A Responsible Art Market in Practice
February 5, 2019
On February 1, experts from throughout Europe, the United Kingdom, and the United States came together in Geneva, Switzerland, to address growing legal and ethical challenges in the art trade. On the grounds of artgenève, the famed cultural fair, the Responsible Art Market (RAM) Initiative held its third annual conference, centered upon “A Responsible Art Market in Practice.” The Antiquities Coalition participated in the event, alongside leading art collectors, dealers, lawyers, historians, journalists, underwriters, and other professionals.
“Created by the art market, for the art market” in 2015, the RAM Initiative addresses the evolving operational and reputational threats faced by the multi-billion-dollar art market. RAM strives to both raise awareness of these risks, and to provide a “practical and ethical compass to art businesses” encountering them. As part of this mission, in 2017, it published Guidelines on Combating Money Laundering and Terrorist Financing, followed in 2018 by an Art Due Diligence Toolkit, a series of best practices to assist businesses navigating increasingly complicated waters. The Toolkit includes detailed checklists for due diligence on clients, artwork, and transactions. While geared toward market actors operating in the U.K. and Europe, both the toolkit and the guidelines would also be of great use to those in the U.S.
The February 1 event built on this progress to date. Chaired by Georgina Adam, of the Art Newspaper and Financial Times, it focused on how the guidelines and toolkit can work in practice. Leading professionals walked participants through three case studies, one for each of RAM’s due diligence checklists, to see how these best practices can be applied to different fact patterns. Attorneys also presented updates and overviews on new legal developments, including the proposed U.S. Illicit Art and Antiquities Trafficking Protection Act (introduced in May 2018), Swiss legislation, and the 5th European Union Anti-Money Laundering Directive.
Key takeaways included:
- Responsible Was the Word of the Day: Responsible players in the art market recognize their vulnerability to financial crimes, including money laundering, forgery, fraud, and terrorist financing, as well their risk of unknowingly dealing in stolen or looted cultural property. Moreover, they are taking active steps to mitigate these risks, although continuing scandals show there is still more to be done.
- There Is Wide Support for This Work: RAM’s founding members include Christie’s Auction House, the Geneva Free Ports and Warehouses, top legal firms, and the Art Law Centre at the University of Geneva. It was encouraging to see such leaders take up this cause. Participants emphasized that it is in the interest of larger market actors, such as auction houses and trade associations, to assist smaller players who do not have access to the same legal expertise and financial resources.
- The U.S. Is at Risk: The day’s presentations made clear that the U.K. and Europe are making significant progress with their anti-money laundering efforts. Unless the U.S. takes similar action, its art market risks becoming a haven for financial criminals.
- The Risks Are Varied and Growing: Those working in the arts have already been exposed to issues surrounding provenance, including Nazi-looted art and antiquities trafficking, both of which remain major problems in the field. However, while remaining vigilant about these risks, art market actors must also learn a new vocabulary: PEPs, offshore structures, KYC, sanctions, AML, etc. Understandably, this seems daunting, especially to those without a legal background. However, as speaker Irina Tarsis pointed out, dealers in gemstones and jewelry are already subject to the regulations that may soon be imposed on the art market, and these industries have nevertheless continued to thrive and grow. The more the art market can do now to address its own vulnerabilities, the easier it will be for it in the long run.
- Transparency Helps the Market: Several speakers stressed that improved transparency is in everyone’s interest, but the market’s most of all. Clients themselves are increasingly calling for it. After all, scandals and resulting prosecutions rightfully erode trust in the art industry, and that in turn affects the bottom line. Building trust, following best practices, and staying within both the letter and the spirit of the law will help the market grow.
We look forward to seeing more developments from the RAM Initiative in the future.
To learn more about this issue, see our blog on Looting and Laundering Art, Antiquities, and Financial Crimes and recent op-ed in ACAMS Today, Art and Antiquities: Conduits for Money Laundering and Terrorist Financing.