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Financial crime risks in the art market

Financial crime risks in the art market

The potential role of high-end art and antiquities in money laundering and sanctions schemes is attracting increasing attention. Given the focus global enforcement and regulatory authorities are placing on money laundering and sanctions, the established avenues for disposing of tainted assets are becoming the subject of scrutiny - and increasingly less attractive as a result. The art world can be a tempting way to make ‘dirty money’ clean.

The commercial need for extreme discretion and confidentiality, particularly in relation to beneficial ownership, is often at odds with the transparency required to mitigate against the risk of money laundering and sanctions. This can therefore be a challenging space to negotiate.

While there are established anti-money laundering regulations in the European Union, only recently have authorities in the United States turned their attention to the art market, with the implementation of the Anti-Money Laundering Act of 2020. However, even without statutory requirements for KYC or due diligence measures, money laundering and sanctions breaches can still lead to civil and criminal exposure. Participants in the art world (including insurance providers and entities who hold art as security) will need to ensure they have appropriate and robust systems, policies and procedures and risk mitigation measures in place.

Our global expertise across the US, UK, Europe and Asia in relation to money laundering and sanctions compliance means that we are well-placed to advise businesses on identifying, managing and mitigating strategic risks including in the art world, where they are increasingly pervasive.

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