Page:2020-07-29 PSI Staff Report - The Art Industry and U.S. Policies that Undermine Sanctions.pdf/38

 '''1. Money Laundering in the Art Market'''

A large part of the art market operates in secrecy, allowing participants to conduct transactions anonymously. According to an article quoting Thomas Christ, a board member of the Basel Institute of Governance, "[t]he art market is an ideal playing ground for money laundering." Michael Martin, head of the forensic and anti-money laundering services at Deloitte Luxembourg acknowledged this, saying, "art is one of the asset classes that obviously lends itself to money laundering." Smugglers, drug traffickers, arms dealers, and others have turned to the art market as a means to obscure profits and transfer assets outside the reach of financial regulators.

In recent years, critics note that "[p]art of the reason art has become an attractive vehicle for money laundering is that other channels have been narrowed by tighter regulation," particularly in the financial sector. For example, mortgage brokers, stockbrokers, casinos, banks, and Western Union are subject to federal money laundering statutes requiring them to report suspicious financial activity and perform due diligence to deter money laundering activities and "combat the financing of terrorism." The same requirements do not apply to buyers and sellers of art.

To provide greater transparency and prevent money laundering activities, the European Union adopted its fifth Anti-Money Laundering directive on April 19,