The global art market, with annual sales estimated at fifty-seven and a half billion dollars in 2024, has become one of the most vulnerable sectors for money laundering, sanctions evasion, and other financial crimes. Though the vast majority of market participants operate legally and have no connection to illicit activity, the sector’s unique characteristics—high-value transactions, subjective valuations, a historical culture of privacy, and traditionally limited regulation—create significant opportunities for exploitation by criminals.
The Market’s Peculiar Architecture
The art market encompasses not only traditional paintings and sculptures but also antiquities, collectibles, and, increasingly, digital assets such as N.F.T.s (non-fungible tokens), each presenting distinct money-laundering risks. The fundamental vulnerabilities arise from several interconnected factors, including minimal transparency that enables buyers and sellers to remain anonymous through intermediaries, shell companies, and offshore trust structures.
Unlike financial institutions subject to rigorous A.M.L. regulations, art-market participants have traditionally faced limited oversight, creating regulatory gaps that criminals systematically exploit.
The Three-Stage Waltz
Money laundering through the art market follows the classic three-stage process—placement, layering, and integration—but adapts these phases to exploit the art market’s unique features.
Placement occurs when illicit funds first enter the legitimate economy through the purchase of artworks. Criminals use dirty money to acquire art, often paying in cash or routing payments through shell companies to conceal the source of funds. The art market’s acceptance of large cash transactions and its use of intermediaries facilitates this initial placement without triggering the reporting requirements that would apply in traditional financial systems.
Layering involves creating complex layers of transactions to distance the money from its criminal source. In the art context, this might include purchasing a work through one shell company, storing it in a freeport, then selling it through another entity. The artwork may change hands multiple times—often without physically moving—creating a paper trail that obscures the original transaction. The subjective nature of art valuation allows criminals to justify significant price fluctuations between transactions, further complicating efforts to trace illicit funds.
Integration represents the final stage, where laundered funds are reintroduced into the legitimate economy. The criminal sells the artwork to an unsuspecting buyer, receiving “clean” money that appears to derive from a legitimate art transaction. Alternatively, the artwork may be used as collateral for loans, providing liquidity while the underlying asset appreciates, creating additional layers of legitimacy.
The Techniques of Concealment
Price Manipulation and Subjective Valuation
The inherently subjective nature of art valuation enables sophisticated price-manipulation schemes. Unlike stocks or real estate, which have transparent valuation mechanisms, the worth of artworks depends on factors such as the artist’s reputation, provenance, rarity, and aesthetics—all highly subjective assessments. Criminals exploit this subjectivity through invoice over-valuation and under-valuation schemes.
In over-valuation scenarios, criminals artificially inflate the purchase price of an artwork using dirty money, then sell at a lower “market rate,” pocketing the difference as ostensibly legitimate profit. Conversely, under-valuation allows funds to move across borders while avoiding taxes and capital controls. The art market’s opacity makes it extraordinarily difficult for authorities to challenge these valuations or prove manipulation.
Anonymity and the Use of Intermediaries
The art market’s traditional culture of privacy and confidentiality creates multiple opportunities for concealment. Transactions routinely occur through networks of intermediaries, including art advisers, dealers, consultants, and agents who act on behalf of undisclosed principals. This structure allows beneficial owners to remain hidden behind layers of professional intermediaries.
Shell companies registered in offshore jurisdictions add another layer of anonymity. The Pandora Papers of 2021 revealed more than sixteen hundred artworks by approximately four hundred artists traded through shell companies and trusts in tax havens. Russian oligarchs Arkady and Boris Rotenberg used British Virgin Islands shell companies to purchase more than eighteen million dollars in art through New York auction houses, successfully circumventing American sanctions.
Freeports and High-Security Warehouses
Luxury freeports represent one of the most significant vulnerabilities in the global art market. These high-security, tax-free warehouses—particularly the Geneva Freeport, which stores an estimated hundred billion dollars in art—allow artworks to be bought, sold, and stored indefinitely without entering the customs territory of any country.
Artworks stored in freeports are considered “in transit,” avoiding import duties, V.A.T., and reporting requirements. Ownership can be transferred multiple times while the physical artwork remains stationary, creating opportunities for layering transactions without detection. The combination of tax benefits, security, and opacity makes freeports ideal for both tax evasion and money laundering.
Art-Secured Lending
Art financing—using artworks as collateral for loans—presents distinct money-laundering risks that have largely escaped regulatory scrutiny. Major institutions, including Sotheby’s Financial Services and specialized lenders, offer loans worth millions of dollars secured by art, typically advancing forty to sixty per cent of appraised value.
Criminals can purchase an artwork with illicit funds, use it as collateral for a “legitimate” loan, then potentially default—effectively laundering money while the artwork appreciates in storage.
N.F.T.s and Digital Art
The rapid rise of N.F.T.s has created new money-laundering vulnerabilities that combine traditional physical-art risks with the anonymity of cryptocurrencies. In November, 2023, toys seized in connection with a multibillion-dollar money-laundering operation attracted attention for their potential value—colorful Bearbrick figurines, collectible toy figures produced by the Japanese company Medicom Toy. Experts estimated that the confiscated Bearbricks could be worth between four hundred and fifty thousand and one million dollars.
N.F.T.s enable rapid wash trading through multiple accounts to artificially inflate perceived value. Unlike physical art, which requires storage and transportation, N.F.T.s can be traded globally in seconds, moving through multiple jurisdictions and wallets to obscure the money trail.
Notable Scandals and Cases
The Abramovich Affair
In October, 2023, it emerged that majority stakes in Roman Abramovich’s nearly billion-dollar art collection had been transferred to his ex-wife before sanctions were imposed. An investigation by the Guardian revealed that a foreign trust controlling the Russian billionaire’s enormous art collection had been restructured so that his ex-wife, Dasha Zhukova, became its majority beneficiary weeks before Russia’s invasion of Ukraine.
The collection includes works by Monet, Degas, Matisse, Picasso, and Magritte; Russian Modernists; and contemporary British artists such as Lucian Freud, Francis Bacon, and David Hockney. All are owned by Seline-Invest, a company registered in the British Virgin Islands. Under E.U., U.K., and U.S. regulations, any assets in which more than fifty per cent belong to a sanctioned person may be frozen—which, according to experts, may explain the upheaval in trust arrangements.
Hezbollah Financing
In October, 2023, the Lebanese art collector Nazem Ahmad was charged with financing the militant group Hezbollah. American prosecutors presented evidence showing how easily art sales can be exploited for illicit activity. Ahmad allegedly evaded U.S. sanctions imposed on him in 2019 by employing a network of companies to conceal multimillion-dollar transactions in artworks and diamonds.
The indictment reveals that even after Ahmad’s connections to Hezbollah were disclosed, a New York artist unknowingly sold him artworks, and subsequently the artist’s gallery unknowingly sold six works to an entity associated with Ahmad. Another gallery in Chicago sold twenty-one artworks to a company regularly used by Ahmad, constituting a sanctions violation.
Ukraine’s Sanctions Database
In September, 2023, Ukraine began creating a database of artworks linked to sanctioned Russians. From Leonardo da Vinci’s Salvator Mundi to Andy Warhol’s Four Marilyns, it’s a collection that could grace any gallery in the world. These are just some of the three hundred—and growing—artworks known to have recently become the property of Russian citizens subject to Western sanctions, now entered into a searchable database created by Ukraine’s National Agency for Corruption Prevention.
The Regulatory Landscape
The European Union: 5AMLD and 6AMLD
The European Union has led international efforts to regulate the art market through the Fifth Anti-Money Laundering Directive (5AMLD), implemented in January, 2020. This directive extended comprehensive A.M.L./C.F.T. obligations to “art market participants” (A.M.P.s) for transactions valued at ten thousand euros or more.
Under 5AMLD, art dealers, galleries, auction houses, intermediaries, and freeport operators must implement risk-based A.M.L. programs, conduct customer due diligence, identify beneficial owners, screen against sanctions lists, monitor politically exposed persons (P.E.P.s), train personnel, maintain records, and report suspicious activity.
Great Britain
Great Britain implemented parallel regulations through amendments to the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017, covering A.M.P.s dealing in art valued at ten thousand euros or more. Enforcement has intensified significantly, with H.M.R.C. imposing eighteen hundred and sixty A.M.L. penalties between 2021-22 and 2024-25—an increase of a hundred and seventy-seven per cent over four years.
In May, 2025, Great Britain expanded financial-sanctions reporting obligations to explicitly include the art market. Under the new rules, A.M.P.s must report suspected sanctions violations to the Office of Financial Sanctions Implementation within twenty-four hours, with penalties including up to seven years’ imprisonment and fines of up to one million pounds or fifty per cent of transaction value, whichever is higher.
The United States: The Continuing Gap
The United States represents the world’s most significant regulatory gap, with the art market remaining largely outside comprehensive A.M.L./C.F.T. requirements. The Bank Secrecy Act, which imposes rigorous A.M.L. obligations on financial institutions, currently does not apply to art dealers or auction houses engaged exclusively in buying and selling art.
A U.S. Treasury Department study in February, 2022, examining money laundering in the high-value art market found that although vulnerabilities exist, “the art market should not be an immediate focus for imposing comprehensive A.M.L./C.F.T. requirements.”
In July, 2025, bipartisan legislation—the Art Market Integrity Act—was introduced in the U.S. Senate. The bill would amend the B.S.A. to add art-market intermediaries, including dealers, advisers, consultants, galleries, and auction houses, to the definition of “financial institutions,” thereby requiring A.M.L. compliance.
Financial Action Task Force
In March, 2023, F.A.T.F. published its guidance on “Money Laundering and Terrorist Financing in the Art and Antiquities Market.” The report highlighted vulnerability factors, including widespread secrecy surrounding beneficial owners and transactions, subjective valuation, the market’s size and global nature, and the sector’s use for proceeds-generating crimes, including forgery, fraud, theft, and illicit trafficking.
F.A.T.F. guidance includes risk indicators that public and private entities can use to identify suspicious activity, such as the use of shell companies and intermediaries to conceal beneficial owners, refusal to provide identity documentation or source of funds, payments from unrelated third parties, transactions inconsistent with customer profile, gaps in provenance, and storage in freeports with frequent ownership changes.
The Unfinished Canvas
The exploitation of the art market for money laundering represents a significant and evolving threat to the integrity of the international financial system. The sector’s unique features—high-value assets, subjective valuation, traditional opacity, use of intermediaries, and luxury freeports—create multiple vulnerabilities that sophisticated criminals systematically exploit.
While regulatory progress has been substantial in the European Union and Great Britain through 5AMLD, 6AMLD, and enhanced enforcement, the United States’ continuing regulatory gap creates opportunities for illicit actors to exploit the world’s largest art market. The emergence of N.F.T.s and digital art markets introduces new complexities that combine traditional art-market risks with cryptocurrency anonymity and rapid cross-border transaction capabilities.
A.M.L. Obligations for Auction Houses and Art Dealers in Poland
Under currently applicable regulations on anti-money laundering, A.M.L. obligations also apply to entrepreneurs within the meaning of the Act of March 6, 2018—Entrepreneurs’ Law—conducting activities involving:
Trading or intermediation in trading artworks, collectibles, and antiques within the meaning of Article 120, paragraph 1, points 1-3 of the Act of March 11, 2004, on tax on goods and services, including when such activity is conducted:
- In art galleries or auction houses, or
- Using a freeport understood as a zone or premises in which goods are treated as not being located in the customs territory of member states or third countries, including using a free customs area
Storing artworks, collectibles, and antiques within the meaning of Article 120, paragraph 1, points 1-3 of the Act of March 11, 2004, on tax on goods and services, when such activity is conducted using a freeport
—for transactions valued at or exceeding the equivalent of ten thousand euros, regardless of whether the transaction is conducted as a single operation or several operations that appear to be connected.
Services of Kancelaria Skarbiec for Auction Houses and Art Dealers
Kancelaria Skarbiec offers comprehensive assistance for auction houses and persons engaged in art trading in:
Preparation of anti-money-laundering procedures—development of compliance documentation tailored to business specifics and A.M.L. Act requirements
Above-threshold transaction reporting—implementation of systems for identifying and reporting transactions exceeding the ten-thousand-euro threshold
Suspicious-transaction reporting—implementation of procedures for identifying red flags and reporting suspicious transactions to G.I.I.F.
Beneficial-owner identification—verification procedures for U.B.O.s in accordance with 5AMLD requirements
Sanctions screening—counterparty controls against sanctions lists and politically exposed persons (P.E.P.s)
Provenance due diligence—verification of artwork origins and identification of risks related to illicit trafficking in cultural goods
Compliance audits—periodic reviews of implemented A.M.L. procedures’ effectiveness
Personnel training—conducting training on recognizing and reporting suspicious transactions
Defense against money-laundering charges—representation in administrative and criminal proceedings related to A.M.L. violations
