Memorandum submitted by HM Customs &
Excise
INTRODUCTION
1. Customs welcome the chance to update our
memorandum of April 2000 and to give oral evidence to the Select
Committee. This submission follows the outline of our earlier
memorandum and aims to address the topics raised by the clerk
to the committee.
THE ROLE OF CUSTOMS
2. Customs are responsible for the enforcement
of controls on the export of cultural goods from the UK. National
prohibitions on the export of cultural goods are set out in the
Export of Goods (Control) Order 1992, made under the Import, Export
and Customs Powers (Defence) Act 1939. The Export of Objects of
Cultural Interest Order, which is expected to come into force
on 1 May 2004, will replace the 1992 Order, but without changing
any of Customs' powers.
3. EU controls on the export of cultural goods
are principally derived from Council Regulation (EEC) No. 3911/92
of 9 December 1992.
4. The only import restriction currently in
force specifically related to cultural goods is United Nations
Security Council Resolution No. 1483 (dated 22 May 2003), which
prohibits the import and export of Iraqi cultural objects and
which is given effect in the UK by The Iraq (UN Sanctions) Order
SI 1519. This Order came into effect on 14 June 2003.
5. Customs will have an enforcement role in relation
to the Dealing in Cultural Goods (Offences) Act 2003, which comes
into force on 30 December 2003.
GENERAL CUSTOMS PROVISIONS
6. General Customs requirements in relation to
imports and exports are common throughout the EU and set out in
Council Regulation (EEC) No. 2913/92 of 12 October 1992 establishing
the Community Customs Code. Customs enforcement powers are mainly
derived from the Customs and Excise Management Act 1979 ("CEMA").
This also sets out the principal offences and sanctions in the
event of an illegal import or export.
7. Supplies of art and antiques and other cultural
objects are liable to VAT at the standard rate, with a special
scheme in place for dealers.
CUSTOMS POWERS TO PREVENT ILLEGAL EXPORTS
8. The main UK legislation enabling the Commissioners
of Customs and Excise to enforce controls on goods subject to
export prohibitions and restrictions is Section 68 of CEMA. This
provides that
". . . if any goods are
exported or shipped as stores; or
brought to any place in the United Kingdom for
the purpose of being exported or shipped as stores . . ."
and the exportation is or would be contrary to any
prohibition or restriction in force, then the goods will be liable
to forfeiture and any person concerned guilty of an offence.
CUSTOMS POWERS IN RELATION TO IMPORTS
9. Similar provisions relate to imports. Section
49 of CEMA makes the import of prohibited goods liable to forfeiture.
Section 170 establishes offences in relation to the import of
prohibited goods. There is no EU import licensing regime in relation
to cultural objects, nor any national import licensing restrictions.
10. In relation to both imports and exports,
Section 139 of CEMA gives Customs powers to detain or seize goods
liable to forfeiture. Customs also have powers to restore seized
goods on appropriate terms, determined by the Commissioners.
DEALING IN CULTURAL GOODS (OFFENCES) ACT 2003
11. The new Act creates an offence of dishonestly
dealing in a cultural object, knowing or believing the object
to be tainted. Dealing includes importing and exporting. There
is no specific prohibition or restriction in the Act that will
allow Customs to use powers of search and forfeiture in CEMA.
Customs' power to search for suspected tainted goods will be confined
to cases where cultural objects are controlled for other purposes
(e.g. firearms) or we are engaged on a lawful search under another
power. We expect that many cases will involve other Customs offences
such as evasion of revenue or false declaration, and therefore
we will be able to use CEMA powers. If not, Customs will rely
on Section 19 of the Police & Criminal Evidence Act 1984 ("PACE")
for seizure where there is an offence as described in the Act.
12. The Act gives Customs powers to investigate
and prosecute offences where there is any dealing with tainted
cultural objects by way of importation or exportation. However,
such investigations may not be straightforward and it is likely
that they will be confined to the most serious and clear-cut cases.
Establishing an offence will require sufficient evidence that
firstly, the person knew or believed the goods to be tainted and
secondly, the goods were removed or excavated after the date of
commencement of the Act.
13. In practical terms, these issues will have
less impact when dealing with exports, where there could be an
export licensing offence that would fall within Section 68 of
CEMA. However, enforcement of imports of cultural objects will
not be as effective as a regime based on import licensing. Our
interpretation is that we will act against attempts to import
cultural objects from third countries where we receive information
that the goods are tainted or where we detect them in the course
of our multi-functional activities at the frontier.
MOVEMENTS WITHIN THE EU
14. Goods destined for an EU country may require
a UK licence issued by DCMS. Although there is no regulatory role
for Customs (i.e. no Customs declaration is required), there is
a requirement that the UK licence accompany the goods and be produced
to Customs if we so request - for example, in circumstances where
we are responding to intelligence.
15. Council Directive 93/7/EEC of 15 March 1993
sets out the procedures on the return of cultural objects unlawfully
removed from the territory of a Member State. To date there have
been no requests from Member States under the directive.
EXPORTS TO COUNTRIES OUTSIDE THE EU
16. Cultural goods being exported to countries
outside the EU may be controlled under UK licences issued by the
DCMS or under EU harmonised licences. The latter are issued by
DCMS or the recognised authority of another Member State. Customs
enforcement powers are essentially the same in both cases.
VAT IN RELATION TO CULTURAL GOODS
17. Works of art, antiques and collector's items
are not liable to any import duty but are entitled to a reduced
VAT rate of 5% at the time of import provided that they had not
been exported from the UK in the previous 12 months.
STOLEN GOODS
18. The import and export of stolen property are not assigned
matters for Customs and we are not able to use CEMA provisions
to stop and examine consignments for such purposes. However, section
19 of PACE provides statutory power for Customs to detain goods
identified during checks made for Customs' purposes where the
officer suspects that the goods are the subject of a criminal
offence.
19. Where there is suspicion that cultural objects
were stolen in the UK and are being exported, Customs can use
CEMA powers in those cases where there are grounds to suspect
an export licensing offence that would fall within Section 68
of CEMA. On importation, where we suspected the goods might be
stolen we rely on section 19 of PACE to hold them whilst we inform
the police. Thereafter we would release the goods if the police
did not follow this up.
CUSTOMS PROCEDURES
Regulatory Checks
20. Cultural goods that are being exported outside
the EU with an export licence must be declared to Customs on an
export declaration. The declaration, the export licence and the
goods must be presented to Customs before shipment. Customs may
inspect the official and commercial documentation and may also
examine the goods. Customs will ensure that the export of the
goods is endorsed on individual licences. Exhausted licences are
returned to DCMS.
Preventing Illegal Exports
21. Under Section 53 of CEMA, which gives powers
to control the movement of goods intended for export, Customs
may prevent the shipment of cultural objects until any query on
their licensability is resolved by DCMS. Customs operate an electronic
profile system to identify possible illegal exports. Our profiling
looks at four elements: the exporter (and other parties involved),
the nature of the goods, the destination and the documentation.
Our detailed guidance to staff sets out the particular risks and
type of response in each case. This is reinforced by quarterly
awareness-raising seminars to front line staff on export controls
during which we cover cultural goods. Every month the Metropolitan
Police Art and Antiques Unit provide colour images of UK cultural
objects that are missing or have been stolen. These are circulated
to front line Customs staff at ports and airports. Customs have
had some involvement in the development of the national cultural
objects database and would obviously benefit once it is established.
INVESTIGATIONS
22. Customs are responsible for the investigation
of alleged breaches of export control requirements. Customs have
conducted several investigations into possible breaches of the
export controls on cultural goods but none have resulted in a
criminal investigation. Some recent examples are summarised at
paragraph 25. Regulatory breaches (such as failure to produce
a licence, or incorrect Customs declarations) have been dealt
with by local customs staff.
PENALTIES
23. Offences for breaches of controls fall into
two categories. These are:
· strict
liability offences, which apply when a breach is committed regardless
of the knowledge or intent of the exporter; and
· offences
relating to deliberate evasion of the controls.
The maximum penalties are:
· for
strict liability offences, on summary conviction a penalty of
three times the value of the goods or £1,000, whichever is
the greater; and
· for
deliberate offences, on summary conviction a penalty of £5,000
or three times the value of the goods whichever is the greater
or to imprisonment for a term of up to six months. On conviction
on indictment a penalty of any amount, or imprisonment for a term
of up to seven years, or both.
Customs have powers to compound offences, i.e. accept
a monetary amount in lieu of pursuing criminal proceedings.
CUSTOMS ACTIVITY
Dealing with suspected breaches of export controls
24. Customs follow up suspected breaches with
appropriate enquiries, often conducted by intelligence or investigation
staff. In many cases, the results of those enquiries will mean
that the goods are released. Customs seizures over the last 4
years are:
1999-2000 : 10 consignments totalling 90
objects worth £0.82 million
2000-2001 : 6 consignments totalling 6 objects
worth £0.38 million
2001-2002 : 10 consignments totalling 31
items worth £1.2 million
2002-2003 : 1 consignment totalling 1 item
worth £0.56 million
These are a mix of imports and exports.
SOME RECENT CASES
25. The following are example of cases in 2002
and 2003 that were investigated by Customs where for various reasons,
ultimately no seizure was made.
The Old Times Coach
An export licence was granted by DCMS for the export
of a horse drawn coach. DCMS received information that this coach
was back in the UK and was actually the unique "Old Times
Coach". DCMS referred the matter to Customs as a possible
offence. A photograph supplied with the licence application had
been doctored to disguise the coach. Customs got to the point
where, in order to progress the investigation, investigators needed
an expert witness statement to prove that the coach was of Waverley
standard[1].
We were unable to obtain such a statement and so could take no
further action.
The King's Warrant for a Patent for Hooke's Watch
with Springs
Its US owner had had 2 previous export licence
requests refused for this manuscript as it was considered to be
of Waverley standard and the owner had turned down a matching
offer from the Clockmakers' Museum. DCMS contacted Customs, as
they were aware that the owner was selling the manuscript and
feared it had been illegally exported. After some investigation
Customs discovered the manuscript in a safety deposit box of a
London bank. The manuscript had never left the UK.
Lewis Carroll Glass Negative
Its owner applied for an export licence but the glass
negative was exported in error by a shipping agent whilst the
application was being considered. Customs accepted that this was
not deliberate evasion. The negative was considered to be of Waverley
standard. Customs contacted US Customs to see whether we could
assist DCMS' efforts to negotiate its return but without success.
The negative is still in the USA and its owner has been told that
the negative is liable to forfeiture if it returns to the UK.
Blake Painting
The painting "God Blessing the Seventh Day"
was bought by a US national for £650,000. During discussions
between the owner and the Tate Gallery he withdrew his application
for an export licence. The painting was subsequently sold to another
US national for £1.3m. As no similar offer was received in
the UK and there was no evidence to refute the value an export
licence was granted and the painting exported to the US. At DCMS'
request Customs examined the paperwork attached to the export
declaration but found no grounds to prevent the export. Customs
also conducted enquires with US Customs but concluded that this
was a bona fidae sale.
Bulgarian Jewelry & Coins
Customs are currently in the process of returning
a recent seizure of Roman coins and other precious metal objects
illegally exported from Bulgaria. In this case Customs seized
the goods at importation because they had not been declared and
were of significant value, thereby avoiding revenue due on such
goods.
LOOTING OF IRAQI ANTIQUITIES & CUSTOMS ROLE
IN ENFORCING THE IRAQ (UN SANCTIONS) ORDER 2003
26. After the Secretary of State for Culture
Media and Sport wrote to the Economic Secretary in April 2003,
Customs alerted all front line staff to look out for looted Iraqi
antiquities. We backed this up with a similar message through
our suspect information system, which is relayed to all detection
staff. We circulated the emergency Red List of Iraqi Antiquities
along with the DCMS statement "Safeguarding Iraq's Cultural
Heritage".
27. Customs attended a meeting organised
by a British Museum/UNESCO on 29 April 2003. We also attended
a briefing at the US Embassy which highlighted the goods that
were missing. We relayed details of these items to our front line
staff.
28. For commercial imports, Customs also set
a profile (a "flagging" mechanism) on CHIEF, our electronic
freight control system to identify any possible illegal imports
of cultural objects from Iraq and its surrounding countries. Where
profiles are activated Customs officers are directed to a hyperlink
to the Interpol / International Council of Museums Iraq Red List.
We have had further contact with the Art and Antiques Unit to
share intelligence and ensure our profiling is up-to-date.
29. To date Customs have not detected anything
that we believe to be looted Iraq antiquities and we have not
received any intelligence of trafficking in such goods into the
UK. However, we have been involved in the following two importations
that attracted media interest.
Statue of Saddam Hussein
- In early June there were press reports of a statue of Saddam
on display at a Marines barracks. DCMS identified it as a cultural
object under UN Security Council Resolution 1483 and Customs were
asked why we had allowed it to be imported. The statue had been
cleared by Customs on arrival on 30 May 2003. At that time, the
original Iraq UNSCR (No. 661) had been lifted and, although UNSCR
1483 had been passed, the enabling Order was not in place. The
statue had been declared to Customs and had no significant commercial
value. Customs therefore had no powers to act.
Iraqi Display Weapons -
On 17 April 2003, whilst UNSCR 661 was still in force, Customs
staff at Heathrow seized a consignment of 5 firearms and a number
of swords and daggers being smuggled from Kuwait to the USA. Two
of the firearms were gold plated. This incident was reported in
the UK press shortly after publicity that US forces operating
in Baghdad had discovered such weapons, said to belong to Uday
Hussein. Customs cooperated with US Customs in a "controlled
delivery" to their destination in a successful operation
to identify who was behind the smuggling attempt.
CUSTOMS RESOURCES
30. Customs are responsible for the enforcement
of a wide range of prohibitions and restrictions on the movement
of goods. In deploying their resources against these responsibilities
Customs must take account of both the Government's key priorities
and how the resources they deploy can make as effective a contribution
as possible to the overall enforcement effort. Customs are changing
emphasis from static based detection staff to flexibly deployed
teams that are fully mobile. Deployment is on the basis of risk
assessment, driven by intelligence.
31. Some officers, such as members of the Heathrow
Export Enforcement Team focus on freight exports. Much of their
effort is directed against strategic exports such as arms, dual
use goods and UN sanctions, but they may also deal with exports
of cultural goods. Customs' Detection staff, as part of their
multi-functional responsibilities, undertake anti-smuggling controls
at import and export. With the exception of new Detection teams
targeting illegal imports of meat and other products of animal
origin, Customs do not assign dedicated roles to officers but
they are deployed flexibly on a mobile basis and are responsible
for detection of the full range of import and export prohibitions
and restrictions and revenue evasion.
32. It is our policy that when an officer detects
what they suspect to be cultural objects, they seek advice from
DCMS Export Licensing Unit on whether the goods are licensable.
If there is an issue of expert identification of the item, our
normal practice is to seek expert advice from bodies such as the
British Museum. We do not believe that there is a sufficiently
strong case to justify employing such experts "in-house ".
We believe it is more effective to focus front line staff on detection
techniques, awareness of their wide range of responsibilities
and awareness of, and responsiveness to particularly topical issues
such as Iraqi antiquities.
LINKS WITH ORGANISED CRIME
33. The National Criminal Intelligence Service
("NCIS") are the lead enforcement authority on intelligence
related to organised crime. Customs will investigate any quality
intelligence relating to the international trafficking in cultural
objects by organised criminals. Customs share NCIS' assessment
that serious and organised criminals may be attracted to the global
cultural property market and are alive to the potential use of
cultural goods as a relatively safe means of payment or moving
assets. Under the Proceeds of Crime Act 2002 Customs carry out
controls at export for cash associated with criminal activity.
However, neither Customs nor NCIS have any specific intelligence
of links between cultural goods and money laundering, drug or
arms trafficking.
UNESCO CONVENTION
34. The two articles in the UNESCO Convention
of particular relevance for Customs are Article 6 on exports and
Article 7 on imports. In considering these provisions, Customs'
major concern is that the definitions in the Convention are not
sufficiently clear to provide a sound basis for enforcement.
35. The UK already has an export control system
that goes much of the way to meeting Article 6 on exports. This
is, however, based on EU and national definitions rather than
the Convention definitions. Should the Government decide to implement
an import licensing system based on by UNESCO articles, Customs
would regard as essential elements the existence of clear and
unambiguous obligations upon the parties, definitions of which
goods would require a licence and a technical specification unit
to give definitive rulings in specific cases.
36. Customs have had one case which might typify
the sort of case envisaged under Article 7. In 2002 at the request
of the Australian Federal Police, Customs returned a traction
engine that had been illegally exported from Australia. Although
there was no UK Customs offence, Customs co-operated under powers
provided in international assistance cases by the Criminal Justice
and International Cooperation Act 1990.
HM Customs & Excise
November 2003
1 The 'Waverley criteria' form the test for nationally
significant cultural objects. Back
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