A look at cases involving art, artifacts, and money laundering helps explain why art and antiquities dealers should be included in anti-money laundering laws.
Pretending to be a narcotics trafficker who needed to launder dirty cash, the undercover agent asked the gallery operator if the artworks she wanted to buy could be "in somebody else's name to where if [the undercover] were to ever have to sell it, that [other] person can sell it." The gallery owner explained, "We can do it any way, any way you want." "It doesn't have to be, it doesn't have to be in anybody's name," he said, "It can be in anyone's name you want."
The prosecution of the gallery owner is among the sample of court cases described below that offer a window into the world of art, artifacts, and money laundering.
Why is knowing about money laundering in the sale of art and antiquities important?
Industries that deal with high cash value transactions are the first lines of defense against money laundering. Banks, life insurers, casinos, precious metal dealers, automobile sellers, travel agencies, and other sectors are best positioned to become aware of unusual financial transactions early. That's the reason why the Bank Secrecy Act (BSA) directs certain of these businesses to file Suspicious Activity Reports (SARs) with the U.S. Treasury's Financial Crimes Enforcement Network (FinCen) and requires designated sectors to maintain risk-based anti-money laundering (AML) programs.
Art and antiquities dealers do not fall under the BSA's directives, yet they are susceptible to money laundering. Like other trades and businesses, they are required to file Form 8300 when they receive more than $10,000 in cash, cashier's checks, bank drafts, traveler's checks, or money orders either from a single or several related transactions. But they are not part of the BSA's reporting, recordkeeping, and anti-money laundering program requirements even though they sometimes receive large amounts of cash for high value goods.
In its National Money Laundering and Terrorist Financing Risk Assessment (2013) report, the Financial Action Task Force (FATF) expressly called attention to the illegal trading of antiquities as a predicate crime of money laundering. FATF, in fact, specifically flagged art and antique dealers as a commercial sector that must "build[] a list of the [money laundering/terrorist financing] vulnerabilities that can be exploited." They additionally need to assess "the adequacy of their [anti-money laundering/counter-financing of terrorism] controls."
Both FATF's report and the Basel Art Trade Guidelines' (2012) conclusion that "the art market faces a higher risk of exposure to dubious trade practices" is why CHL in 2014 called for taking a fresh look at federal AML laws and why CHL later listed such improvements as one of the top six law enforcement recommendations to combat transnational cultural heritage trafficking.
Congress made initial progress on this topic last year when Rep. Luke Messer (R-IN-6) introduced the Illicit Art and Antiquities Trafficking Prevention Act (H.R. 5886) in the U.S. House of Representatives. The bill sought the addition of "dealers in art or antiquities" to the BSA. Although the legislation sat idle in 2018, it could be presented to lawmakers again in 2019. In the meantime, the nonprofit Antiquities Coalition has started to focus vital attention to the AML issue.
