Launching our new resources on financial crime risks in the art market
The international art market is characterised by what participants call a “culture of discretion” but what some market regulators would label as “secrecy”. It is also global and vast, valued at well over 50 billion USD.
The release of the Pandora Papers recently highlighted how the art and antiquities markets can be used as a means to launder funds, engage in fraud and disguise the illicit transfer of goods and wealth. For example, Douglas Latchford, a prominent UK-based antiquities dealer, who was indicted by the U.S. authorities before his death last year, used offshore trusts to shield assets that had been accumulated by trafficking in looted Cambodian artifacts.
Regulators in Europe have already taken notice – since July 2018, the EU’s Fifth Anti-Money Laundering Directive has applied to persons operating in the art market or acting as intermediaries in the trade of works of art where the transaction is worth EUR 10,000 or more. The UK has implemented this Directive in the UK Money Laundering Regulations, with art market participants being required to register their businesses with the tax authorities by June 2021.
In the U.S., what began with a 147-page U.S. Congressional Report focussing on the art industry and policies that undermine economic sanctions has culminated in a series of proposed regulations and guidance issued by the US Department of the Treasury’s Office of Foreign Assets Control and the US Department of the Treasury’s Financial Crimes Enforcement Network.
Our business crime team has been monitoring developments in this area and engaging in outreach to our clients.
We have developed a new webpage, accessible here, which gives more information.
We have also prepared a short animation highlighting the potential risks in this area for financial institutions; you can watch it here.