Laundering and Art

The US Treasury has released a Study of the Facilitation of Money Laundering and Terrorist Through the Trade in Works of Art.

The report states

Section 6110(c) of the Anti-Money Laundering Act of 2020, enacted as part of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021, directs the U.S. Department of the Treasury to study the facilitation of money laundering (ML) and terror finance (TF) through the trade in works of art (the “Study”). This Study identifies art market participants and sectors of the high-value art market in the United States that may present ML and TF risks to the U.S. financial system. The Study also examines what efforts U.S. government agencies, regulators, and market participants should explore to further mitigate these risks. 

Most art market participants, including some entities that provide financial services within the high-value art market, are not subject to anti-money laundering/countering the financing of terrorism (AML/CFT) obligations. Several qualities inherent to art, the high-value art market, and market participants may make the market attractive for ML by illicit actors. Specifically, the high-dollar values of single transactions, the ease of transportability of works of art, the long-standing culture of privacy in the market (including private sales and transactions), and the increasing use of art as an investment or financial asset, all could make trade in high-value art vulnerable to ML. 

However, the infrequent use of cash in the high-value art market and preexisting requirements for financial institutions and commercial businesses to report high-value cash transactions, both of which are described later in this Study, may make the institutional high-value art market a poor vehicle for laundering illicit cash proceeds. The Study found some evidence of ML risk in the institutional high-value art market but found little evidence of TF risk. Furthermore, the emerging online art market may present new risks, depending on the structure and incentives of certain activity in this sector of the market (i.e., the purchase of non-fungible tokens [NFTs], digital units on an underlying blockchain that can represent ownership of a digital work of art). 

To mitigate these risks, some institutional art market participants, such as certain auction houses and galleries, maintain procedures for conducting due diligence on potential buyers and sellers. Institutional art market participants have inherent economic incentives, such as credit risk issues and reputation maintenance, to collect this information. These good business practices can collect information that may help reduce ML in the art market. However, these programs are purely voluntary, and the procedures can be suspended or disregarded at the institution’s discretion without the risk of the U.S. government (USG) bringing a civil or criminal enforcement action, which presents a vulnerability to the U.S. financial system. These programs are less common in certain areas of the online art market, such as with exchanges that host digital art transactions. Furthermore, illicit actors may attempt to utilize or bribe merchants, professionals, and financial services employees in the art market to ignore policies and best practices for a desired transaction. A significant portion of ML in the high-value art market is likely conducted with the help of such complicit professionals. While the use of complicit professionals is not unique to the art market—it can happen in any profession or service—the historically private nature of the high-value art market makes it more challenging for government authorities to identify and investigate potential ML.

To address these ML risks, the Study considers several regulatory and nonregulatory actions the USG should consider. Nonregulatory options include (1) providing government support for the creation and enhancement of private sector information-sharing programs to encourage transparency among art market participants and (2) updating guidance and training for law enforcement, customs enforcement, and asset recovery agencies. Regulatory options include (1) using targeted recordkeeping and reporting requirements to support information collection and ML activity analyses and (2) applying comprehensive AML/CFT measures to certain art market participants. Weighed against other sectors that pose ML/TF risks, the Study concludes that the art market should not be an immediate focus for the imposition of comprehensive AML/CFT requirements.

On January 1, 2021, the U.S. Congress enacted the Anti-Money Laundering Act of 2020 (the AML Act) as part of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 (NDAA). Section 6110 of the AML Act includes several AML/CFT provisions related to antiquities and art. Section 6110(c) of the AML Act directs the U.S. Department of the Treasury (Treasury) to conduct a study of the facilitation of ML and TF through the trade in works of art, including an analysis of the following:

1. The extent to which the facilitation of ML and TF through the trade in works of art may enter or affect the financial system of the United States, including any qualitative or quantitative data or statistics; 

2. An evaluation of which markets, by size, entity type, domestic or international geographical locations, or otherwise, should be subject to any regulations; 

3. The degree to which the regulations, if any, should focus on high-value trade in works of art and on the need to identify the actual purchasers of such works, in addition to the agents or intermediaries acting for or on behalf of such purchasers; 

4. The need, if any, to identify persons who are dealers, advisors, consultants, or any other persons who engage as a business in the trade in works of art; 

5. Whether thresholds and definitions should apply in determining which entities, if any, to regulate; 

6. An evaluation of whether certain exemptions should apply; 

7. Whether information on certain transactions in the trade in works of art has a high degree of usefulness in criminal, tax, or regulatory matters; and 

8. Any other matter the Secretary of the Treasury determines is appropriate.

The report comments 

The global trade in art is a multi-billion-dollar industry. According to The Art Market 2021, a leading industry report published by UBS and Art Basel,2 in 2020, global sales of art were valued at an estimated $50 billion, down from approximately $67 billion worldwide just a few years earlier. This decrease is likely primarily due to the ongoing COVID-19 pandemic. According to the same study, the United States, the United Kingdom, and China account for an estimated 82 percent of global art sales by value, with the U.S. share estimated at 42 percent ($21.3 billion). Headlines consistently identify paintings sold by galleries or at auctions that are valued in the hundreds of millions of dollars. In 2017, Christie’s auction house sold a painting for nearly half a billion dollars, the most expensive sale on record. High-value art has even been purchased by investors speculating with excess capital to allocate, demonstrating the viability of art as an investment asset class. Economic growth, rising purchasing power, and growing disposable income in the global economy are also likely driving factors behind the thriving high-value art market. Technological innovations, such as the rise of distributed ledger technology and NFTs, have presented and continue to present new opportunities for the exploration of creative media, and financial innovations in cross-border payments have allowed the global art market to thrive and expand. 

The substantial number of art-related transactions taking place globally in the high-value art market provides an opportunity for disguising illicit transactions as legitimate commercial transactions. Highnet-worth individuals (HNWI) seek high-value goods or commodities for personal consumption or as an investment. Illicit actors attempting to launder large amounts of illegitimate wealth, such as kleptocrats and drug traffickers, are among those who seek out such possessions or investments. While the risk that high-value art can be a conduit to launder illicit proceeds is long-standing, this Study considers market indicators and case studies of misuse to assess the extent to which the high-value art market attracts illicit finance and whether certain sectors of the market are particularly vulnerable to abuse by criminal actors. The Study also examines what efforts should be undertaken by U.S. government agencies, regulators, and market participants to further mitigate the laundering of illicit proceeds through the high-value art market. 

The high-value art market is the part of the market that is of greatest concern from a ML perspective but represents a limited portion of the broader art market. According to the UBS and Art Basel report, in 2020, less than 20 percent of works sold internationally by art dealers had values over $50,000. Approximately 10 percent of sales by auction houses internationally in 2020 had values over $50,000, but those sales accounted for over 85 percent of the total sales value. 

The high-value art market and art market participants who routinely transact in the type of high-value artworks have certain inherent qualities that make them potentially vulnerable to a range of financial crimes. These qualities include the following:

• The relatively high value of art compared to other retail goods and commodities; 

• The historically opaque nature of the high-value art market; 

• Subjective valuations and the lack of stable and predictable pricing; 

• The transportability of certain types of artworks, including across international borders; 

• The difficulty faced by law enforcement to monitor such movements and assess the value of artwork, including across borders;  and 

• The accepted use of third-party intermediaries to purchase, sell, and hold artwork while their clients remain anonymous (i.e., art dealers, advisors, interior designers, shell companies, trusts). 

For example, in September 2005, Brazilian financial institution Banco Santos went bankrupt, and its owner, Edemar Cid Ferreira, was convicted of bank fraud and ML in Brazil. As part of the case, a Sao Paulo Court judge also ordered the search, seizure, and confiscation of assets that Ferreira, his associates, and members of his family had acquired with unlawfully obtained funds from Banco Santos.  Brazilian authorities ordered the seizure of his art collection, valued at $20 to $30 million, which included high-value works of art. However, when Brazilian law enforcement searched Ferreira’s properties, several of the most valuable works of art were missing. In 2007, a U.S. investigation revealed that one of these high-value works of art had been illegally imported into the United States from a storage facility in the Netherlands with an invoice that valued the work at $100; however, it had been recently appraised for approximately $8 million. 

The Ferreira case highlights the ease of transfer, even across international borders, of high-value art. National border authorities can struggle to identify when high-value works are mis-declared as they lack the specialized experience to detect and appraise high-value art. 

AML/CFT and Other Reporting Requirements in the United States 

In the United States, AML/CFT laws and implementing regulations require that financial institutions establish and implement AML/CFT programs, which generally include the following elements: 

(1) designation of a compliance officer; 

(2) maintenance of a system of internal compliance controls; 

(3) ongoing, relevant training of employees; and 

(4) independent testing and review.  

As part of their AML/CFT programs, certain financial institutions are also required to identify and verify the identity of the beneficial owners of legal entity customers who own, control, and profit from companies when those companies open accounts.   Most financial institutions are also required to file Suspicious Activity Reports (SARs) with Treasury’s Financial Crimes Enforcement Network (FinCEN) when they know, suspect, or have reason to suspect that a transaction or group of transactions involve funds over applicable thresholds that are designed to evade federal reporting requirements, have no business or apparent lawful purpose, involve the use of the financial institution to conduct criminal activity, involve funds derived from illegal activity or are intended or conducted in order to hide or disguise funds or assets derived from illegal activity, or when the financial institution believes the reporting may be relevant to possible violations of the law. 

While banks are defined as financial institutions under FinCEN’s implementing regulations, other participants in the art market are not subject to comprehensive AML/CFT requirements.Although a bank is required to establish and implement an AML/CFT program, including appropriate risk-based procedures for conducting ongoing customer due diligence (CDD), and to file SARs, it is generally the bank’s customers, such as galleries, auction houses, or other art market participants, that are in a position to collect information regarding specific transactions, such as the identities of buyers and sellers and other transaction data. That said, some banks may require some supporting documentation before processing certain payments. In addition to SARs, certain financial institutions must file Currency Transaction Reports whenever a transaction in currency exceeds $10,000. 

Though they are not subject to AML/CFT obligations, participants in the U.S. art market are subject to certain general reporting requirements. First, any person engaged in a trade or business in the United States must file a “Report of Cash Payments Over $10,000 in a Trade or Business” (referred to as the “Form 8300”) for the receipt of more than $10,000 in cash, coins, or certain monetary instruments in one transaction or two or more related transactions (meaning that large currency and monetary instrument transactions are mandated to be reported by art industry participants that are not financial institutions). A Form 8300 may also be filed voluntarily for certain suspicious transactions, even if the total amount does not exceed $10,000. The Form 8300 provides valuable information on the movement and use of cash to the Internal Revenue Service (IRS), FinCEN, and the broader law enforcement community. Second, all U.S. persons must comply with Office of Foreign Assets Control (OFAC) regulations, including all U.S. citizens and lawful permanent residents regardless of where they are located, all individuals and entities within the United States, and all U.S. incorporated entities and their foreign branches.  For some OFAC programs, foreign subsidiaries owned or controlled by U.S. persons also must comply. Since the enactment of the “Berman Amendment,” U.S. sanctions regulations administered by OFAC generally exempt from regulation transactions related to sanctioned jurisdictions that involve “the importation from any country, or the exportation to any country…of any information or informational materials, including but not limited to…artworks.”  OFAC has issued public guidance indicating that it does not interpret this exemption to allow blocked persons or their facilitators to evade sanctions by exchanging financial assets for high-value artwork or vice versa.  OFAC has further noted it will apply its sanctions to transactions involving artworks in which a blocked person has an interest, to the extent the artwork functions primarily as an investment asset or medium of exchange. 

Outreach conducted by Treasury over the course of this Study revealed that while most art market participants are not mandated by federal regulations to maintain AML/CFT programs, many maintain voluntary programs that may include procedures for collecting information on customers. These voluntary programs can include information collection regarding “obtaining the provenance history of the object, requesting identification information from the seller, establishing credibility and plausibility references relating to the seller, referring to publicly available databases and listings relating to the parties to the transaction and the art object respectively, obtaining any relevant and available legal documents, witness declarations, expert opinions as the case may be, and checking the restoration history as appropriate and presenting circumstantial evidence when no direct documentation is available.” Whether the establishment and implementation of these programs are due to inherent art market incentives, such as knowing the customer for credit risk issues or to maintain the reputation of art market participants, adoption of these voluntary programs appears to be a best practice in the industry for high-value art. Additionally, some trade groups that represent auction houses, galleries, or other dealers maintain certain required due diligence policies and procedures that member businesses must adhere to as a membership requirement. That said, all these programs are not legally mandated and can be suspended or amended by the institution or trade group categorically or on a case-by-case basis. Moreover, the lack of regulatory requirements for such programs also means that government authorities cannot take administrative or enforcement actions when such programs are ineffective or nonexistent. 

While some art market participants may provide information in response to informal law enforcement requests, this is at the discretion of individual art market participants. There may be few other legal mechanisms for obtaining customer information other than a subpoena or court order. Based on these facts and the evidence presented throughout the rest of the Study, this report concludes that there is some evidence of ML risk in the high-value art market and little evidence of TF risk.

Secession

I have noted the 2020 'occupation' by the New Westralia secessionists of the National Trust heritage courthouse museum in York, Western Australia. 

The building was damaged, the group got some publicity for beliefs about sovereignty and the wickedness of the papacy, and no one was hurt. 

Three members of the group have now been ordered to pay over $27,000 in fines and compensation. 

The ABC notes that 

 The occupancy was streamed live on social media. The group brought a toilet bucket to see them through the weekend and drilled holes in the stone walls to set up their New Westralia banners. They also raised a flag. 

Wade William Guerin, 32, pleaded not guilty to trespass and damage at his Northam Magistrates Court trial on Thursday. His plea was despite footage being uploaded to social media showing him smashing through a door of the 1852 building. 

The amateur footage, taken by the group, showed the self-styled 'Magistrate Pumphrey' — identified by police in court as William David Atherton — holding a bible and saying, "open the doors in the name of the law" and "the bishop of Rome has no jurisdiction in this here realm of England". 

The incident triggered the building's alarm and police attended with body-worn cameras. 

'It sounded legitimate' Mr Guerin told Magistrate Donna Webb he had arrived in Australia about four months earlier and was working on farms for accommodation as the pandemic struck. He said Mr Atherton arrived on the farm to give a speech about the "government of New Westralia" which was a "Christian nation". "It all sounded legitimate," Mr Guerin said. "He said there were a few things we needed to do and one was reclaim the York courthouse. "I believe I was genuinely, honestly doing the right thing, I thought this was a genuine government." Under cross-examination Mr Guerin, who was representing himself, acknowledged he should have done more research. "Looking back I wish I had done more investigation," he told the court. 

Police body worn camera footage, played at the trial, shows a local police sergeant speaking to Mr Atherton who tells the officer to "return to barracks" and "surrender your firearms". Following the event, Mr Atherton, 54, spent two months in custody before being found 'unfit to stand trial'. Mary Frances Mount, 64, and Gary Thomas Hutton, 69, did not front court for their trial, but were each found guilty of trespass and damage in their absence. Ms Mount was also convicted of obstructing police during her arrest nearby after she left the old courthouse to buy food. 

Police prosecutor Sergeant Mark Sita said the group had "no lawful right. They were not leaseholders and they were not on the title deeds." He said the actions were the result of a "fantasy" and commands to police came from an "imaginary magistrate Pumphrey". "A reasonable person would think, 'why are we breaking into a building that is a museum at 6.30 in the morning?'," ... 

 Magistrate Webb said ...  "I struggle to understand how you got caught up in all of this," she told Mr Guerin. She said the group’s organisation and the fact that it was a historic building made the offence serious.

Webb fined Guerin $5,000, Hutton $5,500 and Mount $6,000. The group’s New Westralia banners and flags were forfeited. Guerin, Hutton and Mount were also ordered to pay $10,500 between them for the damage to the National Trust building.

Guerin's current LinkedIn profile describes him as 'Ambassador at The Government of New Westralia (de jure)'

BioGenome

'Ethical, legal, and social issues in the Earth BioGenome Project' by Jacob S Sherkow, Katharine B Barker, Irus Braverman, Robert Cook-Deegan, Richard Durbin, Carla L Easter, Melissa M. Goldstein, Maui Hudson, W. John Kress, Harris A. Lewin, Debra J H Mathews, Catherine McCarthy, Ann M McCartney, Manuela da Silva, Andrew W Torrance, and Henry T Greely in (2022) 119(4) PNAS e2115859119 comments 

The Earth BioGenome Project (EBP) is an audacious endeavor to obtain whole-genome sequences of representatives from all eukaryotic species on Earth. In addition to the project’s technical and organizational challenges, it also faces complicated ethical, legal, and social issues. This paper, from members of the EBP’s Ethical, Legal, and Social Issues (ELSI) Committee, catalogs these ELSI concerns arising from EBP. These include legal issues, such as sample collection and permitting; the applicability of international treaties, such as the Convention on Biological Diversity and the Nagoya Protocol; intellectual property; sample accessioning; and biosecurity and ethical issues, such as sampling from the territories of Indigenous peoples and local communities, the protection of endangered species, and cross-border collections, among several others. We also comment on the intersection of digital sequence information and data rights. More broadly, this list of ethical, legal, and social issues for large-scale genomic sequencing projects may be useful in the consideration of ethical frameworks for future projects. While we do not—and cannot—provide simple, overarching solutions for all the issues raised here, we conclude our perspective by beginning to chart a path forward for EBP’s work. 

The Earth BioGenome Project (EBP) is an audacious endeavor, an attempt to obtain whole-genome sequences from specimens of every eukaryotic species on Earth—land, sea, sky, or underground. We know of about 2 million such species ranging in size from the blue whale to a single-cell plankton in the class Mamiellophyceae; it is estimated that about another 7.5 million currently unknown eukaryotic species exist. The knowledge generated by EBP may “lead to new food sources, revolutionary bio-inspired materials, and innovations to treat human, animal, and plant diseases”. Also, “[i]f successful, the EBP will completely transform our scientific understanding of life on earth and provide new resources to cope with the rapid loss of biodiversity and habitat changes that are primarily due to human activities and climate change”. 

The scientific and technical problems of finding, sampling, sequencing, databasing, and analyzing these eukaryotic genomes are enormous, but so too are the ethical, legal, and social challenges associated with the project. This perspective highlights and categorizes many of the ethical, legal, and social issues currently confronting EBP and suggests a path forward. At the same time, we recognize that the problems inherent in the complexity of interests in a project like EBP are myriad, that solutions to some of these issues may be controversial or currently unavailable, and that resolving disputes over individual sequencing projects will likely require further input, not only of EBP and its members but also the broader public as well. It is nonetheless our belief that these problems can be managed well enough to enable EBP to proceed—and to succeed—equitably and fairly for all of humanity and the biosphere. 

Legal Issues 

EBP’s goal of sequencing representatives from all extant Eukarya raises a number of significant international and national legal challenges. These concern basic legal obligations on the part of researchers, such as proper sample collection and permitting, but also more complex requirements, such as the Nagoya Protocol’s requirements regarding access and benefit sharing (ABS) for the utilization of genetic resources. Beyond these obligations, EBP and its member projects face difficult questions pertaining to rights and responsibilities regarding intellectual property (IP), sample collecting practices, accessioning rules for collected samples, and biosafety and national security restrictions. ... 

Sequencing a genome often requires a tissue sample from the species, and most countries have regulations governing the collection of biological samples for research. EBP’s work, by its nature, is international in scope; a great number of species are endemic to only a single country or very few. This means that EBP researchers, at least today, are frequently tasked with collecting samples in one jurisdiction and preparing and sequencing them in another. As discussed later in this paper, fostering the sequencing of species in the country in which they are found is a future project goal. 

Many countries have biological permitting restrictions for engaging in species sample collection, some of which are the consequence of international treaties, while others are entirely domestic in nature. The Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) is perhaps the best-known of such international treaties in this regard and regulates the import, export, and reexport of International Union for Conservation of Nature (IUCN)-listed endangered species and derived materials without prior permitting from their respective source countries. Beyond CITES, a number of other legal frameworks operate similarly, including the Migratory Bird Treaty Act (implementing separate conventions among Canada, Mexico, Japan, and Russia), the Marine Mammal Protection Act, and the African Elephant Conservation Act. 

Supranational jurisdictions, such as the European Union, have a host of similar limitations among their respective member nations. In addition, biological samples sourced from Antarctica, specifically, are subject to governance under the Antarctic Treaty System, which encompasses not only the Antarctic Treaty, which came into force in 1962 and now has 54 members, but also over 200 separate requirements, including those in the Protocol on Environmental Protection to the Antarctic Treaty. Marine samples have yet further sampling and permitting restrictions, governed in many instances by the United Nations Convention on the Law of the Sea (UNCLOS) or, in the special case of cetaceans, the International Convention for the Regulation of Whaling (ICRW). 

Some jurisdictions, meanwhile, have purely domestic permitting requirements for species of significant national interest, such as the United States Bald and Golden Eagle Protection Act, and yet others may institute special national permitting processes for foreign researchers regardless of the particular species to be collected. In addition, some permitting processes may include requirements pertaining to vouchering—requiring a third party to maintain an archetypal specimen in an accessible collection. 

Assessing compliance with this web of legal obligations is complex, but necessary, and EBP researchers will need to take a systematized, species-by-species, sample-by-sample, and jurisdiction-by-jurisdiction approach to ensure compliance with these laws. The costs, in terms of researcher time and effort, are likely to be nontrivial. Nonetheless, many of the protections instituted in the above laws were put in place precisely to avoid the exploitation of biological resources that is currently contributing to the global decimation of biodiversity. Others, meanwhile, are geared to share the benefits of biodiversity as a solution to extractive biocolonialism. A principal goal of EBP is to halt, if not reverse, the global decline in biodiversity; circumventing restrictions on sample collection, aside from being illegal, may be counterproductive in the context of creating benefits for society and human welfare.

Further

Data and DSI 

Woven throughout the issues raised above are complexities regarding the generation and sharing of the sequence data, known under the CDB and Nagoya Protocol as DSI. DSI, like all other digital material, is easily shared across borders. This complicates how DSI is, and should be, considered under the Nagoya Protocol’s ABS principles, and there are conflicting views regarding unrestricted access to genomic data and the rights and interests of nations, Indigenous peoples, and local communities to control such data. A meeting last year between representatives from the European Union and China summarized the potential conflict concerning DSI and Nagoya’s DSI requirements this way: “Open data [are] a key component of the smooth functioning of science globally. However, open access may restrict options to address benefit sharing and the challenge is to generate a different approach that maintains the efficiencies of the current model in delivering societal monetary and non-monetary benefits arising from activities within the current system”. 

Assessing whether this conflict is real or hypothetical lies in the details of any DSI sharing regime. Much of the difficulty lies in narrowly conceiving of the benefits contemplated as primarily arising from a “payment for data” regime, even while there are greater opportunities for collaboration around other value-generating activities. At the same time, there are models where open data have produced monetary rewards for its generators, such as providing data hosting, developing analysis tools, or selling derivative products from such data. One relevant example might be the establishment and support of local sequencing capacity within source nations currently deprived of it and furthering training in the area. The COVID-19 pandemic has demonstrated the need to expand sequencing capacity globally. Researchers from sequencing-capacity-rich nations whose sequencing efforts will primarily focus on source nations without such resources should commit to generating solutions for this gap in sequencing capacity. Depending on how they are deployed, open data and a call for benefit sharing may not be in conflict but such a result will require careful analysis of how to provide meaningful benefits.

Darkness

'The dark authoritarians: Profiling the personality, emotional style, and authoritarian attitudes of the major American parties' by Ryan Bird, Hayden Hickey Mackenzie, Joel Leavitt and Jennifer L Robinson in (2022) 186(B) Personality and Individual Differences 111298 comments 

Many are concerned that authoritarianism is increasing across the political spectrum. In the current study, we investigated the extent to which dark personality variables (i.e., psychopathy, narcissism, Machiavellianism) predict both right- and left-wing authoritarianism (RWA and LWA) between Republicans and Democrats. We developed profiles of individuals' political and personality characteristics concomitant with endorsement of authoritarianism. Our findings (n = 527) suggest a complex interaction between dark traits and political views. Using latent profile analysis, we uncovered underlying profiles characterizing distinct groups of individuals across party identification, LWA, RWA, and dark traits. Four latent profiles emerged: (1) a typical Democrat, low in dark traits and higher in LWA; (2) a typical Republican, low in dark traits and higher in RWA; (3) a dark Democrat, high in dark traits and high in both RWA and LWA; (4) a dark Republican, high in dark traits and high in both RWA and LWA. Together, these data suggest that authoritarianism manifests differentially across the political spectrum and is influenced by emotional style.

Sorting

'Social Norms in Selective Reproduction: Implications for the Wide Offer of Genetic Screening Technologies' by Ainsley J Newson in ELSIhub comments 

 The ability to offer genetic information to inform reproductive decisions, for example through reproductive genetic carrier screening, expanded prenatal testing, or preimplantation embryo screening, is increasingly prevalent. A defining feature of such technologies is that they offer information on many genetic conditions in the one test. Common rationales for expanding the offer of such information include that the results can inform people’s decisions regarding selective reproduction or prepare them to parent a child with a genetic condition. 

While it remains vital for providers to ensure that decisions about whether to undergo screening can be made autonomously, in alignment with one’s own values, focusing only on individual choice is deficient. It is also important that providers, policymakers, and bioethicists consider the social context in which such choices are offered and made, especially because these contexts and the norms they generate shape and influence individual choice, and such choices are going to become increasingly common. 

Scholars of disability theory and feminist philosophy have argued along these lines for a long time. But the importance of attending to social context and social norms when designing and implementing large-scale reproductive genetic screening interventions is now gaining wider attention. ... one can argue that it is imperative that those offering such testing emphasize that testing is a choice and ensure that people undertaking it can access clear and balanced information about the conditions (or groups of conditions) being screened for. It is also important for people to have the opportunity to critically reflect on the reasons they are having this testing and what they might do with the information they receive.

Papers in the particular ELSIhub collection consider 

• who gets (and should get) a say in describing disability and difference, how autonomy and responsibility are intertwined and sometimes at odds, 
• what the proper role of the state should be in testing (including how public health ethics can help us think about this), and 
• how we can reflect on and learn from eugenics practices, including the social risks that arise from a cumulative set of unfettered, private reproductive choices. 

Newson notes that the papers complement material in the ELSIhub collection (edited by Melanie Myers and Emily Wakefield) on Expanded Carrier Screening (ECS): Clinical and Ethical Considerations for Genetic Counseling.

NHS negligence and compensation

'The value of compensation', a report by the UK Association of Personal Injury Lawyers (APIL) as part of the House of Commons Health and Social Care Select Committee inquiry on NHS litigation reform, comments 

 The essential purpose of compensation is to, as far as possible, enable the person who has suffered from negligent medical treatment to get back to a ‘normal life’, i.e. the position they were in prior to the negligence occurring. The impacts of negligence are wide-ranging and include job loss, poor physical health, financial troubles, relationship breakdowns and a loss of self-identity and self-worth. Patients who have suffered negligent medical treatment may be able to take legal action against the NHS and claim compensation if it can be shown that the negligence has directly resulted in injury. Patients can take legal action on behalf of themselves or on behalf of their next of kin if that person doesn’t have capacity to pursue action themselves or has died as a result of the negligence. 

Compensation is split into three parts – general damages, that is compensation for pain, suffering and the detrimental effect on quality of life; special damages for past losses, that is compensation for upfront expenses related to the injury; and special damages for future loss, that is compensation for the loss of earnings in the future, or the loss of earning potential, and future care.  

Examples of clinical negligence include the healthcare provider:

• Failing to diagnose a condition or making the wrong diagnosis 

• Negligence during a procedure or operation 

• Administering the wrong drug 

• Failing to get informed consent for treatment 

• Failing to warn about the risks of a particular treatment

NHS organisations pay an annual premium to the Clinical Negligence Scheme for Trusts (CNST), an insurance scheme administered by NHS Resolution, to mitigate against the cost of clinical negligence claims. Typically, NHS Resolution represents the NHS when a patient takes legal action against the NHS and claims compensation. There are also other, more minor schemes which NHS organisations pay into to mitigate the cost of clinical negligence claims. 

At present Judicial College Guidelines for the Assessment of General Damages in Personal Injury Cases are used to determine the financial value of general damages. These guidelines place an upper limit on the amount of compensation that can be awarded for each type of claim. Every penny of special damages must be accounted for in a schedule of loss.

The report comments  

1. The consequences of NHS negligence are wide-ranging 

NHS negligence causes significant disruption to patients’ lives and to the lives of their family and friends. Peoples’ physical, emotional and financial health can be seriously affected by the injury caused through negligent care. With the help of compensation, some can recover from, or adapt to, the consequences of NHS negligence relatively quickly. However, compensation doesn’t always stretch to help with the longer- term effects of negligence, which many suffer from for the rest of their lives. When rapid recovery isn’t possible, people can fall into a spiral of decline. Financially, they face mounting debt; psychologically the pain and suffering can result in poor mental health, including depression. In the cases with the most serious consequences, the negligent act can become embedded in the patient’s sense of self-identity and self-worth. It’s not possible for people to return to the life they previously enjoyed when they have lost relatives unexpectedly or when the negligence has caused acute impairment. In these circumstances some find it difficult to see themselves as ‘more than’ the victim of the negligence. The fight for justice can become an all-consuming process. 

2. The injury caused by NHS negligence has both direct and indirect costs 

Direct costs are commonly associated with: • A reduction in household income • Increased expenditure due to the need to travel to appointments • Unexpected costs associated with increased living expenses • Direct costs of home adaptations or mobility aids Again, rapid recovery is key for mitigating against indirect costs associated with long-term unemployment and relationship breakdown. If patients are unable quickly to cope with financial  pressures, it can take a long time for their standard of living to return to ‘normal’. Some may never have access to the same financial opportunities they had before the negligent event. This in turn has a negative effect on their quality of life. 

3. Compensation helps people to rebuild their lives 

The role of compensation is multifaceted and serves to help people who have suffered injury because of negligent care get their lives back on track. Financially, it helps people to recoup expenses or loss associated with direct costs, and in doing so alleviates financial pressure. Functionally, it provides access to the private treatment or alternative therapies needed to aid physical recovery and mitigate against long term damage. When physical recovery is not possible, compensation helps people adapt to their impairment and provides access to home adaptations and mobility aids. In doing so it helps people regain independence and freedom. 

4. Private treatment is often a key factor in recovery 

Private treatment aids recovery, both physically and mentally. It includes treatments such as physiotherapy and acupuncture, which contribute to better mobility and dexterity, and corrective surgery, which helps in the rehabilitation process and in improving the patient’s condition. Having access to quality treatment quickly provides reassurance to those who feel like their life has been put on pause. 

5. Compensation can be an effective acknowledgement of what can’t be replaced 

On an emotional level, compensation can be perceived by the patient and/or their next of kin to be recognition of the injustice experienced. Families experience avoidable pain, suffering and loss as a result of negligence and it is important to acknowledge, and be empathetic towards, the real-life consequences felt by individuals. In a top-down institution, some patients feel there is a tendency to lose sight of the people affected by negligence. When a life has been lost, compensation can go some way towards honouring that person’s contribution and acknowledging the opportunities missed. For families to feel any sense of justice for the deceased, it is important that the NHS is held accountable and recognises the loss of life. 

6. Where negligence has caused uncertainty about the future, compensation offers reassurance 

Especially in cases where children are involved (either directly or indirectly), the negligence causes particular anxiety around potential long-term implications for the patient and their family, especially in relation to on-going health problems and financial stability. Compensation has a key role in providing a sense of security. Knowing that there are funds to fall back on for further treatment or to facilitate financial stability offers reassurance to patients living with unknown consequences. It is important for people to feel that they can protect their family against future disadvantage caused by the negligent act. From an emotional perspective, this is important as it allows people to feel they can move forward. 

7. The compensation awarded is ‘not life changing’, it simply helps people get back on track 

Patients place huge value on compensation because it helps them get back on track and recover from the negative fall-out that was caused by the negligence. Compensation does not provide the means for people to elevate their standard of living. It simply facilitates a ‘return to normal’, or an adaption to a ‘new normal’, post the negligent event. 

8. Compensation isn’t about shaming the NHS, but about recognition of wrongdoing 

Many patients mention their admiration and respect for the NHS and the work that they do, and some mention not feeling particularly happy at having to take action against them. However, it is considered important that negligence and wrongdoing are recognised and equally that these experiences are not repeated for others.

Mafia Economics

'Returns to education in criminal organizations: Did going to college help Michael Corleone?' by Nadia Campaniello, Rowena Gray and Giovanni Mastrobuoni in (2016) 54 Economics of Education Review comments 

Is there any return to education in criminal activities? This paper is one of the first to investigate whether education has not only a positive impact on legitimate, but also on illegitimate activities. We use as a case study one of the longest running criminal corporations in history: the Italian-American mafia. Its most successful members were capable businessmen, orchestrating crimes that required abilities that might be learned at school: extracting the optimal rent when setting up a racket, weighting interests against default risk when starting a loan sharking business or organizing supply chains, logistics and distribution when setting up a drug dealing system. We address this question by comparing mobsters to a variety of samples drawn from the United States 1940 Population Census, including a sample of their closest (non-mobster) neighbors. We document that mobsters have one year less education than their neighbors on average. We find that mobsters have significant returns to education of 7.5–8.5% , which is only slightly smaller than their neighbors and 2–5 percentage points smaller than for U.S.-born men or male citizens. Mobster returns were consistently about twice as large as a sample of Italian immigrants or immigrants from all origin countries. Within that, those charged with complex crimes including embezzlement and bookmaking have the highest returns. We conclude that private returns to education exist even in the illegal activities characterized by a certain degree of complexity as in the case of organized crime in mid-twentieth century United States. 

Additional years of education are known to increase earnings in legitimate labor activities. But, what about illegal ones? In this study we will not discuss the activities of common criminals. Our focus is professional criminals who belonged to one of the most successful and long-lasting criminal organizations: the Italian-American mafia between the 1930s and the 1960s. We match a list set up by the Federal Bureau of Narcotics (FBN) of 712 mobsters belonging to the Italian-American mafia with the 1940 United States (U.S.) Census of Population. This gives us information about income, housing values, education, job characteristics, as well as the precise address of residence for each individual. We create a sample of white, male, similarly aged, neighbors of these mobsters that serves as the closest comparison group and we also present estimated returns to education for other samples drawn from the 1940 Census, including all working-age white men; whites born in the U.S.; all U.S. citizens; all immigrants; all Italian immigrants; and second-generation Italians (who are born in the U.S. but have at least one parent born in Italy). 

Economists have shown that increased levels of education reduce criminal participation. This implies that education is valued more by legitimate firms than by illegitimate ones. This is consistent with our first finding: mafia mobsters have on average one less year of education when compared to the sample of neighbors. 

But, this finding does not imply that annualized returns to education are smaller for organized crime members than for ordinary workers. Criminal careers are known to start very early and are likely to be interwoven with schooling choices. Individuals who choose to be part of the mafia are likely to trade off income and power for risk of injury, prison, and death. This alone, without the need of lower returns to education, would predict a lower investment in education as there would be fewer years of working life in which to recoup foregone wages (Mincer, 1974). Indeed, economic theory predicts that individuals with lower (working) life expectancy should have larger annualized returns to education. 

This is true unless the extra schooling is not marketable. So, is schooling marketable in the mafia? This question really involves the mafia’s complex business model and the link between human capital and schooling. Let us start with the latter. If one takes Bowles and Gintis (2002)’s view that schools “prepare people for adult work rules, by socializing people to function well (and without complaint) in the hierarchical structure of the modern corporation” it would seem that schools are an ideal training environment for aspiring mobsters. 

While we do not fully embrace this view of schooling, many of the skills students acquire at school are likely to be useful when setting up a racket (i.e. extracting the optimal rent), a loan sharking business (i.e. weighting interests against default risks), a drug dealing system (i.e. setting up supply chains), etc. It is ultimately an empirical question as to whether the returns to education in the mafia are similar to the ones ordinary workers enjoy. This comparison, we believe, is also informative about the workings of the mafia. The results presented below hold, we argue, for criminals engaged in complex criminal activities, but may not be more generally true of petty criminals or criminals operating at the lowest levels of criminal organizations, whose everyday tasks are much simpler and do not involve the planning, risk evaluation, and communication skills needed of those higher in the network. We are therefore providing a counterpoint to Carvalho and Soares, and Levitt and Venkatesh (2000), who study the characteristics of regular gang members. 

We estimate Mincer-type regressions using log income and log housing value as the main outcomes. The main independent variable of interest is years of education. We present results for the mobster sample and compare to other reasonable comparison groups: all men; U.S. citizens; immigrants; Italian immigrants and second-generation Italian men; and a sample of mobster neighbors, who lived on the same block (and usually the same exact street) in 1940. 

We find large returns to education within the mafia, no matter the model, or the outcome variable, that we use. This shows that private returns to education exist not only in legitimate but also in the illegitimate activities that imply a sufficient degree of complexity. Mobster returns (in terms of income) to a year of schooling are around 7.5–8.5% , compared to 9–10% for the neighbor sample and 10.5–13% for the U.S. born and U.S. citizen samples. Interestingly, mobster returns are substantially larger than we find for the immigrant and, especially, the Italian immigrant, samples, while they are only about one percentage point higher than we find for second-generation Italians. Moreover, for mobsters who, according to the FBN records, were involved in white-collar crimes or in crimes that require running an illegal business (i.e., racketeering, loan sharking, bootlegging, etc.) we find returns to education that are about three times as large as for those who are involved in violent crimes (i.e., robberies, murders, etc.). 

To our knowledge, this is the first systematic attempt to estimate the returns to education in criminal activities and provides intuitive insights into the workings of complex criminal gangs such as the mafia and into the factors considered by those deciding to become criminals in the first place. Carvalho and Soares provide some evidence on the returns to education for low level Rio de Janeiro gang members but it is not the main focus of their study. 

The paper proceeds as follows. We first discuss the existing literature on education and crime, before providing a brief overview of the history of mafia organizations and members in the U.S. before 1960. We then present our novel dataset as well as our comparison samples drawn from the U.S. Census. We then discuss the empirical methodology before finally presenting our results, discussing mechanisms, and concluding.