News Release 7/25/2022

Financial Investigative Services (FIS), a leading California based investigative agency and mortgage expert witness firm has launched a dedicated website to assist the legal community to locate and retain qualified and vetted expert witnesses.

Demand for specialized mortgage investigators and expert witnesses has recently increased as the downturn in mortgage lending and real estate has exposed “Boom-Time” mortgage fraud and sham real estate transactions.

Akin to the 2008 financial crisis, financial institutions are in the early stages of uncovering mortgage, real estate, and title insurance fraud that went undetected by loan originators, such as banks, credit unions, and mortgage bankers.

Law firms, insurers, and lenders are all seeking skilled experts who are professionally trained and credentialed to root-out mortgage application fraud and identify real estate schemes, such as forged deeds, identity theft, insider real estate theft, and occupancy fraud.

In addition to providing investigation and real estate expert services, FIS conducts vetting of experts not contracted to FIS. The expert referral program saves law firms time and money by pre-screening experts, conducting background investigations, and verifying credentials.

FIS was at the forefront of the 2008 financial crisis serving as expert witnesses in civil and criminal fraud cases. In recent years, FIS expanded its operations by adding a licensed fraud investigation unit and internal audit group. For more information, please visit www.MortgageExpertWitnesses.com or contact Curt Novy at (858) 336-0520.

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NEWS UPDATE:

On January 1, 2021, Congress enacted the National Defense Authorization Act (NDAA) which included significant reforms to the Bank Secrecy Act and United States anti-money laundering regime as posted on the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) website and attached in its entirety to this news release.

The NDAA included the Anti-Money Laundering Act of 2020 (AMLA 2020) and the Corporate Transparency Act (CTA) to strengthen, modernize, and streamline existing AML regulations under the Bank Secrecy Act (BSA). These regulations are intended to protect the United States from potential money laundering schemes, identify human trafficking, art theft & looting, financial crimes, and potential financing of terrorist activities.

Over the past several years, FinCEN and other financial regulatory agencies have identified concerns that fine art was becoming an avenue for individuals and criminal organizations to bypass AML regulations and controls. BSA regulations have been around for years and adherence to these regulations have primarily remained in the domain of banking and money center related institutions.

BSA regulations assist governmental agencies to help define where financial crimes geographically occur and assist in focusing law enforcement resources where illegal activity is most prevalent. Suspicious Activity Reports (SAR’s) are the main vehicle that FinCEN and law enforcement agencies rely on to identify and track individuals and corporations linked to potential fraud, money laundering, and criminal enterprises. The AMLA 2020 regulation will now incorporate use of SAR’s in the sale and transfer of art work handled by dealers and auction houses nationwide.

The passage of AMLA 2020 is significant to the U.S. art community and will place hefty financial and human resource demands on dealers to comply with complex reporting, investigation, and tracking of high value art and antiquities sales. Failure to comply with these new regulations could trigger large fines, sanctions, and result in reputational damage. The costs of regulatory compliance may be passed along to art purchasers or absorbed by dealers or deducted from seller proceeds.

The Initial definition of “high value art” is estimated to be sales of art that exceed $1 million dollars. This preliminary and arbitrary threshold may soon be downgraded to a much lower figure, perhaps $500,000 or less. Smaller dealers may be affected by complex compliance regulations.

Implementation of the new AMLA 2020 regulations is expected to be announced by the Spring of 2022 with dealer compliance shortly thereafter. Timely implementation of the AML Act is a top priority of FinCEN and art community compliance will be challenging. Financial related industries, such as BSA-AML fraud investigators and art compliance advisory firms will emerge to guide dealers through the compliance maze.

Key AML Provisions to Impact Art Dealers:

• Establishment of compliance programs, written policies & procedures, and training will be required of some high value art dealers.
• Reporting and documentation related to beneficial ownership and data collection protocols will be necessary. For example, the Corporate Transparency Act (CTA) section of AMLA 2020 will require dealers to document sources of cash payments exceeding $10,000.
• Establishment of national anti-money laundering program to counter financing of terrorism.
• Requirement to test compliance procedures and retain compliance personnel to manage their in-house compliance program.
• Conduct investigative due-diligence of individuals and shell companies.
• Preparation of Currency Transaction Reports (CTR).
• Development of a formal provenance program and retain sales records.
• Preparation and filing of suspicious activity reports (SAR’s).
• Compliance to the overall framework of BSA Regulations.

On June 30, 2021, FinCEN Acting Director Michael Mosier announced recent actions to comply with the new AMLA 2020 regulations including the recent formation of the FinCEN Bank Secrecy Act Advisory Group Plenary Session, Innovation and Emerging Technologies Briefing to the Senate Committee on Banking, Housing and Urban Affairs, and Publication of National AML/CFT Priorities and Related Guidance.

FinCEN and member organizations tasked with implementing AMLA 2020 are on track to finalize compliance regulations for BSA-AML members, including newly included art & antiquities dealers, auction houses, art sales advisory firms, and intermediaries.

How will Art & Antiquities Dealers Comply with AMLA 2020?

Compliance standards and requirements will soon be published once FinCEN completes its recommendations on how best to implement the new regulations. The enactment of AMLA 2020 regulation placed a final mandate and deadline to research and formalize implementation by January 2022. Some dealers may outsource the entire AMLA 2020 compliance program which is permitted under certain circumstances.

In the interim, law firms and BSA-AML compliance advisory firms, such as FIS are actively preparing for AMLA 2020 implementation by developing initial compliance programs, policies, and procedures. For example, FIS has developed a discreet compliance and investigation program to outsource the entire art sale compliance process.

FIS’s streamlined AMLA 2020 dealer program will include BSA-AML compliance review and advisory services based on a flat fee. In addition, FIS will conduct individual transaction AML investigations, verify source of purchase funds, and communicate compliance to the dealer. FIS will then issue an AMLA dealer certificate of compliance (AMLA Compliance Certificate©). If a SAR filing is deemed necessary related to any transaction, FIS will prepare the confidential AMLA-SAR document and file directly with FinCEN. BSA regulations require all aspects of the SAR filing to remain confidential. Therefore, the dealer and art buyer will not be notified. FIS will continue to provide updates as to AMLA 2020 regulations and best practices.

Financial Investigative Services.com (FIS) is an investigative agency and financial advisory firm specializing in Anti-Money Laundering investigations and Bank Secrecy Act compliance. Curtis L. Novy is the agency’s Chief Investigator and BSA-AML Compliance Officer. For more information about AMLA 2020 compliance or investigative services, please contact FIS at (858) 336-0520 or email CurtNovy@gmail.com. FIS is licensed by the CA Bureau of Security & Investigative Services, License PI188926. Copyright FIS 2021

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