[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]





 
                      THE EXPLOITATION OF CULTURAL


                      PROPERTY: EXAMINING ILLICIT


                      ACTIVITY IN THE ANTIQUITIES


                             AND ART TRADE

=======================================================================

                                HEARING

                               BEFORE THE

                       SUBCOMMITTEE ON TERRORISM

                          AND ILLICIT FINANCE

                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             JUNE 23, 2017

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 115-23
                           
                           
                           
                           
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                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                    JEB HENSARLING, Texas, Chairman

PATRICK T. McHENRY, North Carolina,  MAXINE WATERS, California, Ranking 
    Vice Chairman                        Member
PETER T. KING, New York              CAROLYN B. MALONEY, New York
EDWARD R. ROYCE, California          NYDIA M. VELAZQUEZ, New York
FRANK D. LUCAS, Oklahoma             BRAD SHERMAN, California
STEVAN PEARCE, New Mexico            GREGORY W. MEEKS, New York
BILL POSEY, Florida                  MICHAEL E. CAPUANO, Massachusetts
BLAINE LUETKEMEYER, Missouri         WM. LACY CLAY, Missouri
BILL HUIZENGA, Michigan              STEPHEN F. LYNCH, Massachusetts
SEAN P. DUFFY, Wisconsin             DAVID SCOTT, Georgia
STEVE STIVERS, Ohio                  AL GREEN, Texas
RANDY HULTGREN, Illinois             EMANUEL CLEAVER, Missouri
DENNIS A. ROSS, Florida              GWEN MOORE, Wisconsin
ROBERT PITTENGER, North Carolina     KEITH ELLISON, Minnesota
ANN WAGNER, Missouri                 ED PERLMUTTER, Colorado
ANDY BARR, Kentucky                  JAMES A. HIMES, Connecticut
KEITH J. ROTHFUS, Pennsylvania       BILL FOSTER, Illinois
LUKE MESSER, Indiana                 DANIEL T. KILDEE, Michigan
SCOTT TIPTON, Colorado               JOHN K. DELANEY, Maryland
ROGER WILLIAMS, Texas                KYRSTEN SINEMA, Arizona
BRUCE POLIQUIN, Maine                JOYCE BEATTY, Ohio
MIA LOVE, Utah                       DENNY HECK, Washington
FRENCH HILL, Arkansas                JUAN VARGAS, California
TOM EMMER, Minnesota                 JOSH GOTTHEIMER, New Jersey
LEE M. ZELDIN, New York              VICENTE GONZALEZ, Texas
DAVID A. TROTT, Michigan             CHARLIE CRIST, Florida
BARRY LOUDERMILK, Georgia            RUBEN KIHUEN, Nevada
ALEXANDER X. MOONEY, West Virginia
THOMAS MacARTHUR, New Jersey
WARREN DAVIDSON, Ohio
TED BUDD, North Carolina
DAVID KUSTOFF, Tennessee
CLAUDIA TENNEY, New York
TREY HOLLINGSWORTH, Indiana

                  Kirsten Sutton Mork, Staff Director
             Subcommittee on Terrorism and Illicit Finance

                   STEVAN PEARCE, New Mexico Chairman

ROBERT PITTENGER, North Carolina,    ED PERLMUTTER, Colorado, Ranking 
    Vice Chairman                        Member
KEITH J. ROTHFUS, Pennsylvania       CAROLYN B. MALONEY, New York
LUKE MESSER, Indiana                 JAMES A. HIMES, Connecticut
SCOTT TIPTON, Colorado               BILL FOSTER, Illinois
ROGER WILLIAMS, Texas                DANIEL T. KILDEE, Michigan
BRUCE POLIQUIN, Maine                JOHN K. DELANEY, Maryland
MIA LOVE, Utah                       KYRSTEN SINEMA, Arizona
FRENCH HILL, Arkansas                JUAN VARGAS, California
TOM EMMER, Minnesota                 JOSH GOTTHEIMER, New Jersey
LEE M. ZELDIN, New York              RUBEN KIHUEN, Nevada
WARREN DAVIDSON, Ohio                STEPHEN F. LYNCH, Massachusetts
TED BUDD, North Carolina
DAVID KUSTOFF, Tennessee
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    June 23, 2017................................................     1
Appendix:
    June 23, 2017................................................    23

                               WITNESSES
                         Friday, June 23, 2017

Daniels, Brian I., Research Associate, Smithsonian Institution...     5
Grunder, Alyson, Deputy Assistant Secretary for Policy, Bureau of 
  Educational and Cultural Affairs, U.S. Department of State.....     3
Villanueva, Raymond, Assistant Director for International 
  Operations, U.S. Immigration and Customs Enforcement, Homeland 
  Security Investigations, U.S. Department of Homeland Security..     7

                                APPENDIX

Prepared statements:
    Daniels, Brian I.............................................    24
    Grunder, Alyson..............................................    28
    Villanueva, Raymond..........................................    39


                      THE EXPLOITATION OF CULTURAL



                      PROPERTY: EXAMINING ILLICIT



                      ACTIVITY IN THE ANTIQUITIES



                             AND ART TRADE

                              ----------                              


                         Friday, June 23, 2017

             U.S. House of Representatives,
                          Subcommittee on Terrorism
                               and Illicit Finance,
                           Committee on Financial Services,
                                                   Washington, D.C.
    The subcommittee met, pursuant to notice, at 9:15 a.m., in 
room 2128, Rayburn House Office Building, Hon. Stevan Pearce 
[chairman of the subcommittee] presiding.
    Members present: Representatives Pearce, Pittenger, 
Rothfus, Messer, Tipton, Poliquin, Hill, Emmer, Zeldin, 
Davidson; Perlmutter, Maloney, Himes, Foster, Kildee, Sinema, 
Vargas, Gottheimer, and Kihuen.
    Also present: Representative Royce.
    Chairman Pearce. The Subcommittee on Terrorism and Illicit 
Finance will come to order.
    Without objection, the Chair is authorized to declare a 
recess of the subcommittee at any time. Also, without 
objection, members of the full Financial Services Committee who 
are not members of the Subcommittee on Terrorism and Illicit 
Finance may participate in today's hearing.
    Today's hearing is entitled, ``The Exploitation of Cultural 
Property: Examining Illicit Activity in the Antiquities and Art 
Trade.''
    I now recognize myself for 2 minutes to give an opening 
statement.
    Most of the statement is going to be simply presented into 
the record, but just to talk about the nature of the sale of 
historical artifacts, archaeological artifacts--the ISIS groups 
are now destroying entire cultural properties and putting them 
on the market for sale. Many times, the money goes into 
terrorism. That is what we are here to discuss today. The rest 
of my statement will be just printed into the record.
    I now yield 2 minutes to the gentleman from Colorado, Mr. 
Perlmutter.
    Mr. Perlmutter. Thanks, Mr. Chairman.
    History has shown that art and cultural antiquities have 
always been trafficked due to their value. Trafficked. 
Trafficked. Sorry. Trafficked. Due to their value. Sorry about 
that. I am going to start over.
    Is that okay, Mr. Chairman? Can I start that over?
    Chairman Pearce. I will yield you an additional 5 minutes. 
It looks like you are going to take them.
    Mr. Perlmutter. In fact, I am on TV.
    History has shown that art and cultural antiquities have 
always been trafficked due to their value. The Nazis famously 
stole countless works of art during World War II, which will 
never fully be recovered. We know that war and chaos create 
instability and an environment where cultural heritage sites 
and antiquities are easily pillaged.
    According to INTERPOL, the black market in works of art is 
becoming as lucrative as those for drugs, weapons, and 
counterfeit goods. Evidence suggests some 50,000 to 100,000 
works of art are stolen each year worldwide. Not surprisingly, 
only about 10 percent of stolen art is recovered, and 
successful prosecution occurs even less frequently. We must 
give credit to U.S. law enforcement agencies which, from all 
accounts, appear to be working collaboratively with each other 
as well as international bodies in the private sector to 
address this problem.
    I would hope that the U.S. Government continues to make the 
prevention of illegal trafficking of art a priority and 
encourages strong interagency efforts. Some of the questions I 
hope we can answer today are: How can we better regulate 
marketplaces where these valuable pieces of art are exchanged? 
Who are the buyers of stolen art, and how can we track them 
better? What steps can be taken to better safeguard works of 
art and vulnerable cultural sites? And how are funds related to 
these antiquities being used to underwrite terrorist 
organizations?
    I look forward to learning more from our witnesses, and I 
yield back, Mr. Chairman.
    Chairman Pearce. The Chair yields 1 minute to the gentleman 
from North Carolina, Mr. Pittenger.
    Mr. Pittenger. Mr. Chairman, and Mr. Ranking Member, thank 
you for hosting this important hearing today relative to the 
illicit antiquities trade and how it funds terror.
    As you know, last year the Task Force to Investigate 
Terrorism Financing held a similar hearing on this matter. And 
I am pleased that our new subcommittee is continuing our work 
on this issue.
    The United States Government must posture strongly against 
any and all financing methods for ISIS. Antiquities trafficking 
is no exception. Not only does this practice provide ISIS with 
a steady stream of material support, but it also devastates 
priceless historical locations throughout Iraq and Syria. We 
must create an enforcement and an investigative structure that 
fits to the antiquities industry and that is strong enough to 
impact ISIS resourcing.
    Mr. Chairman, I look forward to working with you and your 
staff to promote an effective sanctions policy that puts an end 
to ISIS and its usage of antiquities trafficking to fund 
terror.
    I yield back.
    Chairman Pearce. The gentleman's time has expired.
    Today, we welcome the testimony of our witnesses. First, we 
have Ms. Alyson Grunder. Ms. Grunder is the Deputy Assistant 
Secretary for Policy in the Bureau of Educational and Cultural 
Affairs at the U.S. Department of State. Ms. Grunder is a 
veteran foreign service officer with 26 years of experience in 
policy formulation and advancement through bilateral and 
multilateral engagement, international program development and 
management grants, and budget oversight and evaluation 
performance measures. From 2014 to 2015, Ms. Grunder served as 
Minister Counselor for Public Affairs at the U.S. Embassy in 
Baghdad, leading the mission strategic communications in public 
diplomacy outreach efforts in the wake of the 2014 incursions 
of ISIS into Iraq and Syria.
    Dr. Brian Daniels is a Research Associate at the 
Smithsonian Institution, where he pursues his scholarly work 
about cultural property protection, the antiquities trade, and 
the intentional destruction of cultural and religious sites 
during conflict. Dr. Daniels is also the Director of Research 
and Programs for the Penn Cultural Heritage Center at the 
University of Pennsylvania Museum. Also, he is concerned with 
the preservation of indigenous heritage, and has worked for 
over 18 years with Native American communities in the United 
States on issues related to political sovereignty, cultural 
repatriation, and heritage preservation. Dr. Daniels holds a 
Ph.D. in anthropology and history from the University of 
Pennsylvania; an M.A. in history from the University of 
Pennsylvania; and a B.A. and an M.A. in anthropology from San 
Francisco State University.
    Mr. Raymond Villanueva is the Assistant Director for 
International Operations, U.S. Immigration and Customs 
Enforcement, Homeland Security Investigations, U.S. Department 
of Homeland Security. He is responsible for a budget of more 
than $160 million and the operation and oversight of 62 offices 
in 46 countries, 8 Department of Defense liaison offices with 
over 400 personnel. Mr. Villanueva has served in numerous key 
positions, including group supervisor for the Financial Crimes 
and Asset Forfeiture and Removal Group in Buffalo, New York; 
section chief for the Illicit Finance and Proceeds of Crime 
Unit in Washington, D.C.; unit chief for the Trade Transparency 
Unit in Washington, D.C.; assistant special counsel agent in 
charge for the San Juan office; and most recently, deputy 
assistant director for HSI International Operations.
    Each of you is going to be recognized for 5 minutes to give 
an oral presentation of your testimony. And without objection, 
each of your written statements will be made a part of the 
record.
    Ms. Grunder, you are now recognized for 5 minutes.

  STATEMENT OF ALYSON GRUNDER, DEPUTY ASSISTANT SECRETARY FOR 
   POLICY, BUREAU OF EDUCATIONAL AND CULTURAL AFFAIRS, U.S. 
                      DEPARTMENT OF STATE

    Ms. Grunder. Thank you, Chairman Pearce, Ranking Member 
Perlmutter, and members of the Subcommittee on Terrorism and 
Illicit Finance, for inviting me and my colleagues from DHS and 
the Smithsonian to testify this morning on the topic of illicit 
trade in cultural property by terrorists and criminal groups.
    Earlier, I submitted detailed written testimony on the 
State Department's efforts over decades to reduce the pillage 
and trafficking of cultural property. This work is mandated by 
multiple U.S. laws and U.N. conventions related to cultural 
property protection.
    The Bureau of Educational and Cultural Affairs, or ECA, has 
the lead on cultural heritage protection and preservation for 
the State Department through its Cultural Heritage Center.
    The 1983 Convention on Cultural Property Implementation 
Act, or CPIA for short, implements obligations of the United 
States under the 1970 UNESCO Convention on the means of 
prohibiting and preventing the illicit import, export, and 
transfer of ownership of cultural property. The CPIA provides a 
general legal framework by which the United States Government 
can combat pillage and trafficking of cultural property through 
bilateral agreements. These agreements or memoranda of 
understanding impose import restrictions on certain categories 
of archaeological and ethnological material determined to be in 
jeopardy of pillage.
    Import restrictions are intended to reduce incentives for 
looting and trafficking by keeping looted material out of the 
U.S. art and antiquities market, which is the world's largest. 
To date, pursuant to the CPIA, we have concluded bilateral 
agreements with 16 countries and implemented import 
restrictions on an emergency basis, pursuant to legislation 
enacted by Congress in 2004 and 2016, respectively, for Iraq 
and Syria.
    In addition to negotiating bilateral agreements to protect 
cultural property, the State Department serves a coordinating 
role for the interagency. We convene the Cultural Heritage 
Coordinating Committee, or CHCC, consistent with the sense of 
Congress in the 2016 Protect and Preserve International 
Cultural Property Act and chaired by the ECA assistant 
secretary. The CHCC includes senior representatives from the 
Departments of Homeland Security, Interior, Defense, and 
Justice, including the FBI, as well as the Smithsonian 
Institution.
    ECA also chairs the Cultural Antiquities Task Force, or 
CATF, established by the Department in 2004 at the direction of 
Congress, and now a working group of the CHCC. Originally 
charged with responding to looting in Iraq and Afghanistan, its 
mandate has been expanded to combat antiquities traffic and 
looting of archaeological sites around the world by identifying 
and supporting effective law enforcement, as well as diplomatic 
and training programs.
    CATF concluded its most recent program, a training for 25 
Customs and Border Patrol and Immigration and Customs 
Enforcement agents in April of this year, which included a full 
day at the Smithsonian's Museum Conservation Institute, where 
these agents had hands-on exposure to the cultural property and 
artifacts that are typically trafficked.
    With our interagency colleagues, the State Department has 
also been active in international fora on cultural heritage 
matters. March was a banner month for cultural heritage 
protection with the unanimous adoption and U.S. cosponsorship 
of U.N. Security Council Resolution 2347, the first Security 
Council resolution devoted to cultural heritage protection in 
conflict situations.
    In addition, Acting Under Secretary for Public Diplomacy 
and Public Affairs Bruce Wharton led the U.S. delegation to the 
first G7 Cultural Ministerial in Florence, Italy, which was an 
important meeting of significant market countries at which 
cooperation on cultural heritage preservation was a primary 
topic of discussion.
    Yet the destruction of cultural patrimony at the hands of 
terrorists continues. For more than 800 years, the al-Nuri 
mosque, with its distinctive leaning minaret, stood as a 
testament to the cultural heritage of the city of Mosul in 
Iraq. This week, ISIS blew up the mosque and its famous minaret 
destroying these ancient edifices in an instant.
    We strongly condemn this despicable act, which only further 
proves that the terrorists have no respect for Iraq's identity, 
culture, and religion. The United States will continue to stand 
with the Iraqi people, the free people of Syria, and our 
partners around the world in our shared fight against ISIS 
until it is defeated.
    I am happy to answer any questions that you may have.
    [The prepared statement of Ms. Grunder can be found on page 
28 of the appendix.]
    Chairman Pearce. Thank you very much.
    Dr. Daniels, you are now recognized for 5 minutes.

STATEMENT OF BRIAN I. DANIELS, RESEARCH ASSOCIATE, SMITHSONIAN 
                          INSTITUTION

    Mr. Daniels. Chairman Pearce, Ranking Member Perlmutter, 
and distinguished members of the subcommittee, thank you for 
the opportunity to appear before you today to discuss criminal 
and terrorist groups' use of the illicit antiquities trade. I 
study the subject as a Research Associate at the Smithsonian 
Institution, and I would like to highlight a few key points 
from my submitted testimony.
    There is now growing concern and compelling evidence that 
archaeological site looting is implicated in the financing of 
organized criminal activity and other terrorist networks. It is 
my view that these developments may represent a recent 
innovation and a restructuring of the overall antiquities and 
art trade.
    For much of the past 50 years, the illicit antiquities 
trade has involved regional networks of looters, intermediaries 
who purchase from looters, distributors who purchase from 
intermediaries, and collectors in the United States and Western 
Europe. These networks assert as stable, hierarchical, and 
functional multi-decade supply chains. Existing laws in the 
United States, such as the Convention on Cultural Property 
Implementation Act of 1983, and current law enforcement 
responses are oriented toward identifying, forfeiting, and 
repatriating artifacts that are traded through these illicit 
networks.
    In recent years, reports have linked criminal and terrorist 
groups to antiquities sales more directly. Some of these 
accounts are more credible than others. Commentators have 
implicated members of the Haqqani Network, which is allied with 
the Taliban and al-Qaida, in collecting protection money from 
traffickers moving looted artifacts from Afghanistan into 
Pakistan.
    There have also been suggestions of links between the 
insurgency following the second Gulf War and the illicit 
antiquities trade in Iraq. Archaeological site looting began 
early in the Syrian civil war and has been widespread in 
regions under the control of the Assad regime and in areas held 
by various rebel groups.
    Since 2014, more attention has been given to the activities 
of Daesh in Syria and Iraq. Although media stories have 
attributed Daesh's income from the illicit antiquities trade to 
monetary figures that strain all reasonable belief, this hype 
should not distract us from the fact that looted antiquities 
have been found in the possession of Daesh leaders and 
militants with documentation about their direct involvement in 
the trade.
    Additionally, in late 2016, the Italian Government 
confirmed that Daesh had expanded its organized looting 
activity into Libya as part of a collaborative enterprise with 
the Calabrian mafia.
    How might traditional supply chains for the antiquities 
trade change in response to the interest of criminal and 
terrorist groups? We would expect the looters to remain the 
same but the intermediaries purchasing antiquities from those 
looters to be different. These buyers are likely to be 
opportunistic and to treat antiquities as a resource similar to 
other illicitly trafficked conflict resources, such as 
diamonds, oil, and coltan. We would also anticipate that their 
participation would vary according to the underlying market 
value of the antiquities, access to distributors, collector 
demand, and the perceived and actual success of international 
efforts to restrict the sale of illicitly trafficked 
antiquities on legal art markets.
    It is also important to note that the association between 
archaeological site looting and criminal groups is not only an 
international problem. In the United States, Native American 
archaeological sites are targeted by looters, particularly in 
the Southwest, who are searching for pottery and other 
materials for sale to intermediaries.
    At the border of Oregon and California where I conduct an 
archaeological project, recent prosecutions broke up a criminal 
gang selling methamphetamines and looted archaeological 
material. At present, we do not have sufficient consultation 
with Tribal communities or the basic research completed to 
understand how these domestic illicit networks might operate in 
a transnational context.
    In summary, there is good reason to suspect that the 
illicit antiquities trade is going through a reconfiguration 
that involves the integration of organized criminal networks 
and terrorist groups. Unlike the more traditional illicit 
antiquities trade, which archaeologists have known well, these 
developments require additional study and interdisciplinary 
collaboration with criminologists and political scientists, who 
are more familiar with research about illicit criminal networks 
and terrorists.
    In an effort to develop precisely these collaborations, a 
group of 15 U.S. international universities and museums came 
together to form the Conflict Culture Research Network. I 
coordinate this project, and the National Science Foundation 
supported its planning. Our knowledge about the illicit 
antiquities trade, as well as the amount of funding earned by 
criminal and terrorist actors from it, will only improve as 
additional research is done.
    I am happy to answer any questions you may have. Thank you 
very much.
    [The prepared statement of Dr. Daniels can be found on page 
24 of the appendix.]
    Chairman Pearce. Thank you, Dr. Daniels.
    And Mr. Villanueva, you are now recognized for 5 minutes.

    STATEMENT OF RAYMOND VILLANUEVA, ASSISTANT DIRECTOR FOR 
    INTERNATIONAL OPERATIONS, U.S. IMMIGRATION AND CUSTOMS 
ENFORCEMENT, HOMELAND SECURITY INVESTIGATIONS, U.S. DEPARTMENT 
                      OF HOMELAND SECURITY

    Mr. Villanueva. Good morning, Chairman Pearce, Ranking 
Member Perlmutter, and distinguished members of the 
subcommittee. Thank you for the opportunity to appear before 
you today to discuss Immigration and Customs Enforcement 
Homeland Security Investigations', what we refer to as efforts 
to protect cultural property, art, and antiquities, and to 
mitigate their trafficking both into and out of the United 
States.
    Before I move any further, the men and women of ICE extend 
our best wishes and stand with the Members of Congress as our 
Nation was confronted with the awful occurrence last week.
    This morning, I would like to describe HSI's cultural 
property, arts, and antiquities efforts, also known as our CPAA 
program, and discuss the important collaboration with our 
partners on this issue. Lastly, I would like to highlight some 
of our cultural property cases.
    I am often asked, why is HSI involved with CPAA? There are 
a couple of reasons for that. Federal customs law prohibits 
smuggling and trafficking of all merchandise to include CPAA. 
Additionally, HSI's border authority provides us with a 
responsibility and the unique tools to take a lead role in 
investigating crimes involving the import, export, and 
distribution of stolen or looted cultural property.
    As the largest investigative agency within DHS, HSI works 
with Tribal, Federal, State, and local law enforcement, private 
institutions, intergovernmental organizations, and foreign 
governments on these cases. We also work with the Department of 
Justice and other competent authorities to prosecute the 
individuals and organizations responsible for these crimes.
    To ensure the appropriate effort on investigating these 
crimes, we established the CPAA program based in our Office of 
International Operations. The program has a three-part mission. 
The first one is training and education. As Ms. Grunder 
mentioned, we actually partner with the Department of State, 
and the Smithsonian Institution, and we have trained more than 
400 law enforcement professionals, including HSI special 
agents; Customs and Border Protection, or CBP officers; 
prosecutors; interagency partners; and foreign law enforcement 
officers on the preservation, protection, and investigation of 
cultural property.
    The second one is investigations support. The CPAA program 
helps identify subject matter experts to authenticate items 
that might have cultural and religious significance and acts as 
a liaison to the INTERPOL, FBI, and other law enforcement 
agencies. Through the program, we support over 6,000 special 
agents, HSI special agents, in more than 200 domestic offices 
throughout the United States. But we also work through our 
network of international offices at 67 embassies and consular 
offices throughout the world where our investigators 
collaborate with partners, such as the Carabinieri Tutela del 
Patrimonio Culturale, which is Italy's force responsible for 
combatting arts and antiquities crimes.
    And third is the repatriation. The CPAA program facilitates 
the legal forfeiture process and eventual repatriation of 
cultural items seized as a result of HSI investigations to the 
rightful owners. Whether through a simple exchange, or a grand 
ceremony held at the embassies here in Washington, D.C., these 
events highlight the stories behind the objects themselves as 
well as the women and men who brought the criminals to justice.
    Since 2007, HSI, in coordination with CBP, the Department 
of State has returned more than 8,000 historical objects or 
artifacts to more than 30 countries around the world. One of 
our largest cultural property efforts is Operation Hidden Idols 
led by one of our two specialized teams located in New York and 
Los Angeles. The case began in 2007 out of our New York team 
and has resulted in the seizure of over 3,000 artifacts, 6 
arrests, 5 convictions, and the execution of more than 50 
search warrants.
    Thank you again for the opportunity to testify, and for 
your continued support not only of HSI but of the law 
enforcement mission as a whole. We remain committed to working 
with this committee and our partners to mitigate the 
trafficking of cultural property, regardless of the source.
    And finally, I would like to direct your attention to the 
pictures that provide some examples of the incredible pieces of 
history we have seized and properly returned. Thank you very 
much, and I will be happy to answer any questions you may have.
    [The prepared statement of Mr. Villanueva can be found on 
page 39 of the appendix.]
    Chairman Pearce. Thank you, Mr. Villanueva.
    I now yield myself 5 minutes for questions.
    So if I were going to make this more personal, to give the 
example of, about 5 years ago I received a call from a good 
friend of mine who was one of the officers in one of the Tribes 
in New Mexico. While surfing the internet, he had come across a 
mask, a cultural mask that had come from his Tribe 150, 200 
years before, and so he went online and bought it. About 
$23,000, I think was the purchase price. There was a second one 
in the next lot. Being on an Indian reservation, the internet 
went down and he missed the second one.
    Now, his description to me about the effect is what really 
caught my attention, that he and his wife had lost a child in 
childbirth, and he said when the internet went down, losing 
that second article was equivalent, and made him feel as bad as 
when he lost the child in childbirth. So then it began to 
penetrate that we need to be doing more.
    So, Mr. Villanueva, how long does it take to track and 
prosecute a case, just a simple case, just roughly? And we have 
a lot of questions here, so--
    Mr. Villanueva. Sir, thank you for the question. All cases 
are different. We look at cases on a case-by-case basis. These 
cases, when we talk about cultural property, arts and 
antiquities, and following the explanation of Dr. Daniels, 
which is very pointed, these organizations are extremely 
compartmentalized from the looters to the intermediaries, and 
they can be quite complicated.
    Chairman Pearce. Complicated in years, is kind of what I 
want to hear.
    Now, say the top left artifact there, what is the value on 
that?
    Mr. Villanueva. Sir, as far as the values, I have to say we 
do use a value system, but it is actually for the legal side of 
it, whether we are going to do--
    Chairman Pearce. I understand. I am trying to get to the 
incentive. What is the financial incentive?
    Dr. Daniels, do you have an opinion about what something 
like that would cost on the black market?
    Mr. Daniels. It depends on which level of the market that 
it is actually being trafficked. An object like that at the top 
left might be worth in the tens of thousands of dollars on the 
black market.
    Chairman Pearce. Okay. So you have, basically, rights and 
title. Once the thing is in trade back and forth, it can stay 
in trade in a particular market for years. Is there any way to 
regulate that particular transfer back and forth? Is it being 
regulated now?
    And, Mr. Villanueva, and I would guess that Ms. Grunder, 
you may have an opinion on this.
    Mr. Villanueva. Do you mind repeating the question, sir?
    Chairman Pearce. Yes. So once an article has been acquired 
and sold into a market, it can then be traded back and forth 
between collectors who know each other and never leave the 
country. Is there any way to regulate that chain of ownership 
right now?
    Mr. Villanueva. So if that piece was actually imported into 
the United States--
    Chairman Pearce. No, I didn't say that. If it just stays 
out there circulating in a country, no way to track--people are 
actually identifying it, they are insuring it, they put it on 
their inventory, but there is no way to track it, is there?
    Mr. Villanueva. To your point, you are absolutely correct. 
If the piece is outside of the United States, our ability to 
track that as U.S. law enforcement is limited. We then rely on 
the art markets, the vendors, and the supply chain to notify 
law enforcement of the existence of the piece. But to your 
point, sir, you are correct.
    Chairman Pearce. Ms. Grunder, very quickly, if you could 
address that, if you have an opinion.
    Ms. Grunder. Primarily in the area of training and building 
awareness of the illicit trade, and we work very closely with 
DHS on that sort of activity.
    Chairman Pearce. Okay. So the stimulation is always money, 
right? I read your testimony, and we are talking about focusing 
on repatriation. Sometimes we focus on prosecution, but it 
seems to me that the better--just my perspective--way is to 
affect the value.
    So I imagine that open sourcing, just people out there who 
are aware that a property is being destroyed and taken, if they 
had some way to enter into a database, block chain analysis or 
whatever it is, that this--we see this property being taken, 
they are not even in the product distribution, anything like 
that, but then you can imagine that if we appeal to the 
collectors, surely one out of 100 would have some sort of moral 
sense that, I just can't let it go by that, I have been 
approached to buy something I think is illegal. They just enter 
that into the system, the system begins to identify, just maybe 
scattered here, there, down the future 5 years, ooh, here it is 
again. Now we see that somebody reported it back here. It 
surfaced briefly here, it is there, but each one of those 
identification points drives the value down.
    If you can affect the value, people are less likely to get 
in. If they don't think they can get their million bucks back, 
they are not going to put a million bucks into a very 
significant piece. So I just think that we have to be thinking 
at least in some way to interdict the value. That is going to 
be much easier than the prosecution; it is going to be much 
easier than the inventory tracking. So let's think more about 
it.
    My time has expired. I recognize the gentleman from 
Colorado, Mr. Perlmutter, for 5 minutes.
    Mr. Perlmutter. Thanks, Mr. Chairman.
    My experience with all of this comes mostly from watching 
TV, ``Madam Secretary'' and the different episodes they have 
had on stolen art and the destruction of antiquities and that 
kind of stuff. So I apologize for not really understanding 
this.
    Dr. Daniels, there are a couple of sentences in your 
testimony today that I would just like to inquire about a 
little bit more so that we actually understand, to the best of 
our ability, how this works, how eventually, from these 
antiquities, from the art works, from the artifacts, somebody 
gets money to do bad things around the world. So first, the 
theft is bad, and then they underwrite activities that are 
detrimental to America.
    So you talked about your workshop that you conducted back 
in 2014 before Daesh advanced into Syria. And you say we learn 
more about the cultural risks of the professionals who are 
trying to study these antiquities. I would like to know a 
little more about that. Then you talk about Daesh, what they 
did was they had a tax, in effect, across the territory where 
they allowed looters to come in to a particular area, take 
stuff, and then there was a 20 percent tax. I would like to 
know a little more about that.
    And then during your testimony and in your report, you say 
that, ``nevertheless, such hype should not distract us,'' and I 
want to know what you meant by that. So if you would, sir.
    Mr. Daniels. Thank you very much. Let me take the first 
question about the workshop that we held in 2014 in southern 
Turkey. That particular workshop gathered together a group of 
Syrian cultural heritage professionals in areas outside of the 
control of the Assad regime who were caught in the conflict and 
caught in the crossfire and deeply concerned with preserving 
cultural property under their jurisdiction in those areas. It 
was primarily focused on archaeological sites in northwestern 
Syria and in museums and mosaics in what we call the Dead City 
area.
    And what we learned from them was they were deeply 
concerned about extremism. They were deeply concerned about 
entities such as Daesh, but they were also very concerned about 
barrel bombs by the Assad regime, and this was their primary 
concern about how they could protect collections from aerial 
bombardment. And this is in large measure what our discussions 
actually focused on in that context.
    As far as the tax that we learned about that was being 
conducted, the 20 percent tax, it was variable according to 
area and the type of artifact that was actually discovered. 
That was something that appeared to be a new innovation in 
terms of organized and systematized looting. I understand that 
the committee has been briefed by the FBI on developments 
subsequent to 2014, in particular regard to the Abu Sayyaf 
raid. And what this really represented was an organized way for 
a criminal and terrorist organization to benefit from the 
antiquities trade in ways that--
    Mr. Perlmutter. So let me just stop you, because I am 
trying to figure that out. So did somebody from Daesh hire an 
art appraiser to say, okay, this is what this stuff is worth, 
and then did the Daesh militants, whomever they were, the ISIS 
folks, say to the looters, okay, we have appraised this, and 
you are going to pay us 20 percent, you can take it?
    Mr. Daniels. Generally speaking, they impressed 
archaeologists and other cultural heritage professionals into 
their service.
    Mr. Perlmutter. Okay. To appraise it?
    Mr. Daniels. To appraise.
    Mr. Perlmutter. All right.
    Mr. Daniels. And so when I mention the ``hype'' in my 
remarks, one of the concerns that we have in the archaeological 
community is speculation about how much an entity like Daesh or 
any other terrorist organization actually earns from the 
illicit antiquities trade. I have been in fora both in the 
United States and internationally where numbers such as $600 
million or $2 billion have been floated. That strains my 
imagination.
    Mr. Perlmutter. Okay.
    Mr. Daniels. And I think that it is incumbent upon us as 
archaeologists who research this to be circumspect in the kinds 
of claims that we make, because it is such a strong claim to 
talk about the looting of antiquities and the market. And so we 
need to be realistic about the kinds of monetary figures that 
we share with Members of Congress and other policymakers such 
as yourselves.
    Mr. Perlmutter. All right. Thank you.
    And I yield back, Mr. Chairman.
    Chairman Pearce. The gentleman's time has expired.
    The gentleman from Colorado--or from North Carolina, Mr. 
Pittenger, is recognized.
    Mr. Pittenger. Thank you, Mr. Chairman. I do like Colorado.
    I thank each of you for being with us today and for your 
expertise that you offer our committee.
    I would like to know what Congress can do and what more can 
be done to strengthen our sanctions laws or any policy tools 
that we could pursue to ensure that we can put an end to Daesh 
and its antiquities trade. Who would like to comment on that? 
Don't fight over it now.
    Ms. Grunder. Thank you, Congressman Pittenger. We welcome 
the engagement of Congress in this really important issue, and 
I just wanted to add to the comments of Dr. Daniels. The 
exploitation of cultural property by terrorist groups like ISIS 
is dual-edged, and we just can't underestimate the terror value 
of blowing up and destroying these sites.
    Mr. Pittenger. I appreciate that. What I need to find out, 
though, is whether there is anything more we can be doing in 
Congress to facilitate our capabilities?
    Ms. Grunder. As you know, we set up the Cultural Heritage 
Coordinating Committee in response to the sense of Congress 
from last summer's legislation, and we are going forward with 
that very senior coordinating body to strengthen our 
enforcement as much as possible.
    Mr. Daniels. Sir, to your question, to date, we have 
treated the antiquities trade primarily as a problem of trade 
and import restrictions to reduce the incentives to loot and 
also access to U.S. markets for those looted materials. That is 
an important first step.
    But to date, there has not been any really creative 
thinking about how we would address the issue of antiquities 
looting around financial crimes. And there hasn't been the kind 
of conversation about what laws or policies would actually look 
like at that nexus.
    Mr. Pittenger. I would like to delve into technology. What 
technology is being used right now to address this illicit 
trafficking that--you are aware of the image recognition. Are 
varnish solutions applied to certain objects? Are we 
sophisticated enough in our technology or are we adequate or do 
we have capabilities there?
    Mr. Daniels. Image recognition software to date is 
primarily based on facial recognition and shadows as a 
technology, and, unfortunately, those kinds of technologies 
don't actually translate well to flat surfaces like pottery. 
And so we are not quite at that level of technical 
sophistication to really kind of make an app for that as it 
were.
    Mr. Pittenger. How about trade-based money laundering, does 
this enter in--do they use trade-based money laundering as a 
means to transfer these objects?
    Mr. Villanueva. Sir, from the trade-based money laundering 
perspective, it will take money from an illicit source to buy a 
commodity and then ship that commodity across international 
boundaries. So, yes, it is very possible that it is something 
that could happen.
    Mr. Pittenger. The subterfuge of shipping out something 
from one country to another--
    Mr. Villanueva. Absolutely. And you are changing the shape 
of the money, the cash, into a commodity, shipping the 
commodity, selling that commodity, and, therefore, laundering 
illicit funds, so it is a possibility. We have the trade 
transparency unit, which is one of my old jobs that dedicates 
their time and effort 100 percent to pursue trade-based money 
laundering by working with the customs administrations of the 
world in exchanging trade data to do that type of work. So it's 
something that we, in law enforcement, are looking at, and it 
is very possible, sir.
    Mr. Pittenger. Do we need to strengthen our capabilities in 
terms of TBML? And other countries, are they collaborating with 
us? Do you see a commitment, in terms of our partners, in being 
able to have the technology and the commitment to oversee TBML?
    Mr. Villanueva. Yes, sir, we do. We work very well with the 
international community. A little bit of a difference that 
sometimes we encounter is that some customs administration, 
they are not law enforcement, where in the United States we 
carry a law enforcement mission, but then we work with the 
national police force and the customs administration, so there 
is a good partnership. There is many countries that are willing 
to work with us under the customs mutual assistance agreements 
that are in place throughout the world.
    Mr. Pittenger. Okay. My time is about up. Thank you so 
much.
    I yield back.
    Chairman Pearce. The gentleman's time has expired.
    The Chair now recognizes the gentleman from Illinois, Mr. 
Foster.
    Mr. Foster. Thank you. Thank you to everyone here. It is a 
very tragic subject.
    I was wondering, what is the rough fraction of, say, 
Daesh's secondary market in terms of regions of the world: 
Western Europe; Asia; the Gulf states and other Arab states; 
and North America, just in rough terms? And are there trends in 
that? How effective have we been, for example, in Western 
Europe and North America to at least restrict purchases to 
well-documented, things that have been documented to be in 
museums and then disappear, and as well as items that were 
lifted out of the ground without documentation at all in the 
last couple of years?
    Mr. Daniels. Sir, I think that the short answer to that 
question is that, generally speaking, in a conflict-looting 
environment, our research to date suggests that it takes 6 to 9 
years for the antiquities themselves to surface publicly at the 
sort of end stage of the distribution node.
    What we do know about the antiquities that we have seen 
looted from Syria, more broadly, that are not at the moment 
possible to link to Daesh itself, is that they are generally 
being transshipped through Southeast Asia and through countries 
such as Singapore, Indonesia, and Thailand, and then back to 
markets in Western Europe.
    Western Europe predated the United States in placing import 
restrictions on looted material from Syria. The European Union 
was very quick on this particular issue, and Germany very much 
so has been very focused on clamping down this kind of trade.
    So we are not, at the moment, able to actually parse out in 
strict percentages where, say, Daesh's material is specifically 
going to different market countries and market destinations. 
What we can say is that we suspect that this material is in the 
pipeline, again, from transshipment records that we have seen 
from Southeast Asia.
    We can also suspect that, as Ms. Grunder mentioned, the 
United States is the largest art market nation. Other 
significant art market nations include China, Russia, the Gulf 
states, Saudi Arabia, Qatar, and the Emirates. And so our 
suspicion is that we may see some kind of restructuring as 
these materials begin to surface, and they may not necessarily 
appear in, say, Western Europe as we might have typically 
expected, say, after the Iraq war.
    Mr. Foster. Certainly in the traditional modern and more 
modern art markets, China is a huge player and Asia generally. 
It would not be surprising to find them equally large.
    So we have no way of even guessing the percentage of stuff 
that is transshipped to Southeast Asia and then doesn't even 
head for North America?
    Mr. Daniels. Sir, at the moment we have not actually been 
able to review the transshipment records from a research 
perspective, and I really don't know the extent to which there 
may be ongoing law enforcement investigations in the United 
States on that subject.
    Mr. Foster. How important is the documentation of an 
artifact to its value on the secondary market?
    Mr. Daniels. The preliminary research that we have done 
suggests that documentation of an artifact will increase the 
value of the objects somewhere on the order of 40 percent. So 
you can count that as a discount, if the object is completely 
unprovenanced without documentation.
    Mr. Foster. Is the technology to make fake artifacts 
sufficiently advanced such that it is watering down the value 
of nondocumented artifacts or not yet?
    Mr. Daniels. One of the interesting things about the Syrian 
crisis is that there has been a flourishing of a fake 
antiquities market inside Syria that in many ways showed up 
first in the United States and in Western Europe, and these are 
very clearly fake. But there is enough expertise that exists 
within the international art market to actually determine the 
difference between a fake and a real object that I am not sure 
it has had any kind of effect on depressing prices.
    Mr. Foster. Okay. In a funny way, it is maybe encouraging 
that the real theft is being diluted by competent forgeries.
    A couple of years ago, Daesh started issuing gold coins 
with the intention of destroying the U.S. dollar. And I was 
wondering, have those--I presume they are pretty much 
worthless, except for their intrinsic value--started to acquire 
value on the secondary market as just a coin of another dead or 
dying country?
    Mr. Daniels. I have not seen any evidence to date of 
extensive collection of the Daesh coins, although I have heard 
from law enforcement officials outside the United States that 
there is a collectors' market for some objects in the Gulf 
states.
    Mr. Foster. I guess my time is up, so thank you.
    Chairman Pearce. The gentleman's time has expired.
    The Chair now recognizes the gentleman from Arkansas, Mr. 
Hill.
    Mr. Hill. Thank you, Mr. Chairman. I thank the ranking 
member for bringing this important subject back. And certainly 
I want to thank Dr. Daniels for the Smithsonian's work around 
the United States in museum education and repatriation of 
cultural artifacts in coordination with our Native Americans 
around the country. It has been a great 20 years of the work 
that the Smithsonian has done on that.
    When I think about this subject, to me, from my reading, 
destruction, simple, malicious terrorist destruction seems 
really an equal or greater motivation than making money as a 
channel for the Islamic State.
    One of my favorite books last year was reading the Bad-Ass 
Librarians of Timbuktu, which I commend to my colleagues is a 
terrific book in Mali of just simply the Sub-Saharan terrorist 
organizations connected with al-Qaida and the Islamic State and 
others, just their relentless effort to destroy thousands of 
years of Islamic manuscripts just because they could.
    So I hope that you will recommend to the Treasury 
Department that when Secretary Mnuchin goes to the Gulf this 
year to discuss this Gulf states-headquartered terror finance 
unit, that this issue of antiquities transfer be put on his 
agenda in the Gulf states, because I have no doubt that if you 
wanted a relic from the Levant, it seems like that would have 
high value among Gulf State actors with funding.
    Following up on Mr. Foster's comments about the buy side, 
on the sell side, where is, in your view, the major leakage of 
cultural artifacts? Are they primarily exiting through Turkey 
to these other markets you described or to the coast somewhere 
on the Mediterranean? Talk to me about where you think we 
should be most vigilant at looking for the leakage.
    Mr. Daniels. Thank you for the question, sir. The Turkish 
law enforcement has actually very much stepped up to the 
current crisis about archaeological site looting, and the 
numbers of artifacts that the Turkish police forces have 
actually recovered is quite extraordinary and points to the 
effectiveness of their law enforcement response.
    My own view on this is that much of the large antiquities, 
not the small antiquities, but the large antiquities, were 
actually smuggled from Syria into Iraq to Mosul itself. And 
some of the members may be aware that not all plane flights 
stopped to Mosul during the present Iraq crisis, and my 
suspicion is that--or my working theory is that many of those 
artifacts were smuggled in those plane flights, particularly 
the large plane flights, and then to the Southeast Asian route 
that we have actually seen crop up.
    Some smaller artifacts, especially earlier in the conflict, 
were likely smuggled out through the regional networks that 
have long been established and routed through Lebanon, which 
has been a major transshipment point and sales point for 
antiquities in the Middle East for the better part of the last 
75 or 100 years.
    Mr. Hill. Thank you. That is responsive. I think it guides 
the committee and also the Department of State, I would think, 
on where to place emphasis in trying to step up working with 
our customs people and our experts on how to target the 
stopping of those that do get transshipped.
    On a separate subject, we center all of our money 
laundering work on the banking system, because we always 
believe that people will try to turn whatever they have in the 
global market to cash, and, therefore, the nicest place to 
track that is in a financial institution. Of course, we know 
that now in today's society, that is not necessarily accurate.
    So do you think that the international art community should 
be required, perhaps, to file a suspicious activity report 
through to some place or among each other on a self-regulatory 
or cooperative basis? I would be interested in your views on 
that, how you think those red flags could be used in maybe a 
more effective way. Whomever would like to respond to that.
    Mr. Villanueva. That is an interesting question, actually. 
On the money side of the house, art dealers, as part of a 
business transaction, if they receive more than $10,000 in 
cash, they will have to do the Form 8300. As far as suspicious 
activity reports, that will entail a change in legislation 
because they are not a money service business. They are an arts 
dealer. I would defer to experts in terms of suspicious 
activity reports as it pertains to the art market.
    But as far as the money side of the house, that would 
entail a little bit of a change, because they are not 
necessarily known as a money service business. However, there 
are mechanisms in place to contact law enforcement, and some of 
them have done that quite proactively, when they come across 
differing artifacts that are questionable to their expertise. 
They are the experts. So if we think of using your analogy, 
sir, if you think in terms of the art dealers as we think of 
the banks, which are the front line of defense for financial 
transaction, then art dealers are the first line of defense for 
us when it comes to the selling of looted artifacts, and we 
would love to work more with them. We are doing a lot of work 
with that community in terms of outreach, using their 
expertise, but I will defer to my colleagues at the table on 
the CPAA or the cultural properties out of the house.
    Chairman Pearce. Thank you. The gentleman's time has 
expired.
    The Chair now recognizes the gentleman from Nevada, Mr. 
Kihuen.
    Mr. Kihuen. Thank you, Mr. Chairman, and Mr. Ranking 
Member. And I thank you all this morning for being here with 
us, talking about such an important subject.
    I just have a couple of questions. In your opinion, how has 
ISIS' approach to collecting payments from looters changed 
since the coalition air strikes in 2014 began to choke off 
other sources of revenue, including the sale of oil? And that 
is for any of you.
    Mr. Daniels. I think two things on this. I think that the 
information that we actually--that we understand about how this 
market actually operates certainly became much more fragmented, 
in my view, since the coalition air strikes actually began. And 
so in some ways we are operating in an environment where it is 
not entirely clear.
    What I am aware of is that about the time the coalition air 
strikes began, it became harder to move material, and this is 
what my colleagues whom I have been working with in Syria tell 
me. And at that juncture there was also a problem of actually 
determining the price point of many of these antiquities, and 
many of the first buyer intermediaries began to misidentify in 
many ways the value of the antiquities, either grossly 
overvaluing or grossly undervaluing, pointing to a fact that 
maybe some of the expertise that they were relying on may have 
escaped or there wasn't as much coordination because of the 
disruption caused by the coalition air strikes.
    Mr. Kihuen. Got it.
    And, Mr. Villanueva, your testimony notes that your agency 
has a robust international presence through a network of 
attaches at 67 different embassies and consulates. Of these 
attaches, how many of them have expertise dealing with art and 
antiquities? And, in your view, is additional training for such 
personnel warranted?
    Mr. Villanueva. Thank you for the question, sir. So, yes, 
we do actually--as a part of our training, as Ms. Grunder 
mentioned, we actually train some of our agents stationed 
abroad. There are some offices that are heavily engaged. I 
mentioned the Italian Carabinieri. Our office in Rome within 
the embassy under the chief of mission works very closely with 
our foreign partners on that.
    But let me say this: We do have subject matter experts in 
our office in D.C. We work very close with the Smithsonian, and 
with the Department of State. So if any of our agents, any of 
our 6,000 agents, whether domestically or abroad, comes across 
to a case, an allegation involving CPAA, even if they are not 
trained, they do have resources available immediately, people 
that we can deploy, people who can talk to them on the phone to 
help guide that investigation.
    Mr. Kihuen. Got it. Thank you.
    And then just my last question, and you might have answered 
this before I got here, but what portion of the funds are 
raised from direct looting by ISIS itself versus through 
imposing taxes and licenses on the civilian population?
    Mr. Daniels. Sir, I think that one of the issues with the 
amount of money identified from ISIS is that we are really not 
clear right now about parsing out the exact dollar figure from 
ISIS. The best information I think that exists to date on that 
is the financial information that was retrieved from the Abu 
Sayyaf raid, and again, my understanding is that the committee 
was briefed on that particular raid in closed session.
    Mr. Kihuen. Okay. Thank you.
    Thank you, Mr. Chairman. I yield back.
    Chairman Pearce. The Chair now recognizes the gentleman 
from somewhere east of the Mississippi River, Mr. Poliquin.
    Mr. Poliquin. Mr. Chairman, that would be the great State 
of Maine, Vacationland. If you haven't booked your summer 
vacation to Maine, you should do so now.
    Thank you, gentlemen, and Ms. Grunder, for being here 
today. We really appreciate this. This is a concern to all 
Americans who want to make sure we preserve world history and 
culture, including here in the United States.
    We spend a lot of time talking about this illicit trade 
over in the Middle East and other parts of this great Earth, 
but what about right here in America? We have a real problem in 
our great State of Maine with an opioid and heroin addiction--
an epidemic, I should say. It is a real concern. It is 
affecting all of our families or most of our families.
    And there has been a little bit of discussion today about 
illicit trade in antiquities here, right here, in historical 
artifacts right here in America. I would like to ask you, each 
of you, if you can weigh in as quickly as you can so I can get 
to some other questions, Ms. Grunder, we will start with you, 
do you have any feel for how much of this illicit trade in 
antiquities and historical artifacts has an impact on illicit 
drug trade here in America?
    Ms. Grunder. Thank you for the question. We believe that 
there are commonalities between all the different forms of 
illicit trade, but I would have to leave it to the experts 
for--
    Mr. Poliquin. Thank you.
    Dr. Daniels?
    Mr. Daniels. Right now, we really do not have a very good 
sense about the relationship between Native American looting 
and the illicit drug trade, except insofar as many of the 
Native American cultural property cases that have emerged have 
drug ties to either methamphetamines or to opioids.
    Mr. Poliquin. Okay. But it is happening?
    Mr. Daniels. It is definitely happening. My own view on 
this and my working theory on this is that the looting of the 
archaeological sites actually provides a form of base capital 
for drug producers to begin their operations.
    Mr. Poliquin. I see.
    Mr. Villanueva, we have to choke off the financing to 
anybody who is trying to sell this poison to our kids and our 
families, whether it be in Maine, New Hampshire, or any other 
part of the country. Do you have any information here for the 
panel on this?
    Mr. Villanueva. You mentioned financial as it pertains to 
drug trafficking. Our agency brings many years, over 40 years 
of financial investigation expertise. As a matter of fact, I 
have worked my career of over 25 years as a money laundering 
investigator.
    Mr. Poliquin. Thank you for doing that, but do we have a 
connection between the illegal drug trade and heroin and opioid 
in America with respect to the selling of our historical 
artifacts here within our borders?
    Mr. Villanueva. What I can say in this forum at this point 
is that we have not seen any investigations on CPAA 
specifically cautioning on opioids, but I have to limit my 
comments at this point just to that.
    Mr. Poliquin. Okay. Thanks.
    Let's dig in to another issue here. Dr. Daniels, I will 
start with you. Tell us a little bit about how a free port 
works and how a free port might have an impact on the illicit 
trade of historical artifacts in fueling the drug trade across 
the world.
    Mr. Daniels. Generally speaking, sir, with a free port--we 
expect the antiquities trade to actually follow the free ports. 
Free ports have served as gallery spaces for distributors to 
actually show--
    Mr. Poliquin. There are warehouses at different ports of 
entry around the world. Is that correct?
    Mr. Daniels. That is correct, sir.
    Mr. Poliquin. Okay.
    Mr. Daniels. And so these warehouses serve as both 
showrooms. They serve as conservation centers. They serve as 
areas for the long-term holding of antiquities while they 
increase in value or the taint that is associated with their 
looting disappears over the passage of time.
    Mr. Poliquin. Okay.
    And, Mr. Villanueva, do you have any comment on that issue 
in particular?
    Mr. Villanueva. Sir, I agree with Dr. Daniels. What I want 
to highlight is that free trade zones in the United States are 
a little bit different than those abroad. Free trade zones in 
the United States are heavily regulated. Customs and Border 
Protection does great work in that space, and any merchandise 
in the United States going in and out of a free trade zone is 
subject to shipping documents, such as country of origin, 
description, and valuation, very similar to the shipping 
information when they are actually bringing merchandise into 
our commerce or out of the United States--
    Mr. Poliquin. Since this has an impact on terrorism 
financing around the world, does the United States Government 
have any kind of jurisdiction in those free zones in other 
countries in other parts of the world?
    Mr. Villanueva. Only if it pertains to merchandise coming 
into our commerce once it comes into the United States.
    Mr. Poliquin. I see.
    Thank you, Mr. Chairman, very much. I yield back my time. 
And thank you all for being here today.
    Mr. Pittenger [presiding]. The Chair recognizes the 
gentlelady from New York, Mrs. Maloney.
    Mrs. Maloney. I thank all of the panelists for being here, 
and I thank the chairman and the ranking member for holding 
this important hearing on the theft of cultural antiquities. It 
has long been an interest of mine, and this is hardly a new 
practice.
    In the early 1800s, when Greece was under Ottoman rule, a 
British nobleman took over 100 pieces of the historic Parthenon 
in Athens, and under very questionable circumstances, he then 
sold these artifacts known as the Parthenon Marbles or 
sculptures to the British museum, where they remain today. This 
is probably the most important antiquities in Greece prepared, 
developed by Greek artists, owned by the Greeks, and yet a 
representative of an occupying nation sold them. He certainly 
didn't have the right to sell them, so in effect, in my 
opinion, they were stolen.
    And I have introduced a resolution that calls for the two 
countries to negotiate a return of the Parthenon Marbles, 
because these artifacts have incredible cultural significance 
to the Greek people. But the story of the Parthenon Marbles in 
many ways mirrors the modern problems that we face in the 
illegal antiquities market. The British nobleman Thomas Bruce 
took these artifacts while the Ottomans were ruling Greece and 
then was able to profit when he sold them to a museum.
    Like today, there are terrorist organizations like ISIS who 
steal cultural artifacts in territories that they occupy and 
then convert them to cash by selling them on the black market 
in order to fund their terrorist organizations. Of course, if 
there were not a secondary market for stolen antiquities, then 
terrorists and criminals would not see these artifacts as 
potential sources of revenue in the first place.
    So I have two questions to ask the panel, and I would like 
to start with Mr. Villanueva.
    First, is it the lack of agreed-upon and enforceable 
standards in the antiquities market that makes it so attractive 
to criminals and terrorists to sell these artifacts or are the 
terrorists just using the antiquities market simply because the 
area they currently occupy happen to have lots of valuable 
antiquities?
    And we have been called to a vote.
    Mr. Villanueva. I would say that when we are talking about 
cultural property, arts and antiquities trafficking, we are 
talking about, perhaps, the oldest crime in the books of law. 
Ever since we have had civilization, and we have had art, we 
have had the smuggling and looting of arts and antiquities.
    But what I would say is that you talk about the area I 
occupy. I would also mention that there are regions with civil 
unrest, with rich history, traditions, arts and antiquities. So 
we do have, as far as the United States--I feel comfortable 
enforcing the laws we have, issues working with the 
international community to prevent the looting specifically as 
it pertains--
    Mrs. Maloney. Do we have standards to prevent this in the 
antiquities market? Are people who buy these, do they have 
standards and laws against doing this? What are the standards 
that could prevent this from happening? Dr. Daniels?
    Mr. Daniels. One of the issues in the broader antiquities 
market is that it has existed for a very long time, as you 
rightly point out. And for much of that time, there has been 
very little oversight or regulation or due diligence required 
in the passage of antiquities throughout the supply chain and 
then, ultimately, on to collectors.
    This has actually changed in recent years with the 
vigilance of the FBI Art Crime Team, and the State Department 
working well with them to enforce the memorandum of 
understanding that we have for the specific 16 countries and 
the other two special cases.
    Our principal issue, though, is that that does not 
represent international coverage, and there is a real lack of 
standards about what constitutes the documentation required for 
legal title for the sale of an object through that supply chain 
and the expectation to receive that kind of title information.
    Mrs. Maloney. So how would you create the international 
standards? Through the Hague? How would it be created? What 
entity? The United Nations? How would you make this happen 
internationally?
    Mr. Daniels. Right now, the approach has been very much 
piecemeal country by country, according to the laws of 
possessor title in each country.
    Mrs. Maloney. Do you think it would be good to go to the 
United Nations with this effort?
    Mr. Daniels. I am not sure there would be concurrence in 
the United Nations for such an actual project, and in that way 
I am a realist, politically, about what is possible in that 
way. But I think that there are certainly possibilities that 
this committee and the United States Congress can explore in 
regard to legitimate title.
    Mrs. Maloney. Thank you.
    Mr. Pittenger. The gentlelady's time has expired.
    The Chair recognizes Mr. Royce, chairman of the House 
Foreign Affairs Committee.
    Mr. Royce. I thank the chairman.
    The Foreign Affairs Committee's ranking member, Eliot 
Engel, and I last year passed the Protect and Preserve Cultural 
Property Act, and the goal there was to deny funding to ISIS, 
but also to improve our ability, our government's ability to 
work with our partners there in Syria and in Iraq. And since 
that time--and I was at the Iraq museum last year--we have seen 
the destruction of the Great Mosque in Mosul.
    And I was going to ask in that vein, I would ask the panel 
what the practical impact of this legislation has been both as 
it relates to stopping the illicit trade in antiquities and in 
the coordination among the respective agencies that have a 
stake in this fight, and also, are there other countries 
experiencing conflict in which illicit antiquities might enter 
the U.S. markets just as these antiquities taken down by ISIS 
has been found to have entered the U.S. market?
    Ms. Grunder. Thank you, Congressman Royce. The State 
Department has stood up the Cultural Heritage Coordinating 
Committee in response to the sense of Congress in the 
legislation from last summer, and we have had three meetings of 
that senior interagency committee since last summer.
    I think it genuinely has increased coordination among our 
agencies at a senior level. One result that I would highlight 
is a recent agreement between the Smithsonian and the State 
Department to fund a project in northern Iraq to do emergency 
stabilization at the site, the ancient site of Nimrud.
    Mr. Daniels. Sir, thank you for drawing attention to the 
Protect and Preserve International Cultural Property Act and 
your bipartisan leadership with Mr. Engel on this particular 
issue.
    I also want to emphasize just the importance of the 
increased coordination capacity that has increased across the 
interagency after the CHCC was stood up.
    What I also want to add in this regard is that the Protect 
and Preserve International Cultural Property Act was specific 
to Syria and looted material from Syria in order to choke off 
the Daesh funding. There are, of course, other countries 
experiencing conflict. Afghanistan, Nigeria, and South Sedan 
all have looting issues, and all have antiquities that have the 
potential to enter the flow of commerce.
    I recently returned after a prolonged trip to Europe 
speaking with law enforcement. And after my conversations in 
those meetings, I am at this point almost more concerned about 
the nexus between looting and al-Qaida and Afghanistan than I 
am about Daesh and Syria and Iraq. But there is no protection. 
There are no import restrictions for Afghanistan.
    Mr. Royce. Thank you.
    Any other commentary?
    Mr. Villanueva. Sir, as far as the different topics, I will 
defer to my colleagues. No further comments from law 
enforcement.
    Mr. Royce. Thank you, Mr. Chairman. I appreciate it, and I 
yield back.
    Mr. Pittenger. The gentleman yields back.
    The Chair recognizes Mr. Gottheimer for 1 minute.
    Mr. Gottheimer. Thank you, Mr. Chairman. And thank you, Mr. 
Ranking Member, and all of the witnesses for appearing today.
    Mr. Villanueva, late last month, The Wall Street Journal 
quoted a former customs officer in New York, who handled more 
than 16 antiquities seizures saying, ``It is still surprisingly 
easy to smuggle stolen objects here,'' pointing to the use of 
courier services, air cargo, and even stashing objects in 
passenger luggage.
    What additional steps is DHS, ICE, or TSA taking to disrupt 
and prevent this pathway into the lucrative U.S. market? Thank 
you.
    Mr. Villanueva. Thank you for the question, sir. As we 
mentioned: training. Training capacity building is paramount to 
what we do, understanding this crime and the smuggling, the 
routes, the techniques, concealment, what have you, is 
important to both investigators and to Customs and Border 
Protection working at the front lines.
    So we bring the CBP officers to training. We talk about the 
different concealment techniques. We talk about the 
investigative side of the houses. We talk about the handling 
and the preservation of the pieces. We also work with the 
interagency and with our international partners to learn about 
the pieces that are out there in the market, whether the great 
market or the legitimate auction houses that might be coming 
through the border, so that when our officers come across with 
that piece, a red flag goes up.
    So there are actually actions in place. There are efforts 
underway through Customs and Border Protection, Immigration and 
Customs Enforcement using our border search authority to 
prevent that.
    Mr. Gottheimer. Thank you, Mr. Chairman. Thank you.
    Mr. Pittenger. Thank you. The gentleman's time has expired.
    We regretfully must adjourn this hearing. Thank you so much 
for being with us today and for your wise counsel.
    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.
    [Whereupon, at 10:25 a.m., the hearing was adjourned.]

                            A P P E N D I X



                             June 23, 2017
                             
                             
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