So, if the anti-money laundering (“AML”) regulations in the United States haven’t been issued yet, why do US art market participants need to be concerned about the issue now?
First, if you are planning to participate in an art fair in a jurisdiction that is covered by AML regulations—basically, most of Western Europe and beyond—as an Art Market Participant (“AMP”) you are mandated to comply even if you are a US gallery or auction house, etc.
Secondly, during this window prior to the formal expansion of anti-money laundering regulations in the US to the art industry, there is an increased concern that bad actors will turn to the unregulated US market. This is because the EU and UK art markets are highly regulated, making money laundering in the US through art purchases an easier target. AMPs need the tools to ensure that they are not taken advantage of and unwittingly drawn into criminal or sanctioned activities. The major auction houses, museums and larger galleries already implement risk analysis (due diligence) as a best practice. ASV is a solution for the small- to mid-size art market participants who are increasingly similiarly at risk.
Third, sooner rather than later, US based gallery owners, dealers, art consultants and other intermediaries – all AMPs – will, like their counterparts in Europe, be required to evaluate the risk of money laundering in any transaction over a threshold dollar amount. Regulations under the Bank Secrecy Act, which already includes jewelers and dealers in antiquities, provide guidelines for assessing the risk that a transaction is being used to hide the real (and potentially illegal) source of the funds. A current example are the sanctions that the US imposed on Russia and designated individuals to indicate the US disapproval of the invasion of the Ukraine. Art Sales Vault Sanction Search is available specifically to assist AMPs comply with this mandate.
With ASV’s help Art Market Participants can use the time before the US regulations come into effect to get ready and protect their positons in the international market in a simple stream lined and confidential manner.