[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 ____________________________________________________________________ For sale by the Superintendent of Documents, U.S. Government Publishing Office, Internet:bookstore.gpo.gov. Phone:toll free (866)512-1800;DC area (202)512-1800 Fax:(202) 512-2104 Mail:Stop IDCC,Washington,DC 20402-001 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 [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]