Art Market Must Prepare For More AML Scrutiny

This piece was published in Law360 on 21 August 2025 and is reproduced with their permission here.

On 23 July 2025, a bipartisan group of senators introduced a bill that would extend the anti-money laundering regulations contained in the Bank Secrecy Act to cover a broad swath of the U.S. art market.

The BSA requirements for AML were previously extended in 2020 to a smaller segment of the market — antiquities dealers — pursuant to the Anti-Money Laundering Act. The regulations covering antiquities dealers have not been issued, but the latest proposed bill, called the Art Market Integrity Act, would bring the full art market — and most of the people doing business in it — within its scope.

If the bill is passed, it would bring the U.S. art market substantially in line with the U.K., Switzerland and the European Union, which adopted similar rules years ago under the EU's Fifth AML Directive and national domestic legislation.

The Art Market Integrity Act's lead sponsor, Sen. John Fetterman, D-Pa., commented in a press release that the bill would "align the United States with international standards," thus "preventing America from becoming a safe haven for illicit activities."

Many art market participants oppose AML regulation as unnecessary and overburdensome, especially for smaller operations. While the fate of this bill in Congress is far from clear, calls for art market regulation have persisted and do not appear to be fading away.

In addition, the consequences of an AML issue can be devastating financially and reputationally. Thus, people in the business of art, as well as those who collect for enjoyment, are well advised to pay attention to AML issues, and consider adopting basic, risk-based controls — whether required by law or voluntarily.

Provisions of the Bill

The key aspects of the proposed bill are as follows.

Scope

It applies to dealers, advisers, consultants, collectors and intermediaries of all kinds, leaving no gaps in the range of art market participants covered.

While this might strike some as overbroad, it can also be viewed as creating a level playing field for participants big and small, from public auctioneers to private dealers, and from advisers to galleries and museums.

De Minimis Exception

The bill has a de minimis exception for very small participants handling only works under $10,000 each, or totaling less than $50,000 in transactions per year.

Other Exemptions

It also exempts artists who sell their own creations, as such transactions are highly unlikely to involve money laundering and compliance measures would be difficult for artists to implement.

Definitions

The definition of the term "work of art" is broad and includes "any original painting, sculpture, watercolor, print, drawing, photograph, installation art, or video art," but excludes "applied art” such as product design, fashion design, architectural design, or interior design." It also excludes mass-produced objects like carpets, textiles and ceramics.

Future Regulations

The bill calls for the Financial Crimes Enforcement Network to issue regulations detailing who is required to do what, whether certain geographical areas should be targeted, and how the regulations should apply to intermediaries and agents.

FinCEN has historically taken a very long time to issue other industry-based AML regulations. Indeed, while FinCEN issued an advance notice of proposed rulemaking in September 2021 for the 2020 antiquities dealers amendment, no final rules have been issued to date.

Regulatory Guidance

The bill also directs the Office of Foreign Assets Control to update the guidance it issued in 2020 "regarding the risks of ... artwork transactions involving sanctioned" parties.

The OFAC advisory warned art and luxury goods dealers to be on the lookout for illicit actors seeking to hide assets in the form of high-value goods — defined as having a value of $100,000 or more — to evade sanctions.

The advisory also encouraged art galleries, museums, private collectors, auction houses, agents and others in the market to adopt risk-based compliance programs to mitigate exposure to sanctions-related violations.

The Art Market: A Haven for Money Launderers?

Statements issued by the various groups endorsing the bill paint a dismal picture of the art market, portraying it as populated primarily with terrorists, arms dealers, thieves, fraudsters and other bad actors.

Yet, while there have been a few high-profile cases of bad actors transacting in the art market — after all, both bad actors and law-abiding people alike often enjoy buying art and other collectibles — it's reasonable to question whether the alarm bells need to be sounded at this high a volume.

Last February, the U.S. Department of the Treasury issued the 2024 National Money Laundering Risk Assessment. In more than 100 pages, the assessment discusses a wide range of the latest money laundering schemes and the multiple creative ways illicit actors are attempting to use the U.S. financial system and other industries to move and hide dirty money derived from predicate criminal activities like healthcare fraud, human trafficking and smuggling, corruption, and cybercrime. On Page 80, two short paragraphs can be found under the subheading "Update on Art."

What Should We Take Away from this Report?

On the one hand, the report certainly did not sound any new alarm bells about the connection between the art market and money laundering. First, the report discusses the art market under the less-pressing heading of "Vulnerabilities and Risks," rather than outright "Threats."

Second, the first paragraph begins with a citation to the Treasury Department's February 2022 "Study of the Facilitation of Money Laundering and Terror Finance Through the Trade in Works of Art," which itself concluded that the art market was not a priority for AML regulation: "Weighed against other sectors that pose ML/TF risks, the Study concludes that the art market should not be an immediate focus for the imposition of comprehensive AML/[countering the financing of terrorism] requirements."

Finally, the 2024 assessment concludes that "there was little change in [the art market's] risk profile" during the reporting period.

AML Best Practices

Despite these conclusions, it is risky to be lulled into complacency, as the pressure from the domestic and international anti-money laundering community to regulate the trade in high-value goods — with art, jewelry other collectibles making up the core of this category — is not abating. Art is under scrutiny and, as the Art Market Integrity Act suggests, it will continue to be.

With such persistently intense interest and focus on the money laundering potential of the art market, and given the perception — even if somewhat misguided — that art is an attractive vehicle to move and clean ill-gotten proceeds, it makes sense for the market to step up vigilance and due diligence in this area.

Attorneys working with galleries, auctioneers, dealers, advisers, museums and collectors — large and small — should be asking whether these clients have a basic know-your-customer process in place.

Are they screening everyone they transact with, including entities, for sanctions? Do they accept or send funds to entities, offshore or domestic, without understanding who the ultimate beneficial owners or controllers are? Do the people working at the business understand what to look for and who to speak to if they encounter something concerning or suspicious?

Whether the Art Market Integrity Act is passed into law or not, it is prudent for art market participants to implement basic, risk-based, reasonable, and effective AML programs and controls. Most transactions in the art world are not related to criminal activity, tainted funds or stolen property — but ensuring protection against victimization or exploitation by the few bad actors in the art market is nevertheless a commonsense good practice.

It is understandable for smaller, art-related businesses to be uncertain and perhaps nervous about the additional cost and resources needed to implement AML programs. That concern may come, in part, from a lack of experience with this type of control process in the art market.

A sensible, risk-based approach will identify the aspects of an art-related business that could be vulnerable to bad actors, as well as those posing very little risk. That information helps craft an AML program that is proportional, lean but effective, and not overblown.

Adopting a long-term approach, and keeping in mind that the small up-front investment in establishing basic AML practices — which could involve simple steps such as obtaining and recording identification of transacting parties, and being attentive to suspicious conduct — is a lot less expensive than the cost of defending an AML investigation, possible penalties and fines, and reputational cost.

About Jane Levine

Partner and co-founder JANE LEVINE has extensive experience at the intersection of the international art market, art crime, and regulatory compliance. Jane is a former federal prosecutor who spent ten years as an Assistant US Attorney for the Southern District of New York, followed by a thirteen-year stint at Sotheby’s as Chief Global Compliance Counsel and Head of Government Affairs. Jane was appointed by President Obama to serve on the Cultural Property Advisory Committee, and currently serves as a member of the Board for US Committee for the Blue Shield working to safeguard cultural heritage around the globe. In addition, Jane has been teaching Art and Cultural Heritage Law at Columbia Law School for the past twenty years. Read more about Jane’s career here.