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AC in the News: The Unregulated Art Market Creates a Safe Haven for Criminals, Executive Director Tess Davis Discusses on TRACE’s “Bribe, Swindle or Steal” Podcast

May 26, 2020

Crimes in the arts and antiquities market are often imagined to be victimless, white collar acts. However, such labelling could not be more misguided. Even setting aside the negative implications that the looting and trafficking of art and antiquities has for the integrity of cultural heritage, the sale of artifacts acquired through illicit means presents a national security risk—criminal organizations are using profits from the trafficking of stolen art and looted antiquities to fund violent crime and conflict all over the world.

Antiquities Coalition Executive Director Tess Davis discussed this phenomenon on May 26, when she appeared as a guest on the “Bribe, Swindle or Steal” podcast. Hosted by Alexandra Wrage, the president and founder of anti-bribery business association TRACE, “Bribe, Swindle or Steal” professes to explore “the world of financial crime—corruption, fraud, money laundering and sanctions—and what motivates people to break the law, how wrongdoers cover their tracks and what can be done to put a stop to the looting through interviews with experts in the field.” 

Key takeaways included:

  • The Issue Reaches Beyond Daesh (ISIS): While Davis acknowledged that Daesh may have put the looting and trafficking of antiquities on the front page of newspapers around the world, she emphasized that “they were not the first to arm their cause by stealing art [and] looting treasures, and they won’t be the last.” Many of the last century’s worst criminal organizations have funded themselves through the theft of fine art and the looting of antiquities, including the Nazis, the Khmer Rouge, the Irish Republican Army, the Taliban and Al Qaeda. “Opportunistic looting has been taking place in the Middle East and North Africa since as long as these sites existed,” Davis said. “Tomb raiding is often as old as the tomb itself.”
  • The Web Has Made Cultural Trafficking Easier Than Ever Before: While a sizable portion of the artifacts on sites such as eBay and Facebook are fake, many are actually genuine—and unfortunately so, as these bona fide listings are often produced through looting and trafficking. Collectors, according to Davis, need to remain vigilant and exhibit caution in their purchases. Davis listed several potential red flags to look out for, including property from a crisis-stricken country, property in a high risk market jurisdiction, property that was originally immovable, property that was originally intended for a non-commercial purpose, and property with weak provenance (ownership history). For more red flags, check out this infographic, prepared by the Antiquities Coalition.
  • The Arts and Antiquities Trade Is the Largest Unregulated Market in the World: The global arts and antiquities market is valued at around $65 billion, according to recent reports, with nearly half based in the United States. Despite the scale of this trade, dealers of arts and antiquities are currently exempt from the Bank Secrecy Act of 1970, a U.S. law that requires businesses “whose cash transactions have a high degree of usefulness in criminal, tax, or regulatory matters” and other financial institutions to assist the U.S. government in detecting and preventing financial crimes. This lack of regulation, combined with how difficult it can be to price out arts and antiquities, have made the market a hotbed for fraud, forgery, tax evasion, money laundering, sanctions violations, and even terrorist financing.
  • The Situation Has Been Improving, Albeit Slowly: According to Davis, Daesh’s cultural trafficking crimes in recent years have made governments and United Nations more aware of the ways in which an unregulated art and antiquities market can facilitate terrorist financing, and some countries and international bodies have taken actions to impede such crimes. The art and antiquities market itself has also come to reflect more on its own vulnerability, with the Basel Art Trade Guidelines and the Geneva Responsible Art Market Initiative both calling for greater measures to protect the integrity of the trade. While the U.S. has been relatively slower to act, the House of Representatives did pass the Corporate Transparency Act of 2019, which would remove the current exemption arts and antiquities dealers have from the Bank Secrecy Act. As of May 26, the bill was in the Senate, essentially on hold due to the COVID-19 pandemic.
  • Increased Transparency Is Going to Benefit All Lawful Parties: According to Davis, “Transparency helps the market. Transparency is in everyone’s interest.” Clients, in particular, are calling for transparency, as scandals and prosecutions can erode trust in the art and antiquities market. This, in turn, affects the market’s bottom line. Dealers and auctioneers can build trust by conducting due diligence and engaging in other best practices. “By staying with not only the letter, but the spirit of the law and ethical guidelines, this is going to help the market to grow,” Davis said. This advice is of particular importance to the U.S., as no matter what measures other governments around the globe undertake, if the U.S. does not go through with taking sufficient actions against art crimes, it will end up inadvertently providing a safe haven for criminals to engage in cultural trafficking and other misdeeds. 

Listen to the full podcast here.