Could transparency in the world of high-cost art – that of seven- and eight-figure works – help fight money laundering?
The US Treasury Department seems to think so and is taking steps to bring more visibility to an industry where secrecy about who owns what works and where exactly they come from is common practice.
According to a recent report in The arts journal, the Treasury will introduce regulations for the antiques trade that eliminate “traditional secrecy regarding the ownership and provenance of objects bought and sold”. The art trade is likely to experience similar rules over the next year or so.
Money laundering is a mainstay of the arts and antiques (frankly, it’s a reality in many industries), and the purpose of these regulations is to counter it.
The government has already taken steps to end money laundering. Last year, for example, Congress voted to regulate antique dealers with the Bank Secrecy Act, dating from 1970, and treat them as financial institutions.
Michael McCullough, a lawyer in New York, says the antique industry “has become of concern as a number of cases have arisen in which stolen antiques have been recovered in the United States.” The original sources for some of these antiques were “problematic”. Says McCullough, and include foreign governments and the terrorist group ISIS.
What specific regulations come into play is the million dollar question. The Treasury Department is working with its Financial Crime Network to seek advice from antique trade experts on dollar amounts that should be subject to regulation. Are these purchases of $ 10,000, $ 50,000, or should the number be much higher?
Also, is it imperative that the owner’s name be revealed?
Regarding the art world, Natasha Schlesinger, founder of the art consultancy and art tours company ArtMuse, says buyers of expensive works often don’t want to be identified.
“They work with one advisor and sometimes multiple advisers, so there can be multiple layers between the owner and the job itself,” she says. “It gets even more complicated because you don’t need a license to be an advisor, so anyone can say they are. You can never really know who you are dealing with.
Transparency, according to Schlesinger, will certainly help mitigate money laundering and benefit all parties involved, from artists and galleries to buyers.
But here’s another perspective: Maxwell Davidson, art dealer and owner of Davidson Gallery in New York’s Chelsea neighborhood, says full transparency can invade people’s privacy. “At the end of the day, if you’re making an expensive purchase, you want to be discreet about what you’re buying,” he says. “If your privacy is not guaranteed, it is understandable that you are not comfortable buying an expensive piece of work.”
Davidsons adds that regulations stating that a buyer’s name must be disclosed will deter buyers. “It’s also not a good model for dealers like me, if we have to share the names of our customers,” he says. “You can have privacy, but that doesn’t mean you are laundering money. “
Whether or not you support regulations in the art industry doesn’t matter – they probably come into play anyway, depending on the. Art journal report.
At least a few experts agree.
“Anyone in the art market is likely to see a renewed commitment to due diligence and in-depth documentation as a matter of business practice,” says Judd Grossman, an art lawyer in New York City. “Where the market is likely to see a slight increase in law enforcement actions and investigations, the industry as a whole will need to respond to the scrutiny with increased professionalism and accountability.”