Apr 22, 2020
The global art market, valued at over $67.4 billion, is notoriously known for its secrecy and its insistence on anonymity. In contrast to ordinary course of dealings in other business sectors—such as real estate—when an artwork is sold at an auction, the identity of the consignor (seller of the artwork) is often concealed. Significantly, as there is no registration of artwork ownership, the location of artworks, along with the identity of their owners, are often unknown. As such, money laundering, defined as “the process by which criminals disguise the original ownership and control of the proceeds of criminal conduct by making such proceeds appear to have derived from a legitimate source,” has long been a thorn in the side of this prestigious market. In fact, one observer has proclaimed “[t]he art market is an ideal playing ground for money laundering.” Artworks can sell for exorbitant prices, are easily hidden, and transactions are often conducted in private, all of which make art prime for money laundering. While the precise extent of the money laundering issue in the art market is almost impossible to determine, it is estimated that around $3 billion is laundered through art annually. In response to these issues, the European Union, and importantly, the United Kingdom, have adopted an anti-money laundering (“AML”) framework which could have broad implications on the industry as a whole, and may potentially affect the art market and its regulation in the United States.