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Anti-money laundering rules seek to end the culture of secrecy in the art market | WORLD

Will the new anti-money laundering regulations end the culture of secrecy entrenched in the art market? The sector defends old habits of discretion that favor transactions.

Wealthy collectors have always cherished confidentiality, which is also part of the mysterious universe of auction houses.

When a Botticelli was awarded last month for $ 92 million in Sotheby’s in New York, the buyer was assumed to be a Russian oligarch, because the offer had been made by an adviser to wealthy Russians.

But the reality is not so simple, says Scott Reyburn, a journalist for The Week in Art podcast. “Sometimes very wealthy collectors turn to bidders whose names evoke this or that nationality to guarantee their own anonymity and cover the tracks.”

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 rules stipulate that art and antique dealers in the UK and in the European Union (EU) they must inform who are the true beneficiaries of their sales.

The United States Congress passed similar legislation that could take effect in 2022.

Some cases from the last decade have served to justify this tightening of screws: as when the Brazilian banker Edemar Cid Ferreira bought a Basquiat for US $ 8 million and then sent it to a storage center in New York with false customs documents that they estimated at US $ 100.

But some art dealers complain that they are systematically described as bait for criminal circles.

Investigations in the wrong places

“The difficulty, explains Marion Papillon, president of the National Committee of Art Galleries, is that the regulatory authorities tell us that not enough people are reporting. Now, it is explained to them that they are not denounced for not having done business with them ”.

“Every time you feel something suspicious, you end the relationship. It is very difficult to explain to the French anti-money laundering office (Tracfin) that they want us to go to the end of the transaction to report ”.

Art dealers also fear negative financial impact, as the secrecy surrounding their clients’ identity is their most prized asset.

In addition, small independent galleries have to vet their clients like banks.

From London to Paris, gallery owners also argue that regulators are investigating in the wrong places, and that criminals are going to privilege anonymous transactions online.

However, most of the Western art market admits that the glory days of the confidential private club are over, and that public opinion will not mourn the fate of wealthy collectors who will lose their anonymity.

With the new regulations, how are these old school merchants going to adapt? One possibility, according to Amy Whitaker, an art market specialist at New York University, is that they use technologies such as blockchain to “allow to continue to guarantee confidentiality while keeping a record of purchases.”

But this requires a cultural revolution in a sector where “many people are still printing their emails,” he says.

Finally, merchants may prefer sneaking sales between old acquaintances than facing a bureaucratic puzzle.

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