming out of the ground,
and that is really a huge task and that is what we are focused
on.
Our problem, then, is how do we then manage to pass this
information on? What mechanisms are available to us in terms of
being able to share this information? And, more importantly,
how that information is then used to pursue or retrieve at some
point, or even interject to prevent further transactions.
Mr. Pittenger. Thank you.
My time has expired. Thank you.
Chairman Fitzpatrick. The gentleman from Pennsylvania, Mr.
Rothfus, is recognized for 5 minutes.
Mr. Rothfus. Thank you, Mr. Chairman, and I thank the panel
for a very informative discussion.
I am wondering if Dr. Gerstenblith can answer this
question, or if not Dr. Gerstenblith, then perhaps another
panelist: Can we have--is there an estimate at all of the
number of Americans who may have purchased illicit artifacts or
antiquities over the last 10 years from the Middle East? Can we
quantify that in any way?
Ms. Gerstenblith. I think that would be very difficult,
partly because--again, with antiquities, because they are
unknown and undocumented, proving what is legal and what is
illegal is extremely difficult. And so you have to go object by
object and make a determination first of what is legal or
illegal.
But I would certainly say--you are including purchased in
any way, including the Internet?
Mr. Rothfus. We have estimates of the total value of the
transactions. Somehow we are getting those estimates. And so I
am trying to get some of the data behind those estimates.
Ms. Gerstenblith. I would only say the United States is the
largest market for these kinds of antiquities. And my guess
would be we are probably--if you include everything for
antiquities, you are at least talking about tens of thousands
of people, but not--it is not a huge, huge--
Mr. Rothfus. And the value for the American purchasers?
Ms. Gerstenblith. Do you have an answer to that?
Mr. Rothfus. Versus European. What is the bifurcation
between American and European--
Ms. Gerstenblith. Oh, of the art market overall, the United
States is 43 percent; England is the second--U.K. is the
second-largest at 22 percent. So we are double the next-largest
single market for art overall.
And the dollar value of art--fine art--is much higher than
the dollar value of the antiquities. But the contours are
probably similar, and it is also a function of taste and
tradition that in the United States what collectors collect is
Mediterranean and Middle Eastern antiquities.
But I think Mr. Fanusie wants to add to that.
Mr. Fanusie. I wasn't sure if you wanted to touch on
Customs data, which doesn't specifically get at the question of
who, but one of the things that we have done is to look at
changes in Customs data around artifacts or antiques. But
again, that data is for legal purchases--or at least ostensibly
legal purchases that have come in from elsewhere. But that is
data just coming into the United States that might have
transited through various countries.
You can look at that data to get a sense of how the tide
has risen with certain categories of items and antiques. But
again, that is what we know and that is what people say
legitimately--what they are legitimately importing into the
country, but not for an individual assessment.
Mr. Rothfus. And I imagine there--in the industry there is
a separation in dealers: there are legitimate ones who are
looking at whether these artifacts are provenanced, and others.
Are there any obligations that a dealer has now to know the
seller, who the seller is? Even though it is a private
transaction--we may not know who the seller is; we may not know
who the buyer is--but is there any obligation on the part of
the dealer who will be conducting the transaction to know who
the seller is?
Ms. Gerstenblith. There is no legal obligation on the part
of the dealer to know who either the seller or the buyer is, as
long as the dealer is getting whatever finances they want to
get out of the arrangement.
And I would say even at the top end of the market, just in
the past month at Christie's--a top-end public auction--several
pieces were picked up by law enforcement that came from
Southeast Asia, and a couple of pieces were picked up that were
classical antiquities. So even from the people that you would
think would be doing the most provenance research, where the
fault lies is another question perhaps, but clearly illegal
antiquities surface even at the top end as well as all the way
through the market.
Mr. Rothfus. What can we be doing to prevent that from
happening?
Ms. Gerstenblith. I had several suggestions in my written
comments, but I think we need better tracking of objects, both,
perhaps, by tracking better what is coming into the country,
certainly there is no tracking of what is leaving the country.
I think we could require that these kinds of documents be
maintained and made available to law enforcement. Right now,
law enforcement needs a search warrant before they can get
information about who is selling what and what is the
provenance information for that.
There are a number of things about making this a higher
priority overall. The number of packages that are searched
coming into the country through Customs is really minimal, and
it depends on which port they are coming through. Some don't
know anything about antiquities trafficking; some, like New
York, have so much that comes in that only if something has a
declared value above a certain amount will Customs even look at
it.
So overall, this is just not considered a high priority by
law enforcement, especially on Customs' side. And there are far
too few prosecutions connected with violations of Customs law.
Customs in general is happy if they can seize, forfeit, and
repatriate something. They have a beautiful repatriation
ceremony. It does nothing to stop the illegal trade.
People are happy to give an object back. Only if the
government pursues criminal prosecutions--the threat of
criminal enforcement and the possibility of jail time--will the
government really start to reach the market.
Mr. Rothfus. I see my time has expired. I yield back.
Chairman Fitzpatrick. The gentleman from Texas, Mr.
Williams, is recognized for 5 minutes.
Mr. Williams. Thank you, Mr. Chairman.
And thanks, to the panel.
I first of all want to say hello to my good friend and
fellow Texan, Mr. Edsel, and state to all here that you are a
Texas treasure. We appreciate you.
Now, Mr. Edsel, I was glad to see that the Monuments Men
received a Congressional Gold Medal for their contributions in
protecting artifacts during World War II last year. Your
contribution cannot be understated, and personally, I felt like
it was long overdue and I was proud to support that effort.
My first question is, you have said that a major benefit of
the Monuments Men effort was that noncombatants in Europe were
grateful to Allied forces not only for liberating them but for
preserving the cultural history of the continent. Would you
elaborate on that? And do you believe the same would be true if
we were better able to save antiques and other cultural objects
in the Middle East today?
Mr. Edsel. Thank you for your kind remarks, and thank you
for--you and all of your colleagues--for the support of the
legislation to award the Monuments Men with the Congressional
Gold Medal. It was quite a moment.
Yes, I believe that the United States would be looked upon
favorably by nations of good will throughout the world, and I
think the evidence is irrefutable, because look at what
happened in 2003 in the aftermath of the American-led invasion
of Iraq. Not getting into the issue of whether we should or
shouldn't have been there, but it raises the issue of what is
the responsibility of the United States or any force when they
are in a foreign country concerning the protection of cultural
assets? And our failure to plan and take care of those assets
caused enormous damage to the country's reputation around the
world.
I know from experience in interviewing Monuments Men, that
during World War II, there was a great deal of skepticism
because so much of the damage that took place in Europe was a
result of allied bombing and artillery to soften up landing
beaches. But time and time again the people expressed
appreciation for the fact that you had to get rid of the bad
guys, you had to get troops on the ground, and when they saw
efforts to affect temporary repairs and then at the end of the
war, in a break with civilization, return some of the 4 million
objects--4 million--that these 100 or 200 men and women,
without any technology, no computers, managed to get back to
the countries from which they were taken.
So I think there is no question. Yes.
Mr. Williams. Are we doing enough as a nation--and I think
you have kind of touched on this--to safeguard the cultural
heritage in these regions of the world? And what more can we
do?
Mr. Edsel. This is a great question and it is a challenge
of our time. Look, it makes no sense for us to be sending
modern-day Monuments Men, people with Blue Shield and Patty's
organization, which are doing great work, into harm's way
without force protection. It worked in World War II because we
had 3 million troops in Europe.
But to say that because we can't put troops on the ground,
we can't do anything, is ridiculous. The United States is a
leader in technology and we are not using all the tools
necessary to try and put an end to a lot of these things.
We have discussed--and there have been some good questions
here of the panel--steps that can be taken going forward. There
are two realities about collectors that are inarguable: They
love to show people what they have--that is a problem if it is
hot; they hate losing money--that is a problem if you
demonetize illegally owned works of art.
And I am not talking just about objects that come from
these war zones, but going back to Nazi-looted art, works of
art that were stolen from the Isabella Stewart Gardner Museum
from Mr. Lynch's part of the world, objects that are stolen
from churches in Italy, all over the world. These things don't
get stolen unless there is someone to buy them. They don't get
stored in these tax-free zones unless something thinks
eventually the spotlight is going to move away and there will
be collectors that can buy them.
So if we have some process to register works of art--
perhaps there should be a threshold there where there is a
clean bill of sale--you have this, your things--your work of
art, whatever it is, a small object, a painting--is known,
there is no chance to--there is not concern about it being
something that was smuggled, it is going to be a disincentive
for people out there with lots of money to be out there buying
these things knowing that, ``Where is your piece of paper? I
don't want to buy this thing unless it has been cleared.''
Is it a huge challenge for us from a technology standpoint?
Sure. It is work.
But 100 to 200 Monuments Officers in the face of a war that
claimed 65 million lives with no tools of technology found and
returned 5 million objects. So I am not really interested in
hearing someone tell me all the difficulties or why something
can't be done today when we can read a credit card from space.
So the technology is there. The question is, is the will
there? And in the process of addressing the diminution or
termination of the sale of looted antiquities, and in this kind
of increased reporting, bring transparency because who is
against transparency?
If we bring that into the arena, we are not only going to
be cutting down on trafficking and sources for organized crime,
for ISIS and other terrorist organizations, but the Internal
Revenue Service is going to be getting more of the revenue that
is--that it is due, which is going to take a burden off of
taxpayers who are having to carry the share of people who are
trying to duck the system; it is going to return works of art
to the places from which they were stolen.
There is no downside to doing this. It is just a matter of
the will.
Mr. Williams. Thank you for your testimony. You sound like
a guy from SMU.
I yield my time back, Mr. Chairman.
Chairman Fitzpatrick. The gentleman from Arkansas, Mr.
Hill, is recognized for 5 minutes.
Mr. Hill. Thank you, Mr. Chairman.
And I thank the ranking member for your work on this
important topic.
Mr. Edsel, I was at the ceremony for the Congressional Gold
Medal and it was touching. It was great to see some of the
remaining Monuments Men and their families there, and it was
really touching.
I want to start out and talk about motivation here, and
isn't ISIS or other motivations and the destruction and
marketing of these cultural items really an issue of trying to
establish cultural superiority? Isn't that what drives people
when they do this sometimes?
If you look back at your experience and looking at Europe
in World War II, didn't Hitler want to demonstrate cultural
superiority in capturing all this art, and having it and
possessing it?
Mr. Edsel. Yes, that is a significant factor. There is no
question that if you look over the 20th Century and we do a
little bit of study of history here, the genocides that end up
happening, the Holocaust during World War II--Jews weren't
incarcerated and murdered immediately because there is a key
component of the theft and destruction of these objects, and
that is the process of humiliation.
We are going to detain you. We are going to put you in
concentration camps. But while you are alive, we are going to
steal the things and destroy the things which define you as a
civilization. And, yes, we are going to kill you later on, but
we are not going to do it yet.
And we saw this in Bosnia-Herzegovina; we have seen this in
Mali, the destruction in Timbuktu of Islamic treasures by
people who are purporting to be followers of Islam. But these
are treasured relics that defined that civilization, and the
process begins by destroying them.
And now we have--it is not really a modern twist. I think
when you look back over Nazi Germany, if you want to talk about
institutionalizing the looting, the Nazis wrote the book on it.
The amount of resources that were dedicated in an organized
way--troops, trucks, planes, trains--to move around all of the
cultural treasures of Western civilization, from butterfly
collections, to the church bells in the cathedrals, to
paintings, to drawings, to statues, was extraordinary and a
distraction to the war.
Okay, ISIS may not have quite those resources at this point
in time or that degree of organization. But there is a strong
incentive for them to do it, and I think certainly the things
that are immovable are at great risk of being destroyed. We saw
that in Palmyra, and Bamiyan Buddhas with Al Qaeda in 2001.
We see it now evolving to things that can be sold. Why
destroy them when we can sell them and convert them to cash?
Mr. Hill. Yes. I think this is a cultural genocide, just
like we are experiencing religious and human genocide in the
Middle East. And it is a great tragedy and it is one that I
think our Administration has been behind the curve on now for
multiple years, and others in Europe and Russia, as well.
I am also interested in H.R. 1493. Why limit this to--Dr.
Gerstenblith, why limit this to Syria? For example, why don't
we ban the importation of cultural treasures from other
countries?
How do we determine that these are recent versus something
that actually has provenance and is out in the marketplace?
Aren't we hurting a legitimate antiquities trade potentially?
And finally, aren't we enabling the Assad regime, which you
have testified here today is just as destructive of these
cultural treasures as ISIS ever was? And why are we, therefore,
institutionalizing their control of these icons? They may sell
them themselves, right?
Ms. Gerstenblith. Right. I am not sure how we are
institutionalizing or helping the Assad regime. Those objects
would also be unsaleable in the United States if they were
seized and forfeited at the border. Maybe that is what you are
thinking of?
Mr. Hill. They go back to Syria, do they not?
Ms. Gerstenblith. They would not go back--first of all,
title gets transferred to the United States Government, and
then the U.S. Government would decide when to return them. And
I don't think that will happen as long as Assad is in power.
So who knows what government is going to emerge at the end
of the day, but I would imagine this would be at a point when
relations are normalized with whatever government is in Syria.
So I don't see this as helping out the Assad regime. And I
agree that they are doing lots of bad things, too.
What we call the normal--there is a normal process in place
under the Convention on Cultural Property Implementation Act
for imposing import restrictions on cultural materials from
countries that ask for our assistance--U.S. assistance. That
has to start with a request from the country.
Syria had not done that in the past. Libya, Tunisia,
Morocco--none of them have done that. They are all at risk at
this point in time, and any number of other countries in the
Middle East are at risk.
So that is the reason why H.R. 1493 is needed, to bypass
primarily just that requirement of a request. And H.R. 1493 is
written so that at the point when relations are normalized
between the United States and a Syrian government in the
future, that government is expected to bring a request under
the normal process.
Now, how this helps is that it changes the burden of proof
and what needs to be proven at the border. So if I show up at
the border with an object that may have recently come from
Syria, once it matches what is called the designated list that
State Department and Homeland Security promulgate, now I, the
importer, have to show that it left Syria before March of 2011.
That helps law enforcement significantly, but at the same
time does not really impose a huge burden on the importer or
the industry because showing where it was just 4 or 5 years ago
shouldn't really be that difficult, if it really was out of the
country before that point in time.
So that documentation needs to be offered. There are a
couple of other ways of showing documentation. But basically,
at that point, the object would be importable into the United
States.
So I think this presents the best of both worlds: an
attempt to not overly burden the trade; but at the same time to
prevent those recently looted objects, from which essentially
both ISIL and the Assad government may be receiving funding--
prevent those from coming to the United States now and into the
future.
Mr. Hill. Thank you.
I yield back, Mr. Chairman.
Chairman Fitzpatrick. Thank you.
The gentleman from Kentucky, Mr. Barr, is recognized for 5
minutes.
Mr. Barr. Thank you, Mr. Chairman, and Ranking Member
Lynch. Thanks for your leadership on this important hearing.
There is nothing that to me is more disgraceful about what
these terrorist organizations are doing than what we are
hearing about here today.
The International Council of Museums describes the
situation as the largest-scale mass destruction of cultural
heritage since the Second World War. The United Nations
Educational Scientific and Cultural Organization director
considers the Islamic State's destruction of cultural heritage
sites in Iraq and Syria to be an international war crime. The
Global Financial Integrity Group conservatively averaged and
aggregated existing figures to estimate that the value of the
illicit trade of cultural property may range between $3.4 and
$6.3 billion annually.
And so, Mr. Edsel, my question to you, and following up Mr.
Hill's line of questioning is, in reading the statistics about
the individual Islamic State looters, one estimate is that the
looters themselves, the Islamic State fighters who are actually
pillaging these historical and cultural antiquities sites,
really they are only taking about 1 percent off the top and
that most of the profits from this illicit trade of antiquities
is coming to inure to the benefit of the middlemen who are
engaged in this.
So my question is, obviously, this is some source of
revenue for the Islamic State, but is it more a matter of
wiping out the cultural and religious artifacts that are
inconsistent with the twisted ideology of these terrorist
organizations? Are they equal motives, or is one predominant?
Mr. Edsel. I am sure it is a slippery slope trying to be an
analyst for ISIS and what is going on inside their heads. I
think what we can say is that the--if we can find a way to
disincent by eliminating or reducing the revenue-making
opportunities of stealing these things, we at least are cutting
down on one of the main reasons that it is happening.
Now, there is little we can do about addressing the
ideological motivations for stealing or destroying things.
Again, I emphasize I have people all the time say, ``Well, why
don't we have Monuments Men, or why don't we have Blue Shield
people there?'' It would be a suicide mission to send the
troops into harm's way without having force protection.
But the world has changed, as Monuments Man Mason Hammond
pointed out, and we have all sorts of weapons--non-military
weapons--that we are not using that are, I should say, are
evolving--this use of aerial photography to see developments on
the ground, as Patty talked about, and others that we are
really pioneering the use of--3D technology to do imagery of
these non-moveable objects so that if they are damaged or
destroyed they can be rebuilt.
People are thinking about these things now. This is a
positive step.
Mr. Barr. To Mr. Fanusie and Dr. Gerstenblith, you both
mention in your testimony potential ways to disrupt the illicit
trade of antiquities: applying additional tariff sanctions by
the Treasury Office of Foreign Asset Control against
antiquities smugglers and buyers; also, the Royce-Engel bill on
import restrictions on Syrian antiquities. What is the best
approach to diminishing the demand for these looted
antiquities? An all-of-the-above approach?
Mr. Fanusie. I think all of the above in the sense that we
have made quite a few recommendations that can be used from
different angles. I think when you talk about sanctions, what
we are trying to get at is, is there is a difference between
the threat of prosecution and the threat of having your assets
seized, or the assets of people close to you?
And so sanctions, even though being a bit of a bold move,
provide a potentially greater incentive. It is a tool that we
use. And you can debate how effective it is, but it is a tool
that we use--
Mr. Barr. In my remaining time, if I could just
editorialize a little bit here, I appreciate the advocacy for
sanctions and I agree with you. I support the Royce
legislation.
But because the motivation is not entirely profit-driven
and financing-driven, and because it is an evil, toxic ideology
we are talking about here, ultimately the only way that we are
going to be able to protect these antiquities is to take back
the territory that these radical jihadists control. And
ultimately, that is going to have to happen in order for us to,
in the long run, preserve and protect these sacred sites.
And with that, I yield back.
Chairman Fitzpatrick. The gentleman from Maine, Mr.
Poliquin, is recognized for 5 minutes.
Mr. Poliquin. Thank you, Mr. Chairman, very much. I
appreciate it.
Thank you all very much for being here.
Mr. Edsel, let me ask you, if I may, sir: As more and more
pressure is put on ISIS, hopefully, from the Western world to
stop this horrible pillaging of our human history, do you think
there are going to be different avenues that these folks will
use to loot and to sell the antiquities?
Mr. Edsel. Different than what they are doing now?
Mr. Poliquin. Yes. Can you look down the road and
extrapolate for us here, as more pressure is put on the
combatants in this part of the world, what their reaction will
be when it comes to funding their terrorist activities using
this source of funding?
Mr. Edsel. If we are successful in Syria and Iraq, I
think--I agree with Patty, our focus shouldn't be on what to do
now, because we already ceded that opportunity away once ISIS
gained control of these areas. To ask what we should do about
Palmyra is the wrong question.
What we should be doing is thinking about what are we going
to do about where they are going next, whether it is Libya or
some other area? They will go; they will take this same type
operation.
If there is oil revenue--I was in the oil and gas
exploration business for 15 years--that is a simple, fungible,
immediately profitable way to generate revenue. But that
doesn't mean that we, because it is the majority of revenue
that may go to ISIS, that we shouldn't be concerned about these
cultural treasures, in particular for this reason: We are 5
percent of the people in the world in the United States. We are
trying to figure out how to get along with 95 percent of the
people in the world.
The currency that connects people around the world are
cultural treasures: sports; music; works of art. We don't
necessarily look at the world that way here. It is not wrong;
we are just a much younger country.
But if we want to curry favor and do ambassadorial work in
building up the esteem of the United States in the eyes of the
world, showing respect for cultural treasures of other
countries, which is the hallmark policy of President Roosevelt
and General Eisenhower during World War II, will do more than
all of the foreign aid we are giving away, in my opinion.
Mr. Poliquin. Do you think that ISIS, as it spreads its
ideology, for example, now, over to Libya, becoming much more
active there, have you seen the same sort of illicit activity
in that part of the Middle East?
Mr. Edsel. That's not a question I am qualified to answer.
But I know we have four people here that are, or three for
sure.
Mr. Poliquin. Doctor?
Ms. Gerstenblith. We do know that they have taken control
of several major archaeological sites in their territory in
Libya. And there has been some anecdotal information. We don't
have the satellite imagery yet of things being looted and
stolen from Libya.
If I could add quickly also, there is one big difference.
If you have an oil--for instance, if you are getting revenue
from oil, we can bomb it. The problem with an archaeological
site is the last thing we want to do is bomb it. So that is why
we need to control it through the market.
Mr. Poliquin. I would guess that--
Mr. Edsel. One other thing--let me just add quickly--you
want to talk about the war going around, the areas that are of
concern in Libya are the very areas that the very first
Monuments Men started work in 1943 in North Africa in Leptis
Magnum and other areas. So we are right back to where we began
some 70 years ago.
Mr. Poliquin. Mr. Edsel, do you think that purchasers of
this artwork, these antiquities--these pieces, in America, are
they aware--let me rephrase that, sir. Do you know of illicit
artifacts having been purchased by Americans?
Mr. Edsel. Of illicit artifacts not necessarily from this
area, yes. From the area that we are talking about in a
contemporary sense of antiquities, I don't have any personal
knowledge, no.
Mr. Poliquin. Can anybody else on the panel answer that
question? What I am specifically looking to find is when folks
purchase this type of three-dimensional artwork here in
America, what is the probability of them knowing that, in fact,
it has not been obtained through illegal activities?
Mr. Shindell. I can comment on the good-faith market, and
clearly there is a good-faith market and a not-good-faith
market, like in any other sector. The good-faith market is
trying as hard as they can to avoid acquiring or selling or
taking as gifts implicated assets today. There have been
different eras in the art world as the world has matured around
these issues.
There is no question, at the same time, that things fall
through the cracks, despite the good-faith efforts.
Mr. Poliquin. Now, are you talking about good-faith efforts
of Americans and dealers here in this--
Mr. Shindell. In the European market, as well, correct. So
everyone who is acting in good faith, the credible sectors of
the market, are doing their best to ferret out problematic
assets in an environment where the information is limited and
often inaccurate.
Mr. Poliquin. Can you think of another way where we can
avoid the heavy hand of the U.S. Government getting involved to
help in some way these folks make sure that their good-faith
effort is supported?
Mr. Shindell. The analogy I would use--and I know you are
hearing a constant theme in my comments because I really think
it is the answer--if we look to the pharmaceutical industry,
for example, which 20 years ago had enormous problems of
adulterated drugs--it's still somewhat of a problem today, but
it is far better than it was. And it wasn't until the entire
supply and distribution chain, as we would use different words
in the art world, came together and created systemic solutions
that enabled assuring the integrity of the object.
So here we have the same dynamic in certain ways. We have
ideological motivations that are trying to eradicate identity.
And I suppose at the same time they are saying, ``Well, as long
as we have torn it down instead of burning it or destroying it,
let's go sell it to get some money to further our terrorism.''
And that then takes it into the trade.
And so a lot of the ideas are multidimensional and good
ones on how do we, boots-on-the-ground, so to speak, or at the
site, prevent the ideological destruction, and then how do we
create lots of different barriers that ultimately deincentivize
everyone in the trade, in the sequence, from monetizing around
that asset?
Mr. Poliquin. Thank you very much. I appreciate it.
Thank you, Mr. Chairman.
Chairman Fitzpatrick. The gentleman from Ohio, Mr. Stivers,
is recognized for 5 minutes.
Mr. Stivers. Thank you.
A lot of great questions have already been asked, and I
would like to follow up on some of those questions. And I have
a question for Mr. Fanusie.
You asked--or you said in your statement that if we could
make declaring antiquities looting and cultural property crime
a national security priority, we could really start to reform
things, and that we need to make it an intelligence and law
enforcement priority. How would we go about--is that just an
executive action? Do you think there is a law that is required
to make that happen? How could we make that happen quickly?
Mr. Fanusie. One of the key things is where we put our
resources to lead the effort. We already have institutions and
agencies who are operating and dealing with this issue, but we
should have probably greater resources towards some of those
elements.
So, for example, the State Department has a huge role in
this. The issue of sort of cultural diplomacy is something that
we could--the institutions for cultural diplomacy we could
leverage more.
A lot of what we have talked about goes to public
perception. So there is the potential for us to emphasize and
highlight in our diplomacy this issue--the cultural issue, the
cultural property issue.
If you think about--someone mentioned earlier blood
diamonds, and you could also think about wildlife trafficking
and the fur industry, right? These are industries where there
is some--you can think about you have a cozy--an animal, or you
have something that people are very familiar with because they
deal with them every day--diamonds. But we don't have that in
the same sense with antiquities. So I think we really need to
raise the level, and State has the potential to do that.
I would also say in DHS, within Customs, within ICE, you
already have units which are dedicated to finding out if
individuals coming into the country are involved in human
rights abuses. So that is a structure that we could elevate for
due diligence on--for people who may be dealing with maybe
bring antiquities into the country.
Wwe have within our government, I think, a lot of the
arteries that could do this. At the NSC, and the National
Security Council, there is the opportunity there to have
greater coordination.
I know we have already spoken a little bit about the
legislation, but as someone who is a former government person
who has seen how the NSC operates, there is definitely
opportunity there within that body to help coordinate some of
these efforts.
Mr. Stivers. We have talked a little bit with other members
earlier about the legislation that is pending that would ban
importation of certain Syrian antiquities. From the perspective
of the panel, what other legislative proposals--you talked
about pedigree earlier, for lack of a better word, or getting
the recent ownership of some antiquities in art trading. What
other legislative proposals should be pursued if we are going
to get at this problem?
Ms. Gerstenblith. H.R. 2285 is already--I think it has
already been reported out of Homeland Security. It is no new
law, but it would streamline the way Customs operates and would
actually require the two parts of Homeland Security--the
Customs and Border Protection and the Immigration and Customs
Enforcement Agencies--to work together, which they don't do
terribly well, in this field at least.
For instance, they have not rewritten the Customs directive
since 1990--
Mr. Stivers. Wow.
Ms. Gerstenblith. --which is out of date. And so there are,
in fact, several steps that could be taken.
Beyond H.R. 2285 but not legislatively, for example, the
number of ports through which art antiquities could be imported
could be restricted so that the expertise would develop amongst
Customs agents--
Mr. Stivers. Interesting idea.
Ms. Gerstenblith. --to recognize things and to know the
laws. I am the first to admit this is a very obscure and narrow
area of the law, and the number of people who can be trained
either as agents or among assistant United States attorneys
should be limited, and we can concentrate the expertise and,
therefore, have better outcomes of lawsuits, criminal
prosecutions, and the like.
Mr. Stivers. Are there any ports today that have some more
expertise than others? Is there a port that is more active?
Ms. Gerstenblith. New York, of course, is the most active,
but because of that I have been told anecdotally, for example,
that until you declare something is worth at least $250,000, at
least in the past they don't inspect it. And there are a couple
of other ports in particular. In the South, there are a couple
that mostly have things coming from Central and South America,
like Houston, Santa Fe; the west coast, things from Asia come
to, say, San Francisco, L.A.
Sometimes people route things, though, through ports that
don't have a lot of antiquities. For example, a group of
Chinese antiquities were picked up through Alaska, where they
probably don't have--geographically it makes sense that they
probably don't have the expertise and they are not accustomed
to it.
So I think we could concentrate and thereby build, both in
the U.S. attorneys' offices, to have trained experts at main
Justice who would take on these cases. We have a very effective
FBI art crime team that could use more resources and higher
priority.
But I don't think we have that same level of expertise
within Customs.
Mr. Stivers. Sure.
Ms. Gerstenblith. And we don't have it within the U.S.
attorneys' offices, other than probably the Southern District
of New York.
I also think that both Federal prosecutors and judges
should understand that when there is a criminal conviction,
there is the possibility of jail time. There is a special
cultural heritage resource sentencing guideline that has been
in place for 12 years. It is not used enough.
So there is a lot that can be done with education,
consolidation of resources, which will produce more effective
law enforcement and better criminal sentencing outcomes in
appropriate circumstances.
Mr. Stivers. Thank you. Thank you, Dr. Gerstenblith.
And thank you all for everything that you have worked for
and testified for before today.
I know my time has expired. I yield back my nonexistent
balance of time, Mr. Chairman.
Chairman Fitzpatrick. Thank you, Mr. Stivers.
I am going to yield myself 5 minutes.
I am going to ask the staff to put up that slide, Dr.
Gerstenblith--your original slide, which was Mari, I think it
was after, so you--went through in your opening statement what
we were looking at. In a moment I am going to ask you maybe in
a little more detail if you can explain that slide in some more
detail what we are looking at.
Ms. Gerstenblith. This is the second one. Do you--
Chairman Fitzpatrick. This is the second one, yes. This is
the after slide.
First, I want to ask Mr. Fanusie a really quick question.
The FBI issued a warning back in 2015 that those who were
involved in the trafficking of Islamic State antiquities could
be investigated and prosecuted under material support for
terrorism provisions. To your knowledge, has the FBI ever
applied those types of charges?
Mr. Fanusie. I haven't heard of anything since, not
publicly, for antiquities coming out of--I have not heard of
anything.
Chairman Fitzpatrick. You haven't heard of prosecution or
charges. How about investigations? Any anecdotal evidence that
these things are actually being investigated?
Mr. Fanusie. I don't have anecdotal evidence except for--I
know in the bulletin it states that the FBI is aware that
people have been approached--buyers have been approached. So I
would assume that there should be investigations going on, but
publicly I haven't seen anything.
Chairman Fitzpatrick. Do you have an opinion as to what the
obstacles are to investigation?
Mr. Fanusie. I'm sorry?
Chairman Fitzpatrick. The obstacles that prosecutors would
have in an investigation.
Mr. Fanusie. Someone just mentioned the U.S. Attorney's
Office. I think in general, cultural property is not the most
well-known topic for investigators, so even though the bureau
does have a good team, if you think about all of the agents all
over the country and if not the world, cultural property is not
something that is probably the most--we don't have necessarily
the most expertise in--around--in all of our offices with all
of our agents.
Chairman Fitzpatrick. Dr. Gerstenblith, in your testimony
you had mentioned when these artifacts are intercepted at, say,
the southern border of the United States that they are
identified with some sort of asset forfeiture process that goes
on, returned to their owners, but no prosecution. I assume that
is because of lack of authority?
Ms. Gerstenblith. In some cases, for instance the Syria
import restrictions, if they go into effect under H.R. 1493, is
not a criminal provision; it is only a forfeiture. So in a lot
of cases, that is correct.
But I would say the biggest obstacle to criminal
enforcement is that if this is my ancient Syrian antiquity, by
looking at it you cannot tell whether it is legal or illegal.
That means that if I buy it--first, it is an obstacle to law
enforcement to determine whether it is legal or illegal.
But for criminal prosecution they have to prove whether I
knew that it was legal or illegal, and that is very difficult
to do. You can only do that, so far as we know--in the cases
that we have--either through undercover investigation or
through somebody who flips, my bookkeeper, whatever, then
reports me.
So I think one thing that could be done is to encourage
undercover investigations. That requires some authority and
some finance support for that because it takes time to develop
the personas and everything for the undercover investigations.
So I think that is the biggest problem.
I would like to see more criminal options under import
restrictions. One way of getting the criminal option is through
the sanctions, because those would be criminal if you violate
them. But the knowledge factor is still the problem.
Did you have another question for me?
Chairman Fitzpatrick. Yes. Looking at that slide, can you
just go into a little more detail exactly what we are looking
at? And then I am going to ask Mr. Edsel, because in response
to a question Mr. Edsel--are we doing enough in the United
States--yes, if--want to go to the first slide? Is the first
slide easier? Would that be better--
Ms. Gerstenblith. The second one shows the looting; this
one does not show much in the way--yes.
Chairman Fitzpatrick. Okay.
Ms. Gerstenblith. So the white structure is a palace of
Zimri-Lim, from the early part of the second millennium BCE,
and to the left of it are some excavated areas, the lines that
you see.
And then all of the pits around it are looters' pits. And
some are marked with a red circle, but some are not. The ones
with the red circles were only in the 2 or 3 months before the
image was taken.
Now, this fell under ISIL control I think in the spring of
2014, so this is about 6 months or so. So if you want to
compare it, we could go back to the first slide and you will
see the difference.
Okay? Dr. Al-Azm could also add to that, if you would like.
Mr. Al-Azm. Basically, the site of Mari, there is a very
well-known local village close by, and they traditionally have
always been the looters of that site long before any of the
conflict started. So obviously when things went pear-shaped in
Syria, and even before ISIS took over, when the regime was
pulling back from the rural areas back into the cities, there
was no longer any sort of oversight or scrutiny of what was
going on at the site of Mari as well as many other sites, and
it became a looters' haven.
And we know that in Mari as well as in Dura Europos and
several other of these sites, sectors were being sold by the
local, let's say organized mafia, controlled by this one local
village, to the highest bidder to come and loot the site. Now,
when ISIS took over, they came upon this preexisting situation.
They just said, ``Right. Now we are in charge, so you have
to now work through us. So now we are the ones who issue the
licenses. You can continue looting, but now everything has to
funnel through us and we have to take our cut on every step of
the process.'' And this has really been repeated in site after
site after site after site.
Chairman Fitzpatrick. And this is a combat zone. Does
anybody want to predict, without holding you to it, what the
next potential site would be of this kind of destruction or
looting, combat or noncombat? Are there other sites that we
should be looking at?
Mr. Al-Azm. Are you thinking in Syria or outside?
Chairman Fitzpatrick. The whole world.
Ms. Gerstenblith. Libya, without question.
Mr. Al-Azm. I would concur. We already know that it is
happening. I have spoken to a Libyan colleague of mine who
works--essentially does the same thing I do, and he says that
they are already experiencing very similar pattern of behavior
in Libya.
Chairman Fitzpatrick. I think my time has expired.
There has been a request for a second round. Is there any
objection?
Without objection, Mr. Pittenger is recognized for 5
minutes.
Mr. Pittenger. Thank you, Mr. Chairman.
And I thank each of you for being with us today. We have 5
minutes here on my part, and I would really like to get your
action points: what you would do if you were in our seat; what
policy changes, legislation--you have mentioned some; what work
with our international community. What would you do to prevent
the utilization of antiquities in the market and plundering
them and the use by ISIS?
Mr. Edsel, please begin, and I will give each of you a
little less than a minute.
Mr. Edsel. We need more transparency. I think Mr.
Shindell's comments about establishing standards for disclosure
are absolutely correct.
There is something horribly wrong, from my perspective as a
citizen coming back into the country with requirements to
declare any cash or fungible currency $10,000 or less, and yet
we can ship works of art around the world out of the eye of the
system. So I think there is a lot of work to be done in that
area.
I certainly think the art looting group at the FBI,
Customs, ICE, needs more funding. They have a very, very
difficult situation.
We have to get people who are collecting to understand
there is a responsibility on their part to know what these
objects are and where they came from and that there is a
consequence to willful ignorance.
Mr. Pittenger. Thank you.
Mr. Fanusie?
Mr. Fanusie. Yes. I would like to echo the idea of giving
our law enforcement more tools to work with through the use of
sanctions. That would, again, bring more authority that would
allow us to go after folks who are really involved and the
worst offenders of this issue.
And then I would say--this may be a bit outside of the box,
but we need to sort of bring a face to this issue. There should
be more coverage, I think, culturally in the State Department.
This issue should be raised more so that the public has a
sense, right? We have all viewed, ``Raiders of the Lost Ark.''
We all sort of have this--``Monuments Men'', the power of
media, of culture could play into this, so we should really
leverage that.
Mr. Pittenger. Thank you very much.
Ms. Gerstenblith?
Ms. Gerstenblith. In addition to everything I have said
already, a few other things. One on perhaps the microscale is
to modify the Harmonized Tariff Schedule and to require
importers to declare more precisely what it is they are
bringing into the country. And I can go into more detail on
that if you should want to.
But I think in terms of market transparency, one thing that
we haven't talked about is that when objects are donated to
U.S. institutions, cultural institutions, and the donor
receives a tax deduction, at the moment there is, under the IRS
rules, whatever the museum may do is one thing--and I am not
discounting what museums themselves do and their requirements--
but when the donation is reviewed by the IRS Art Advisory
Panel, it is reviewed only for the market value of the object
and not for the provenance information and the title, and I
think that would be an important addition.
Mr. Pittenger. Thank you very much.
Dr. Al-Azm?
Mr. Al-Azm. On the supply end I would say increase support
to organizations that are on the ground in Syria in the areas
outside regime support to help prevent looting. Remember that
when an object leaves Syria, ISIS has already collected its
money, so everything else is academic after that, in terms of
how ISIS makes its money.
On the demand end, I would suggest maybe, like when you buy
a car there is a VIN number on the car and there is a logbook;
you can't sell it without that. Why can't we do the same for
objects?
It is very simple. Just make sure that you have that, and
the onus is on the buyer and the seller to make sure that
information matches. You are not relieved or absolved of
responsibility under the law currently, as I understand it.
Mr. Pittenger. Thank you very much.
And, Mr. Shindell?
Mr. Shindell. There is a need for both short-term solutions
and long-term solutions, and many of the great ones that have
been suggested are short-term focused, as they should be.
The long-term issue goes back to what we keep saying:
transparency and accurate information. So Patty's example, how
do we know when the artifact bottle of water that is coming
through Customs is real or fake, the object someone says they
are referring to, and the information associated with the
object is accurate?
A clear way to intervene today is through the financial
industry and sector, because of the intersection of money and
these objects; technology solutions, which can put VIN numbers,
in effect, on objects, although that is a very complex issue
for sensitive objects where the integrity must be in place for
decades if not centuries, but technology can do that today.
And all of that, then, adds to the transparency that can
make the specific intervention tactics meaningful. Otherwise we
aren't achieving enough scale to solve the problem
holistically.
Mr. Pittenger. Thank you very much. This has been extremely
helpful. We really appreciate your being here today.
Chairman Fitzpatrick. With that, we would like to thank,
again, our witnesses for their testimony today. We found the
testimony and these action items to be extremely helpful to our
work.
The Chair notes that some Members may have additional
questions for this panel, which they may wish to submit in
writing. Without objection, the hearing record will remain open
for 5 legislative days for Members to submit written questions
to these witnesses and to place their responses in the record.
Also, without objection, Members will have 5 legislative days
to submit extraneous materials to the Chair for inclusion in
the record.
Without objection, this hearing is adjourned. Thank you.
[Whereupon, at 12:08 p.m., the hearing was adjourned.]
A P P E N D I X
April 19, 2016
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