CRIMINAL CAPITALI$M

Art market attracts organized crime and terrorists, report finds

By Adam Schrader


April 8 (UPI) -- Criminal organizations and terrorist groups are attracted to the art market as a way to fund their activities and launder money, according to a recent report from an intergovernmental agency linked to the Group of Seven.

The Financial Action Task Force, an independent global agency created by the G7 in 1989 to address money laundering concerns, released the report in February which was first spotted by The Art Newspaper on Friday.

"The market has attracted criminals, organized crime groups and terrorists who seek to launder proceeds of crime and fund their activities," the report reads.

"The use of cash, third-party intermediaries, shell companies and other complex corporate structures in relevant transactions also represents relevant illicit finance vulnerabilities."

Analysts with the FATF found that art attracts criminal activities because it can attract high prices while retaining its value and is easy to discretely buy and sell. Criminals will also often create "fake sales" and "false auctions" of art to launder money.

The estimated global sales of art and antiquities in 2021 reached more than $65 billion in 2021, according to the report. UPI previously reported that the arts sector contributed more than $1 trillion to the U.S. economy in 2021.

"Terrorist financing is another risk for those working predominantly in the markets for cultural objects," according to the report.

FATF analysts noted that Islamic State terrorist group has "notoriously pillaged" archeological sites in Iraq and Syria for artifacts to sell in the art market. Other terrorist groups, such as Al-Qaeda, have also used "similar schemes" in the Middle East, North Africa and parts of Asia.

Law enforcement and anti-terrorism agencies face challenges in combating the use of the art market by criminal groups because there are "difficulties in tracing the origin," according to the report.

Other challenges include a low number of suspicious transaction reports filed with financial intelligence units worldwide and a lack of prioritization of their investigation.

"It is vital for jurisdictions and businesses to correctly identify and understand the specific risks associated with different cultural objects and market participants," the report reads.

"For example, cultural objects originating from areas where terrorist groups are active, or bordering jurisdictions, are specifically vulnerable to being used for terrorist financing."

However, some experts expressed criticism of the report's findings in comments to The Art Newspaper.

"Diligence and transparency are an important goal, and the art market often falls short," Nicholas O'Donnell, a partner at law firm Sullivan & Worcester, told the news outlet. "But, this report could as well have been an Indiana Jones script -- long on narrative drama, short on evidence."

In November, France's Culture Ministry issued a recommendation that museums tighten their policies after questions were raised about acquisitions by the Louvre Abu Dhabi and a crackdown on art racketeering.

Officials in the United States, as well as researchers in the art world, have been increasing their efforts to repatriate stolen artifacts in recent years.

Last month, the Metropolitan Museum of Art in New York City announced that 15 sculptures linked to former art dealer Subhash Kapoor will be repatriated to India after learning that they were illegally removed from the country before being acquired by The Met.