Financial Action Task Force Report’s anti trade approach rings alarm bells

Financial Action Task Force Report’s anti trade approach rings alarm bells

Just released, the Financial Action Task Force’s new report, Money Laundering and Terrorist Financing in the Art and Antiquities Market, takes a highly irresponsible approach.

The FATF is an independent global body investigating crime whose reports should prove key to policy making. Not this one, however.

Arguably the most salient conclusion it comes to is as follows: “The markets for art, antiquities and other cultural objects are diverse in size, business models and geographic reach. Most are relatively small, and the vast majority of participants have no connection to illicit activity.”

However, this is buried deep in the text, while the FATF has focused on launching the report with a headline grabbing video that gives the clear impression that the art market is awash with criminals committing offences linked to money laundering and terrorism financing.

Needless to say, anti-market forces have leapt on this to condemn the trade and demand further legal restraints, while ignoring the lack of substance in the report or the fact that rigorous anti-money laundering laws already apply in the UK, for instance.

As with so many other reports of this ilk, fact checking has been a casualty. The most important initial independent statistic the report quotes as it launches into its arguments is wrong. In paragraph 3 of the Introduction Background on page 5, it notes that the United Nations Office on Drugs and Crime (UNODC) “has estimated that in 2011, as much as USD 6.3 billion in illicit proceeds could have been laundered through or associated with the trade in cultural objects”. In fact, the figure, which was sourced from House of Commons Select Committee evidence in 2000 – now almost a quarter of a century ago – does nothing of the sort as CINOA’s Bogus Statistics report proves. FATF has simply taken UNODC’s word for it, thereby adding to the dissemination of fake news. This being the case, how reliable is the rest of the report?

The FATF’s work is important, so it is a shame that it, too, appears to have fallen into the trap of putting publicity before purpose in drawing attention to itself to justify its existence.

Further analysis of the report will follow.


CINOA, IADAA and others call for major review and propose five-point plan for future

Trade and cultural heritage groups including global trade federation CINOA and international antiquities association IADAA have called for a major international review of policy and legislation as it applies to the art market.

The call comes in a letter after the US Treasury review of anti-money laundering proposals found the art market to be low risk, with Congress turning its attention to shell companies and the real estate industry instead for the moment.

CINOA secretary general Erika Bochereau and IADAA chairman Vincent Geerling pointed out that all of the numerous recent studies researching possible links between the art market, money laundering and terrorism financing found no justification for clamping down on the market on this basis.

They argued that the lack of hard evidence produced by any of the reports meant that authorities should stop targeting “dealers, collectors and auction houses with wave after wave of damaging and unjust legislation.” Policy making is “being driven by assumptions and false claims,” they argued in their open letter.

Why false claims and bogus data abound

It is thought that one of the reasons so much misinformation is so widely spread is the interests of drawing attention to the pet issues of international NGOs, law enforcement and others all vying for attention and funding as they push their agendas.

The trade and cultural heritage groups singled out UNESCO’s claim that the annual value of trade in illicit cultural goods is $10 billion, a claim that is demonstrably false and not supported by the source that UNESCO gave for it. Despite being informed of this in November 2020, and despite numerous public clarifications on this point by the trade, UNESCO continues to promote the figure and it is still quoted in the media.

The trade and cultural heritage groups have now set out a five-point plan for better policy, listed in the Art Newspaper as follows:

  1. “Policy makers, including governments, when discussing the development of and drafting any policy or legislation which impacts cultural property and the art market, should ensure that recognised representatives from the relevant sector of the art market are co-opted on to any relevant panel or consulting body.
  2. Regulatory review boards or panels assessing the impact of government proposals should focus on how far they have actively addressed concerns and suggestions raised by recognised market representatives, while all proposals should be tested against clear standards of evidence and proportionality.
  3. A designated contact person at the decision-making level of government should be named, whose role is to follow any on-going laws or regulations affecting the art and antiques market, and they should act as a sector contact, with whom the trade can open a dialogue to ensure that the conservation of art or cultural heritage objects is not being unintentionally demoted or ignored.
  4. All relevant active and pending cultural property legislation should be reviewed to take account of the facts and data currently available, particularly if those facts are at odds with the assumptions on which legislation was predicated.
  5. Legislators, particularly in the EU, should commission an independent review to analyse the way in which significant public resources, supposedly dedicated to combating illicit trade in cultural goods, have been wasted as a result of relying on misinformation. Clear guidance should be produced to prevent legislation affecting the art market from misdirecting resources in the future.”

As well as CINOA, signatories of the letter include: the ACPCP (American Council for the Preservation of Cultural Property), the ATADA (Authentic Tribal Art Dealers’ Association), the Committee for Cultural Policy (Cultural policy think tank and information source), Drouot Patrimoine auction house, the EFA (European Federation of Auctioneers), the Global Heritage Alliance advocacy group and the IADAA (International Association of Dealers in Ancient Art).