Author: Dr. Angelika Hellweger
14 March 2023
4 min read
Angelika Hellweger assesses FATF’s report on money laundering and terrorist financing in the art and antiquities market
The Financial Action Task Force’s (FATF’s) first report examining money laundering in the art and antiquities market is a logical response to a billion-dollar industry that is increasing in both its size and its appeal to those looking to launder their proceeds of crime and fund illegal activities.
There are many countries that have not introduced measures to tackle the money laundering (ML) and terrorist financing (TF) risks associated with a market involving vast amounts of money, as well as many middlemen, shell companies and other opaque corporate structures. The FATF report may, therefore, be of value in helping many jurisdictions – and those in business – understand those risks.
The FATF report outlines money laundering threats and methods in the world of art and antiquities. These include hiding or transferring illicit proceeds by concealing the identity of the genuine buyer, the over or under-pricing of items, and the use of fake sales or false auctions, as well as forgery, fraud, theft and illegal trafficking.
It highlights the access that certain terrorist groups, such as ISIS, have to heritage sites and how they directly benefit from the excavation, looting and trafficking of cultural objects, including the selling of them to third parties. ISIS has also taxed others for the excavation, looting and smuggling of cultural objects on territory under its control. It set up a special division and collected a 20% tax on the sales of antiquities excavated or looted by non-ISIS members in its areas. As ISIS once controlled 5000 archaeological sites in Iraq and Syria, it is likely to have generated substantial funds from such activities.
The report’s main findings are:
The report uses case studies to illustrate how ML and TF is conducted in such markets. It also includes a list of risk indicators that can help identify such activity.
While the report lays out in detail the various aspects of the ML and TF problems facing the art and antiquities sector, it also pinpoints the challenges associated with detecting and addressing them.
The report is likely to go some way towards boosting awareness of the ML and TF risks that exist in the art and antiquities market. It identifies common risk factors that will help lawyers who advise participants in the market, financial institutions, those involved in related enforcement proceedings and those working with law enforcement authorities on such matters.
It should be noted that while not all jurisdictions have implemented specific rules when it comes to ML / TF in this market, both the European Union and UK do have such regulations.
In the UK, His Majesty’s Revenue and Customs (HMRC) works with the British Art Market Federation to publish anti-money laundering guidance that helps art market participants meet their obligations. From April 2023, all regulated entities (including art market participants) will need to verify corporate information on the register at Companies House and inform the Registrar of Companies of any material discrepancies on the public register discovered through conducting customer due diligence.
Angelika is a specialist in international, high-level economic crime investigations and large-scale commercial disputes. She has widely-recognised expertise in representing corporates and conglomerates in Europe, the Middle East, Africa and United States.