Rare as it may seem, a bipartisan group of legislators has agreed to introduce legislation that would require those who deal in the sale of art to operate under the Bank Secrecy Act (BSA).
Art is treasured not just for its aesthetic value but also its monetary value. Art is big business, and the multibillion-dollar art market of the U.S. is considered the biggest. A D.C.-based nonprofit, the Antiquities Coalition, has a multi-pronged mission to protect art and antiquities as well as shut down “cultural racketeering”—the well-established industry craft of leveraging art and antiquities for money laundering, tax fraud, and financing dark organizations.
The Art Market Integrity Act
In July, a small group of legislators from both sides of the aisle introduced the Art Market Integrity Act. Given the high prices asked for and fetched by artwork, it is an ideal medium for high-asset hijinks, such as money laundering. As we have discussed, art often turns up in the stages of a money laundering deal. Art can be used to park dirty money and to integrate dirty money into the global asset pool. Oddly, the culture of discretion which is endemic to the billion-dollar art industry is not often challenged. The new Act aims to change that.
Senate Judiciary Committee Chair Chuck Grassley said, “For decades, criminal enterprises have used America’s multibillion-dollar art industry as a personal piggy bank for money laundering schemes, terrorist financing and other nefarious activities. By requiring our nation’s art market to comply with existing anti-money laundering and counter-terrorism financing laws, this bipartisan legislation would keep art, and millions of dollars, out of the wrong hands.”
Reporting from the International Consortium of Investigative Journalists (ICJI) on the Panama Papers data leak drew back the curtain on the practices of Russian oligarchs binge-spending on art following sanctions on Russia after its 2014 invasion of Ukraine. The ICIJ’s investigations into document leaks repeatedly show looted antiquities and art play a quiet but powerful part in the immense shadow of money laundering that covers the globe. The Art Market Integrity Act aims to provide a regulatory framework to combat this practice
What Does the Act Provide?
The Act applies to a wide swath of the people in the art industry including auction houses, dealers, museums, gallery staff and others, unless they have not participated in transactions of a certain size. The legislation is essentially aimed at intermediaries, not artists individually selling their work. The Act has three goals that include:
- Bringing the U.S. up to regulatory speed with the U.K., European Union, China and Switzerland.
- Safeguarding the U.S. economy from art-market tax crimes and money laundering scams by terrorist and other dark-money organizations.
- Requiring those subject to the Act to maintain and report on large transactions, with some exceptions for artists and businesses with less than $50,000 in annual art transactions.
In 2021, a bipartisan effort to slow the current of dirty money through the U.S. financial system, including those trading in arts and antiques, was introduced. The Establishing New Authorities for Business Laundering and Enabling Risks to Security (Enablers) Act ultimately failed to advance. Currently, the Art Integrity Act has been introduced but not yet discussed. Given the turmoil in Congress at present, it may be some time before the Act makes headway. Only time will tell.
Strategic Guidance if You Are Involved in Tax Fraud
If you are involved in money laundering or a tax controversy with the Internal Revenue Service (IRS), our legal team offers strategic guidance for recognizing and resolving challenges with the IRS. Set up a consultation or call us at 440-250-9709. We serve clients across the U.S. and internationally from our offices in Cleveland and Chicago.
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