„Certain features of the market for high-value artworks
make it attractive to those engaged in illicit financial activity, including sanctions evasion.“
Transactions in high-value artworks may play a role in allowing blocked persons to access the European and U.S. markets and financial systems in violation of sanctions regulations. These sanctions may affect individuals, as well as individuals and entities from export-critical embargoed countries.
The trade in works of art is per se capable of conducting illegal financial activities (money laundering, sanctions and embargo violations). These transactions are characterized by a lack of transparency and a high degree of anonymity and confidentiality, especially with regard to the purchase and sale of high-value artworks. Mailbox companies and intermediaries are also frequently used to buy, hold, or sell such artworks and to transfer and receive payments.
These means of anonymity allow blocked individuals and other illicit actors to conceal their true identities from other market participants. The mobility, concealability, and subjective value of artworks further exacerbate their vulnerability to sanctions evasion.
It is therefore recommended that parties involved in the art trade implement a risk-based compliance program to reduce risks for sanctions violations. For example, in addition to a framework for OFAC compliance obligations, the U.S. OFAC has published FAQ on sanctions control in the art market.
The following persons and entities are affected by export controls (sanctions) in the art sector:
- Art galleries
- Private collectors
- Auction houses
- Agents and brokers
- other participants in the art market
The U.S. OFAC bases its recommendation for sanctions control in the art sector on a value threshold of USD 100 thousand (so-called „high-value artwork“). Above this threshold, a sanctions audit of the art trade is recommended.