Why Money Laundering Through Art and Antiquities is a Risk Several factors contribute to the ease and attraction of money laundering using art and antiquities: • Anonymity: Sales and purchases can easily be accomplished anonymously, even with reputable auction houses like Christie's and Sotheby's. There are various reasons why legitimate transactions are made anonymously, such as privacy expectations and not wanting to draw public attention to the transactions. In addition, a more strategic fact is that there is power in anonymity. • Fluctuating valuation: Another aspect of the art and antiquities trade making it prone to money laundering is that it is difficult to place a value on these high-end items as the worth is based on the eye of the collector – the purchaser. The pricing of art and antiquities is a highly subjective practice allowing criminals to launder vast sums of money, mainly through art auctions. • Absence of requirements to report large cash transactions: Art dealers can keep the names of buyers and sellers anonymous. And unlike U.S. businesses that deal in large sums of money and must file currency transaction reports (CTRs) and suspicious activity reports (SARs), art dealers do not have to file reports with FinCEN. Examples of exorbitant amounts paid under anonymity for these items through legitimate auction houses are: • Sotheby's $120 million sale of Edvard Munch's “The Scream” set a 2012 record for the most expensive work sold at auction. The identity of DDealers in art and antiquities have long been part of money laundering typologies on a global scale, given the illegal movement of funds flowing through these channels. Recent efforts to provide greater scrutiny to detect and prevent laundering money through art and antiquities are bringing newfound attention that financial institutions should consider as they run their Anti-Money Laundering/Combating the Financing of Terrorism Programs (AML/CFT Programs). The Problem of Money Laundering Using Art and Antiquities The world of art and antiquities trading is widely portrayed as a glamorous hobby reserved for the rich and famous. The fact that this market has been loosely regulated in the United States leaves the industry open to illegal actors in the dark market and open trade, such as auction houses and the internet. It is an attractive method for layering illicit funds into the financial system by buying and selling high-end items. Money laundering through art and antiquities is a known method of hiding illicit funds. According to estimates from The United Nations Office on Drugs and Crime (UNODC), billions of dollars are laundered through the global art market annually, with further billions estimated to pass through the underground art market each year. Methods of illegal transactions include theft, fakes, illegal imports, and organized looting. Furthermore, terrorist groups have generated revenue via trafficking antiquities. The world of art and antiquities trading is widely portrayed as a glamorous hobby reserved for the rich and famous. January • February 2023 21
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