PAI Opinion: Clean Art

Jean Michel-Basquiat's Hannibal. Courtesy of Artnet.

If you had planned to launder money through buying or selling art pieces in the EU, it is now too late – officially at least. Today marks the implementation of the EU’s Fifth Anti-Money Laundering Directive (AMLD5) – which directly affects art and antiques valued at over €10,000.

The global art industry has – perhaps unfairly – often been touted as one of the murkiest industries there is. But regulation – in the form of the AMLD5 – and public access to national central beneficial ownership registers in the member states aim to change this notion for good.

This is the first AMLD to explicitly mention art and antiques, meaning that galleries, auction houses and freeport operators will have an obligation to comply. However, many think art dealers will be the first affected.

Private Art Investor recently attended a seminar on AMLD5 and witnessed the palpable sense of doom from dealers’ associations. The EU-wide directive will likely wrap the art world in red tape but will be instrumental in stopping illegitimate activities across the trade.

Some art lawyers do not think it will affect proceedings much in countries such as Italy and Germany, where ultimate beneficial owners (UBO) are already identified before transactions. One said: “The directive will affect countries like France and Austria, where the rules are quite lax.” 

In the US too, since 2018, the Illicit Art and Antiquities Trafficking Prevention Act states that dealers must report suspicious activity and any sales over $10,000 to federal regulators.

AMLD5 promises a more transparent future for the art industry, with art businesses better equipped to combat fraudulent persons and paper trails.

After all, the smuggled Basquiat painting which was listed as $100 in false shipping invoices turned out to be worth more – to the tune of $8m.