IS THE ART MARKET REGULATED?
It is a falsehood that the art market, including its dealers and collectors, is the last great unregulated market in the world.
The art market trade is both self-regulated and government regulated. Art market sector business practices are governed by the same laws and regulations that all business must adhere to such as those concerning the sale of goods, fraud, sales taxes (such as VAT), and other business issues. In addition, the art market is heavily regulated by many national and international regulations and treaties focusing on cultural property specifically designed to restrict its activities.
Best business practices include following due diligence guidelines required as a result of membership of trade bodies. Codes of Ethics, such as CINOA’s, reinforce moral and legal obligations for art dealers and help to heighten awareness.
To bring some perspective to this, we refer below to some of the laws that exist in major art market hubs and international laws concerning cultural property. The British Art Market Federation (BAMF) publishes on its website a list of 150 laws, conventions and codes of conduct that apply to the British trade on a domestic and international basis. Since this list was published in February 2015, additional laws directly applying to the art market have included, but are not limited to:
- The Cultural Property (Armed Conflicts) Act 2017 (UK)
- The Act on the Protection of Cultural Property 2016 (Germany)
- Regulation (EU) 2019/880 on the Import of Cultural Goods 2019 (European Union)
- Protect and Preserve International Cultural Property Act HR1493 (United States)
- Fifth Anti Money Laundering Directive (AMLD5) 2018 (European Union)
As an example, the new Anti-Money Laundering Regulation and Sixth Directive (European Union) will further enforce direct regulation on parts of the art market. The regulation, which harmonizes aspects of the AMLD5 throughout the EU, has provisions regarding customer due diligence, databases, provenance requirements and penalties.
Additional specific EU sanctions relating to cultural property from Iraq (Council Regulation (EC) No 1210/2003 (article 3)) and Syria (Council Regulation (EU) No 1332/2013 (art. 11 quarter) have been in place since 2003 and 2013 respectively.
A list of some of the most important International legal instruments for cultural property are on the UNESCO website. In addition, there are twenty-five bilateral agreements regarding the protection and preservation of cultural property currently in effect between the USA and- Albania, Armenia, Austria, Bosnia and Herzegovina, Belarus, Bulgaria, Croatia, Czech Republic, Estonia, Georgia, Germany, Hungary, Italy, Kosovo, Latvia, Lithuania, Macedonia, Montenegro, Moldova, Poland, Romania, Serbia, Slovenia, Slovakia, and Ukraine. (For more details, see the U.S. Commission for the Preservation of America’s Heritage Board). These paragraphs highlight only a small sample of the mosaic of national and international rules, guidelines, legislation and regulations regulating the trade and the micro businesses that make up the majority of the art market sector.