after the post-9/11 crackdowns on terrorist financing, law enforcement has reported a marked increase in antiquities and other artworks being used to launder money (in fact, one agent told us that money laundering cases make up the bulk of their art investigations, not repatriations).
Money laundering is the process of making illegally-gained proceeds (i.e. "dirty money") appear legal (i.e. "clean"). Typically, it involves three steps: placement, layering and integration. First, the illegitimate funds are furtively introduced into the legitimate financial system. Then, the money is moved around to create confusion, sometimes by wiring or transferring through numerous accounts. Finally, it is integrated into the financial system through additional transactions until the "dirty money" appears "clean."
In comparison with other trade sectors, the art market faces a higher risk of exposure to dubious trade practices. This is due to the volume of illegal or legally questionable transactions, which is noticeably higher in this sector than in other globally active markets. Far more serious than shady dealings in a legal grey area, the sector’s shadow economy encompasses issues ranging from looted art, professional counterfeiting and fake certificates to the use of art sales for the purpose of money laundering.
implement the Financial Action Task Force (FATF) standards, which mainly address: (a) the types of AML/CTF laws and regulations a country should have; (b) the agencies a country should establish (financial intelligence units (IUs), regulatory agencies, specialized law enforcement and prosecutorial authorities); (c) the reporting regime and the entities within and outside of the financial sector that should be obliged to file reports (e.g., banks, money remitters, exchange houses, securities brokers, mutual funds, insurance companies, casinos, lawyers, accountants, realtors, art dealers, etc); and (d) the sharing of non-evidentiary information via the FIU and evidentiary information via MLATs and MLAAs to generate cooperation with other countries to ensure conviction of launderers. (Emphasis added).