The US Department of the Treasury has published the results of a study on the interplay between the high-value art market, money laundering and terrorism financing. The study was mandated by Congress pursuant to section 6110(c) of the Anti-Money Laundering Act of 2020.
High-value art transactions are inherently susceptible to money laundering risks because of the secrecy with which they are often conducted, the transportability of many works of art, and the traditional use of intermediaries to shield buyers and sellers. And unlike other high-value transactions, art deals are generally conducted by entities that are not subject to comprehensive anti-money laundering obligations. Entitles that have larger sales turnover and are regularly involved in high-value art sales may present greater risks for money laundering.
The study found that due to the existent requirements for financial institutions to report high-value cash transactions, and the fact that cash is not often used in high-value art transactions, the AML risk was not excessive. And there was little evidence of terrorist financing risk. The study did make some recommendations for addressing the money laundering risk. These included the use of the Financial Crimes Enforcement Network to support recordkeeping and due diligence, imposing AML/CFT requirements such as know-your-customer procedures and suspicious activity reporting, updating and enhancing training for relevant enforcement agencies, and encouraging the creation of private sector information-sharing programs to promote transparency in art deals.