Anti-money laundering (AML)
Oct 16 2023 | CINOA

Art Market sector should be considered low risk of TF and ML – 5 compelling reasons

EU Anti-money laundering and countering the financing of terrorism (AML/CFT) legislative package

For the next meeting of the interinstitutional negotiations, we believe it is important that the Commission has on hand our analysis of the risk that the European Union’s art market could be used to facilitate terrorism finance (TF) or money laundering (ML).

Based on the available evidence, our assessment is that our sector presents a low risk of facilitating both TF and ML. Consequently, rather than using the proposed new AML regulation to enlarge the scope of the existing directive in respect of the art market, we find that the evidence indicates that the scope be limited, primarily to very high value works of art.

1. No significant evidence exists that terrorist financing lies behind illicit movements or trade in art works in the EU, according to 9 studies.

2. No credible overview has been compiled of successful convictions in the EU for cases of money laundering where art works have been the vehicle used and in other jurisdictions information relates primarily to very high value paintings.

3. Art works do not offer a straightforward route to the laundering of money as they are not liquid, require special care, are readily identifiable and require some expertise to sell.

4. The Commission’s SNRA evaluation of risk exposure does not accurately characterize the art business and makes unsubstantiated assumptions, leading to inappropriate risk scores, which should now be revisited.

5. Art transaction funds mainly pass through banks and VAT margin scheme rules require more detailed records of buyers, sellers and art works than for other retail sectors.