Identifying and Mitigating Money Laundering Risks in the Art Market

Abstract

The art market is uniquely vulnerable to money laundering due to its high-value transactions, the subjective nature of art valuation, and transaction anonymity. This thesis addresses the various challenges associated with combating money laundering in this sector. It focuses on the roles and perceptions of art galleries and their auditors, and on the effectiveness of current regulatory frameworks.

The study uses a qualitative research approach and conducts semi-structured interviews with six galleries and five auditors in Oslo, Norway. The participants were selected on the basis of their experience and involvement in the art market. They provide insight into the sector's operational and regulatory aspects of the art market.

The study reveals that art galleries face challenges linked to the characteristics of the art market. These issues and the politically influenced compliance processes lead to the limited effectiveness of current anti-money laundering regulations. Auditors are pivotal in addressing these challenges. They can take action to ensure compliance and strengthen the transparency and integrity of financial transactions in the art market. The findings support the introduction of more advanced due diligence procedures and technology to verify the origin of artworks. It also calls for a regulatory framework that is more flexible and adapted to the unique requirements of the art market. This will increase transparency and reduce opportunities for financial crime.