Art, Money, Secrets
Fighting money laundering in the international culture market
Governments have long wrestled with the question of how to stop the use of buying and selling of art to launder money, move it internationally under cover of legitimate trade, and fund illegal activities like narcotics and human trafficking.
The UK has just started issuing fines to individuals and organizations who have failed to comply with stricter new regulations aiming to increase transparency in art market transactions.
According to a UK government website, the regulations were put in place “because of the ability to conceal the art’s beneficial owners, the final destination of art, the wide-ranging values involved, and the size and international nature of the market.”
The law requires art market participants, including firms and individuals, to register with the government if they deal in transactions with a value of at least 10,000 euros, conduct due diligence to verify the identities of clients (who often operate through shell companies), and report suspicious transactions.
The original deadline for registration was January of 2021 but was extended until June of last year. Although the legislation is part of a European Union money laundering directive, the UK law was unaffected by Brexit because of the UK’s status as a founding member of the Financial Action Task Force, which originated and pushed for the anti-money laundering measures.
Similar legislation in the US — the Anti-Money Laundering Act of 2020 — requires companies across a broad spectrum of industries where financial transfers are often used to move funds anonymously to provide accurate information on beneficiaries of financial transactions.
Whether the fines will increase compliance is an open question, especially in an industry where the financial rewards for opacity may outweigh the effect of the fines.
