A bipartisan group of U.S. Senators is seeking to stem the flow of dirty money through the art market with a new bill that would regulate art dealers and auction houses under the Bank Secrecy Act.
The Art Market Integrity Act would require art dealers and auction houses to retain records of expensive art transactions, report suspicious purchases or sales and align the United States with international standards.
Several countries and international jurisdictions, such as the European Union and the United Kingdom, have already sought to bring the art world under their anti-money laundering and terrorist financing laws, leaving the U.S. as an anomaly when it comes to monitoring the vast wealth coursing through its domestic art market.
“The United States’ art industry is valued at around $25 billion and is the largest of its kind globally,” Hannah Akey, deputy press secretary for Senator Chuck Grassley, a sponsor of the bill, told ICIJ via email. “Despite this, our art market is not currently bound by the anti-money laundering and counter-terrorism financing standards set by the Bank Secrecy Act.”
The Antiquities Coalition, a Washington, D.C.-based nonprofit and a proponent of the reforms, said in a fact sheet that bad actors exploit the art world’s culture of discretion for money laundering. The group noted that the problem is compounded by the widespread use of shell companies and trusts to conceal the beneficial ownership of high-value assets, as well as the challenges of tracing art.
“What some call a longstanding culture of discretion, others would call a longstanding culture of secrecy,” Antiquities Coalition Executive Director Tess Davis said in an email to ICIJ. “In what other industry can someone spend millions — even hundreds of millions — of dollars on an asset without knowing whom they’re buying it from? Yet this happens routinely at auction houses.”
A 2020 Senate report drawing on findings from in ICIJ’s Panama Papers investigation noted the art industry constitutes “the largest, legal unregulated industry in the United States.” The report highlighted one case previously reported by ICIJ, in which Russian billionaire brothers Boris and Arkady Rotenberg spent $18 million buying up art assets over seven months in 2014 in the wake of sanctions stemming from Russia’s invasion of Ukraine.
“This was just a good example of how the opaque nature of the art world can be taken advantage of by people that are looking to potentially purchase artworks and disguise the origin of certain funds that are used to purchase artworks,” said Andrew Dornbierer, head of policy and research at the Basel Institute on Governance’s International Centre for Asset Recovery.
In what other industry can someone spend millions — even hundreds of millions — of dollars on an asset without knowing whom they’re buying it from? Yet this happens routinely at auction houses.
— Tess Davis, Antiquities Coalition Executive Director
As of now, the Bank Secrecy Act, a key domestic anti-money laundering law which requires banks and other financial institutions to keep tabs on suspicious activity, does not apply to groups or actors solely in the business of buying and selling art. Art dealers and major auction houses may keep records of transactions and ask about the beneficial ownership of trusts or offshore companies purchasing art but there is no legal obligation to do so, according to Scott Greytak, the deputy executive director of Transparency International U.S.
“They don’t have to ask who’s actually in control of that company who’s trying to buy the art,” Greytak said. “They don’t have to do any sort of due diligence to make sure that you’re not under indictment for corruption in another country. They don’t have to flag if you show up with a suitcase full of cash.”
Greytak added that the volatility and subjectivity of a given artwork’s value could be advantageous for bad actors seeking to grow their wealth under the radar. “That’s a really high-risk market when it comes to being able to move dirty money, because there’s no necessarily rational market-based baseline for it,” he said.
“Anytime you have subjectivity like that, it makes it really hard for even the intermediary,” Greytak said, referring to art dealers and auction houses. “It’s not like these folks are necessarily complicit. They don’t have the obligation to ask these questions, so they don’t, and so they can be taken advantage of.”
ICIJ’s 2021 Pandora Papers investigation, which examined the financial holdings of hundreds of politicians, business magnates, oligarchs and criminals, highlighted how art assets are traded through trusts and offshore companies that obscure the ultimate ownership of pieces. Through the leak, ICIJ identified 1,600 works by roughly 400 artists that were purchased and sold through intermediaries incorporated in tax havens around the world.
The Hidden Treasures investigation, released the following year, revealed how the offshore world was enmeshed with the shadowy global trade in looted antiquities.
Davis, of the Antiquities Coalition, said that Congress ended the anti-money laundering exemption for antiquities dealers under the Bank Secrecy Act back in 2021 but “unfortunately, the implementing rules for that law still have not been finalized or enforced, and antiquities represent just a small subset of the larger art market.”
A previous legislative effort targeting global money laundering, prompted by the Pandora Papers, failed to pass through the Senate in 2022. Dubbed the Enablers Act, the proposed law would have required art dealers and auction houses to comply with anti-money laundering regulations under an expanded Bank Secrecy Act.
The Senate’s new bill would subject any art broker who has sold a piece valued at $10,000 or more within the previous year to reporting requirements under the BSA.
The move was partly spurred by a 2024 Treasury report that found the domestic art market was particularly susceptible to sanctions evasion and money laundering, Akey, Grassley’s spokesperson, said. “High-profile cases have further highlighted the urgent need for art market reform, including the indictment of Hezbollah financier, Nazem Ahmad, who used art to evade terrorism-related sanctions to the tune of $160 million.”
Greytak, of Transparency International U.S., said the bill would ideally be included in the Senate’s next National Defense Authorization Act, an avenue previously used to enact the Corporate Transparency Act, a law similarly concerned with beneficial ownership and money laundering.
“We are a massive art market, I think the biggest in the world, and we are also the least regulated given our size,” Greytak said. “So it’s a pretty clear roadmap for bad guys being able to get dirty money into the formal economy.”
