Art traders call for review of AML/CFT regulations after US treasury report suggests prioritising shell companies and real estate

The world’s largest art trade federation is leading the call for a fundamental international review of policy making after a recent report commissioned by the US treasury department indicated that money laundering and terror finance risks associated with shell companies and the real estate sector appear greater than those posed by art traders (Trade-based Financial Crime,16 March 2022).

Confédération Internationale des Négociants en Oeuvres d’Art, (Cinoa – International Confederation of Art and Antique Dealers Associations) has published its call for a review in an open letter signed by seven art trade groups.

Very little evidence

Cinoa says it has looked at eight reports into anti-money laundering and counter financing of terrorism (AML/CFT) risks and regulations in the art trade and found “very little evidence of trafficking, money laundering or terrorism financing in the art market.”

“The US treasury report is the latest report looking into possible links between money laundering and terrorism financing through the trade in works of art, for the purpose of advising Congress on anti-money laundering measures,” according to secretary general of Cinoa, Erika Bochereau.

Shell companies and real estate

She argues that the justification for urgent and wide scale measures in the sector is not there, the risks for the majority of the art market are very low and “proposals to regulate the market should be delayed until the US government has dealt with the more pressing problem of shell companies and real estate.”

“This means that every major report investigating trafficking, terrorism financing or money laundering links with the art market since the war in Syria began has found very limited issues,” according to Bochereau.

“Yet still the authorities target dealers, collectors and auction houses with wave after wave of damaging and unjust legislation. This has to stop,” she concludes.

Details of Cinoa’s perspectives on the art market and money laundering can be found here.

The US treasury’s Study of the Facilitation of Money Laundering and Terror Finance Through the Trade in Works of Art can be found here.

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