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On June 6, 2024, the first season of ANCHISE Talks delivered its third episode, a compelling webinar that delved into legislation around money laundering and the connection with the market of antiquities. The webinar ‘The role of the antiquities market in criminal money laundering’ saw the participation of over 70 professionals and researchers to the presentation by Benjamin Omer from Université Jean Moulin Lyon 3.
Main takeaways from the webinar
In his opening remarks, Benjamin Omer emphasized the intrinsic connection between money laundering and illicit trafficking of cultural goods. He highlighted how the antiquities market occupies a unique gray zone between black markets and legal markets, setting it apart from other illicit trades such as drugs or arms trafficking. Within this context, traffickers aim to launder illicit cultural goods by fabricating an appearance of legality to integrate them into the legal art market and maximize profits.
Two distinct types of money laundering can be identified in the art market:
Laundering of cultural goods: This process involves creating a false appearance of legitimate provenance for artworks and antiquities, particularly archaeological objects. Methods include forging documentation, performing restorations to create a museum-quality appearance, exploiting the reputation of established art dealers, utilizing free ports and shell companies in tax havens, and engaging complicit experts and intermediaries, among others.
The case of the Nedjemankh sarcophagus, illustrates this process: looted from Egypt, the artifact traveled through multiple countries before its eventual acquisition by the Metropolitan Museum of Art in New York.
Money laundering through cultural goods: This involves using high-value artworks as vehicles to launder illicit proceeds from other criminal activities, including drug trafficking and tax fraud.
Criminals purchase art objects with illicit funds and subsequently resell them or secure loans against their value. The inherent price volatility and subjective valuation in the art market make this form of laundering particularly effective.
Vulnerabilities in the antiquities market
The art market’s susceptibility to money laundering stems from several key factors:
Structural lack of transparency, rooted in a long-standing tradition of discretion and amplified by the widespread use of shell companies and tax havens.
Complex provenance verification, which poses challenges even for seized objects due to incomplete or missing documentation.
Variable levels of compliance among market participants, ranging from active complicity to passive negligence in verifying provenance or reporting suspicious transactions.
Insufficient due diligence requirements and provenance research obligations, at both European and national levels.
The European Union’s response has evolved since 2001 through progressive enhancement of its anti-money laundering and counter-terrorism financing obligations (AML/CFT) framework regarding art market participants, with the Fifth Anti-Money Laundering Directive representing its most recent iteration. However, implementation remains inadequate, as evidenced by the low number of suspicious transaction reports submitted to authorities. Some market actors also exhibit reluctance to comply with AML/CFT regulations, lobbying to avoid stricter obligations.
International efforts to strengthen criminal law and enhance market transparency have seen several significant developments. The Council of Europe’s Nicosia Convention (2017) marks a crucial step forward by establishing specific criminal offenses related to cultural goods laundering and document falsification. At the national level, countries such as Germany (2016) and Italy (2021) have introduced enhanced due diligence and provenance verification requirements. The art market itself has responded through initiatives like the Responsible Art Market Initiative, which developed practical guidelines for combating money laundering and addressing other key legal challenges. Furthermore, recommendations from the Financial Action Task Force (FATF) and other leading institutions continue to advocate for stronger regulations and improved international cooperation in the fight against trafficking of cultural property.
Benjamin Omer emphasized that strengthening object-specific due diligence obligations, complementing existing client due diligence, would represent a major step forward in combating cultural goods laundering. Such obligations would require art market participants to follow a comprehensive checklist ensuring the legitimate origin of their handled objects. Research plays a crucial role in this context, particularly in developing a more nuanced understanding of money laundering patterns in the art market. This includes gathering reliable data to assess the scope of illicit activities, identify emerging trends, and evaluate the effectiveness of anti-money laundering measures. Success in these efforts depends heavily on fostering stronger collaboration between museums, art dealers, and researchers to accelerate provenance verification processes and promote greater market transparency.
Watch the recording: