Anti-money laundering rules to fight the culture of secrecy
The new rules state that art and antique dealers in the United Kingdom and the European Union now have to notify the true recipients of their sales.
Will the new anti-money laundering regulations improve the culture of secrecy deeply rooted in the art market? In society, it advocates ancient customs of commodity and body discretion that foster transactions.
Collectors have long appreciated the secret wealthy, which is also part of the mysterious universe of auction houses. When a Botticelli bottle was auctioned last month for $ 92 million at Sotheby’s in New York, it was speculated that the buyer was a Russian oligarch, as the bid was made by an advisor to wealthy Russians.
But the reality is not quite that simple, notes Scott Rayburn, a podcast journalist. Week in art: “Sometimes very wealthy collectors turn to bidders whose names evoke a certain nationality … to ensure their anonymity and their tracks are covered”.
Today, regulators in Europe and the United States want to end the practice of secrecy, which is also a boon for criminal networks. The new anti-money laundering regulations stipulate that art and antique dealers in the UK and the European Union must inform the true recipients of their sales. The US Congress has approved similar legislation that could go into effect by 2022.
Art dealers defend their morals
A few notable cases in the past decade have served to justify this screw-down: when Brazilian banker Edemar Cid Ferreira bought Basquiat for $ 8 million and then shipped it to a storage facility in New York with fake papers. Work is priced at $ 100.
But some art dealers complain that they are systematically portrayed as bait for criminal circles.
“The difficulty,” explains Marion Papillon, president of the National Art Galleries Committee, “is that the regulatory authorities tell us that we don’t owe enough people. But we explain to them that we do not denounce them because we did not deal with them”.
“Once you feel something fishy, you end the relationship. It’s hard to explain to the French anti-money laundering office, Tracfin, who wishes to do so. We go to the end of the deal so we can denounce it”.
Art dealers also fear negative financial impact, with secrecy surrounding their customers’ identity as their most valuable asset. “It is a very difficult environment,” Tom Kristofferson, a consultant to Bonhams Auctions in London, notes. “Once something is selling at a high price, in the next seconds the entire art market will try to figure out who the bidder was”.
The additional costs accumulate, as small independent galleries have to conduct basic research on their clients, as if they were banks. “Many small traders know their clients, but they likely don’t have the resources to document this research. This environment is not good in the bureaucracyAccording to Tom Kristofferson.
Criminals prefer anonymous transactions over the Internet
From London to Paris, exhibition holders also argue that organizers are investigating the wrong places, and that criminals prefer anonymous online transactions.
However, most of the Western art market admits that the heyday of the secret private club is over. Knowing also that public opinion will not cry over the fate of the wealthy collectors, who will lose their identity.
With the new regulations, how will the old school merchants adapt? “One possibility is that they are using technologies such as blockchain,” says Amy Whitaker, who specializes in the art market at New York University. “(It) allows continued assurance of confidentiality while tracking purchases, but this requires a cultural revolution in a sector where lots of people still print their emails”,
Merchants may prefer to choose sales over cunning among their old acquaintances rather than facing a bureaucratic puzzle. “On the one hand we end up with an impulse to develop technology worthy of science fiction on the one hand, and on the other hand the reality of two people who continue to negotiate their work around Spritz” Amy Whitaker sums up with humor.
Article credit: https://www.yourdecommissioningnews.com/anti-money-laundering-rules-to-fight-the-culture-of-secrecy/