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Regulation Without Legislation: Combatting Money Laundering in the U.S. Art Market

February 21, 2026

Center for Art Law AML Laundry Machines Ad

By William Yuen Yee

Critics describe the art market as the “largest, legal unregulated industry” in the United States.[1] Lawmakers have repeatedly introduced federal legislation to impose anti-money laundering (AML) obligations on U.S. art market participants (AMPs), without success. Most recently, the bipartisan Art Market Integrity Act, introduced in the U.S. Senate in July 2025, would impose AML obligations on most art market participants for sales of $10,000 per transaction and entities with annual sales exceeding $50,000.[2] Such legislation follows other uphill attempts to impose stricter AML requirements on art market actors, including the 2019 COUNTER Act and the 2018 Illicit Art and Antiquities Trafficking Prevention Act.

However, the view that the United States does not regulate art transactions against money laundering is not entirely correct. Instead, different factors—industry self-regulation, public pressure from high-profile litigation and settlements, and sanctions laws—already de facto regulate the market.

The Art of Money Laundering

Money laundering disguises the illegal origins of criminal proceeds. Often, it involves three steps: (1) placement of illicit funds into the legitimate financial system; (2) layering the funds through different banks to conceal the link between the entrance and exit of the funds; and (3) integration through additional transactions to “clean” the money.[3]

The Bank Secrecy Act (BSA) of 1970 is the United States’s primary anti-money laundering law. According to the BSA, covered “financial institutions” must establish AML programs with compliance officers, verify beneficial owners, and record and file Suspicious Activity Reports to the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN).[4] While regulators extended these requirements to sectors like real estate after the September 2001 terrorist attacks,[5] the BSA’s definition of “financial institution” currently excludes many art market participants, including dealers, auction houses, and galleries.[6]

Recently, criminals have sought to launder ill-gotten proceeds through high-value art, drawn by its perceived laxer regulatory regime and other industry-specific factors. Aristos Aristodemou, a criminal defendant indicted in a laundering scheme in 2018, said he initially planned to launder funds through real estate but chose art because it is “the only market that is unregulated.”[7] The Treasury Department attributes the rise in laundering through high-value art to four factors: high-dollar transaction values, the ease of transporting art, the market’s longstanding culture of privacy, and art’s evolution into a financial asset.[8]

The first factor is the subjective, high prices of art, which are difficult to authenticate. Criminals can launder hundreds of millions of dollars through a “masterpiece” without authorities questioning the amount.[9] Prices are set by only how much a buyer will pay.[10] This subjectivity makes it difficult to authenticate a work’s “fair market price” and thus to detect money laundering.

The second factor is the ease of transporting art. After illicit financier Edemar Cid Ferreira was convicted of bank fraud and money laundering in Brazil in 2006, he evaded seizure of his $20 million art collection by illegally importing works into the United States with an invoice that fraudulently valued the works—which included Jean-Michel Basquiat’s $8 million “Hannibal” painting—at $100.[11] Ferreira illegally smuggled his collection out of Brazil between 2004 and 2005, shipping it through the United States with false documents that provided inaccurate valuations and fabricated titles to locations in various European countries.[12]

The third factor is the market’s longstanding culture of privacy.[13] Transacting parties can be anonymous, posing laundering risks. In contravention of the sanction regimes, sanctioned Russian oligarchs Arkady and Boris Rotenberg purchased over $18 million of art through shell companies, which offer customers the ability to hide their identity.[14]

The fourth factor is art’s evolution into a niche market for financial investment. The rapid growth of the global art market has drawn burgeoning interest from profit-seeking investors. The art-secured lending market—in which auction houses and banks give loans to their clients, with their art used as collateral—is booming.[15] The market value of outstanding loans against art stood at nearly $35 billion as of 2023.[16] Art bought with dirty money can serve as collateral for multi-million-dollar bank loans from reputable institutions. In April 2014, corrupt financier Jho Low, a central figure in the 1MDB scandal,[17] obtained a $107 million loan from Sotheby’s Financial Services through his Cayman Island subsidiary by offering all rights and title to 17 different paintings, including Vincent Van Gogh’s La maison de Vincent a Arles, as collateral.[18] In searching for a willing art-secured lender, Low explicitly sought “speed” and a “fairly quick and relaxed kyc [Know Your Customer] process.”[19]

Industry Self-Regulation

Auction houses already conduct due diligence on transacting parties in the United States. Sotheby’s maintains a global AML program in response to stricter legal obligations in the UK and EU, which also applies to its U.S. locations;[20] Bonhams does the same.[21] Sotheby’s 2018 AML policy states that the auction house must: “know the true identity of the person or entity who owns the property or funds in question” and “understand the source of the client’s funds.”[22] Christie’s global AML program includes client identification, verification, and screening. All Christie’s clients must comply with Know Your Customer requirements, including a copy of a government-issued photo ID required for any beneficial owner with a 25% stake.[23]

Participation in prestigious industry organizations is also conditioned on AML compliance. Art Basel, the world’s most prestigious contemporary art fair, considers a gallery’s AML policies in selecting exhibitors.[24] The Art Dealers Association of America, a members-only organization of leading dealers, considers “[i]ntegrity of business practice and ethical behavior” in selecting members.[25]

The rise of legal advice urging art businesses to adopt AML policies reflects increased industry awareness and compliance, as well as the need to comply with European Union requirements. Law firms have warned clients of impending regulations. The surge in art AML compliance advisory businesses also reflects this new focus.[26]

Litigation, Settlements, and Media Pressure

A second element of de facto AML regulation is high-profile litigation, settlements, and public pressure.

Reforms adopted by auction houses in response to litigation and settlements has shaped auction houses’ AML compliance. In 2024, as part of a $6.25 million settlement for tax evasion with New York State, Sotheby’s adopted internal reforms to review information about whether a client intends to resell art being purchased.[27] The same year (check timing), as part of a $16.7 million settlement with the Manhattan District Attorney’s office, Christie’s improved its compliance with New York State sales taxes.[28]

The reforms will likely improve the auction houses’ monitoring of illicit finance risks,[29] as money laundering and tax evasion are often related. Both pursue similar objectives, aiming to conceal a trail of funds and to obfuscate the ownership of income and assets.[30] Often, both are achieved through similar techniques, such as disguising beneficial ownership through shell companies and offshore accounts and manipulating accounting records.[31]

Public pressure has also gradually incentivized AMPs to adopt AML reforms. After a series of high-profile scandals—including the seizure of illicit Syrian antiquities from the Geneva Freeport in 2017 and economist Nouriel Roubini’s description of the art industry as “full of shady stuff” during a Davos panel in 2015—prominent art market actors jointly launched the Responsible Art Market Initiative (RAM) in January 2017.[32] The Initiative establishes best practices to help art businesses comply with AML regulations, including 10 principles for vetting parties in an art transaction.[33] After the release of the Panama Papers in 2016—exposing the use of corporate veils to conceal ownership and dodge taxes—Christie’s adopted significant changes to its AML policies, requiring agents who sell work through the auction house to disclose the name of the owner they represent.[34] After publication of a 2020 Senate Report urging Congress to pass federal AML legislation, private sellers began including a standardized condition in contracts that the buyer or seller is not sanctioned.[35] After the New York Post characterized Larry Gagosian as “the official art dealer of the Russian oligarchy”[36] in 2022, Gagosian warned its employees against transacting with sanctioned entities.[37]

Sanctions Obligations

Sanctions compliance requirements can also satisfy AML obligations. Experts often describe a convergence between AML and sanctions obligations.[38]

All U.S. entities must comply with U.S. sanctions programs or face liability.[39] Both FinCEN and the Office of Foreign Assets Control (OFAC) have published notices emphasizing that high-value art remains an instrument for sanctions evasion. A 2020 OFAC advisory urged art businesses to conduct “risk-based due diligence” to avoid transacting with blocked persons. After OFAC sanctioned in 2019 a Lebanon-based Hizballah financier, Nazem Said Ahmad—in part for using his multimillion-dollar art collection to launder money for the terrorist group—a senior Treasury official warned that the designation should put all art dealers on notice.[40]

As the Center and others have reported, individuals, who assist with sanctions evasion and either try to buy or sell art on behalf of sanctioned persons, expose themselves to strict liability and criminal penalties.

Why Federal AML Legislation in the US is not a Magic Bullet 

Imposing federal AML requirements on AMPs through legislation will be difficult to implement and politically challenging.

Designing effective AML regulations is difficult. A proper monetary threshold at which AMPs should be required to report a transaction to FinCEN that balances burdening smaller galleries with effectively capturing laundering risks is unclear. This challenge exists elsewhere: In 2024, the Government Accountability Office urged FinCEN to raise its $10,000 cash reporting threshold for financial institutions, because the number is not inflation-adjusted and contributes to excessive report filings.[41]

Existing challenges to extend AML obligations from the U.S. antiquities dealers to all art dealers foreshadows the difficulty of regulating the broader art market. While Congress enacted the Anti-Money Laundering Act (AMLA) in 2021—which expanded the BSA’s definition of “financial institutions” to include persons “engaged in the trade of antiquities”[42]—implementing regulations have yet to be promulgated four years later. The AMLA neither defines nor distinguishes “antiquities” from “art.” Furthermore, the government and industry disagree on the threshold at which to impose AML obligations on antiquities dealers.[43] The absence of implementing regulations has ultimately contributed to a lack of clarity and predictability for the antiquities industry. Similar uncertainty would result from including “art,” a more nebulous category, within the list of “financial institutions” under the BSA, enough uncertainty to encourate art dealers to conduct more checks and KYC before entering into any and all transactions.

In the meantime, Federal AML legislation has also struggled to gain political traction since 2018.[44] Pressure on the art market to adopt AML compliance has increased, but whether such legislation can muster enough support is uncertain. Limited support for the Corporate Transparency Act, a law targeting shell corporations engaged in money laundering for which the United States suspended domestic enforcement in 2025,[45] may presage the political challenges of federal AML legislation.

Conclusion

Those who urge adopting federal anti-money laundering legislation in the United States place little trust into the de facto regulatory approach that already shapes AML compliance. The U.S. art landscape has significantly shifted and strengthened its regulatory compliance since the sanctioned Rotenberg brothers circumvented U.S. regime by laundering money through art nearly a decade ago. A mix of a fear of impending regulations and steps taken by influential industry actors to self-regulate has driven reforms. How much money laundering occurs in the $57.5 billion global art market remains unclear—partly due to the challenge of measuring illicit activity—[46]making it difficult to justify enacting uncertain federal legislation right now. Galleries, dealers, and other art businesses increasingly recognize market incentives to “know” their customers to maintain their reputations and avoid running afoul of sanctions obligations. It may be worth first evaluating the efficacy of AML requirements implemented for the antiquities market before imposing sweeping AML regulations on the broader U.S. art industry.

About the Author

William Yuen Yee is a J.D. candidate at Harvard Law School. Before law school, he worked at the Organization for Economic Cooperation and Development in Paris. He earned his B.A. summa cum laude from Columbia University in Political Science and East Asian Studies and M.A. cum laude from Sciences Po as a Michel David-Weill Scholar. His writing has also appeared in Foreign Policy and The Diplomat.

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Select References

  1. The Art Industry and U.S. Policies That Undermine Sanctions: Staff Rep., U.S. Sen., Permanent Subcomm. on Investigations (2020) 2, https://www.govinfo.gov/content/pkg/GOVPUB-Y4_G74_9-PURL-gpo142344/pdf/GOVPUB-Y4_G74_9-PURL-gpo142344.pdf. ↑
  2. Art Market Integrity Act, S. 2400, 119th Cong. (introduced July 23, 2025), https://www.congress.gov/bill/119th-congress/senate-bill/2400/text/is. ↑
  3. See History of Anti-Money Laundering Laws, FinCEN (last visited Nov. 12, 2025), https://www.fincen.gov/resources/history-anti-money-laundering-laws. ↑
  4. Id. ↑
  5. Rena S. Miller & Liana W. Rosen, Money Laundering in the U.S. Real Estate Sector: In Focus No. IF11967, CRS InSight No. IF11967 (Jan. 4, 2022). ↑
  6. Art Market Integrity Act, supra note 2. ↑
  7. Six Individuals and Four Corporate Defendants Indicted in $50 Million International Securities Fraud and Money Laundering Schemes, U.S. Dep’t of Justice (Mar. 2, 2018), https://www.justice.gov/usao-edny/pr/six-individuals-and-four-corporate-defendants-indicted-50-million-international. ↑
  8. Study of the Facilitation of Money Laundering and Terror Finance Through the Trade in Works of Art, U.S. Dep’t of the Treasury (Feb. 2022) 7-8, https://home.treasury.gov/system/files/136/Treasury_Study_WoA.pdf. ↑
  9. Hannah Purkey, The Art of Money Laundering, 22 Fla. J. Int’l L. 1, 8 (2010). ↑
  10. See Maxwell Rabb, What Determines the Price of an Artwork?, Artsy (Nov. 13, 2024, 3:47 PM), https://www.artsy.net/article/artsy-editorial-determines-price-artwork. ↑
  11. Manhattan U.S. Attorney Returns Two Paintings Linked to Bank Fraud to Brazilian Government, U.S. Att’y for the S. Dist. of N.Y. (Sept. 21, 2010), https://www.justice.gov/archive/usao/nys/pressreleases/September10/brazilrepatriationpr.pdf. ↑
  12. Henri Neuendorf, US Government Repatriates 95 Artworks Linked to Disgraced Brazilian Financier, ArtNet (Oct. 11, 2017), https://news.artnet.com/art-world/95-smuggled-works-returned-brazil-1111004. ↑
  13. See Graham Bowley, As Money Launderers Buy Dalís, U.S. Looks at Lifting the Veil on Art Sales, N.Y. Times (June 19, 2021), https://www.nytimes.com/2021/06/19/arts/design/money-laundering-art-market.html; See also Sage Espindola, Conduits for Crime: How the US Art Industry Has Become a Market Ripe for Financial Crime, 90 Brook. L. Rev. 621, 632 (2025). ↑
  14. 2022 Treasury Report, at 21-22. ↑
  15. Scott Reyburn, Art Is Becoming a Financial Product, and Blockchain Is Making It Happen, N.Y. Times (June 8, 2018), https://www.nytimes.com/2018/06/08/arts/art-financialization-blockchain.html. ↑
  16. Riah Pryor, Art-Backed Loans Are Thriving in a Muted Art Market, Art Basel (Aug. 14, 2024), https://www.artbasel.com/stories/art-market-loans-2024?lang=en. ↑
  17. The 1MDB scandal involved systematic embezzling from the Malaysian sovereign wealth fund, 1Malaysia Development Berhad. For more, see generally Tom Wright & Bradley Hope, Billion Dollar Whale: The Man Who Fooled Wall Street, Hollywood, and the World (Hachette Books 2018). ↑
  18. United States v. Certain Rights to and Interests in the Viceroy Hotel Group, No. CV 17-4438, at 173 (C.D. Cal. filed June 15, 2017), https://www.justice.gov/archives/opa/press-release/file/973671/dl. ↑
  19. Id. ↑
  20. Sotheby’s, Comment Letter on Anti–Money Laundering Regulations for Dealers in Antiquities, Docket No. FINCEN-2021-0006, RIN 1506-AB50 (Oct. 25, 2021). ↑
  21. Bonhams & Butterfields Auctioneers Corp., Comment Letter on Anti-Money Laundering Regulations for Dealers in Antiquities, Docket No. FINCEN-2021-0006, Regulatory Identification Number 1506-AB50 (Oct. 25, 2021). ↑
  22. 2020 Senate Report, at 50. ↑
  23. Christie’s, Comment Letter on Anti-Money Laundering Regulations for Dealers in Antiquities, Docket Number FINCEN-2021-0006, (Oct. 22, 2021) ↑
  24. Art Basel, Art Market Principles and Best Practices (2017), https://d2u3kfwd92fzu7.cloudfront.net/AB_Art_Market_Principles_and_Best_Practices.pdf, at 2. ↑
  25. Procedures for Considering New Members in ADAA, Art Dealers Ass’n of Am., https://artdealers.org/about/procedure-for-considering-new-members; Code of Ethics and Professional Practices, Art Dealers Ass’n of Am., https://artdealers.org/about/code-of-ethics-and-professional-practices. ↑
  26. Anna Brady, Fraud, Lax Legal Procedures and Regulatory Landmines: Why Risk Advisories Are Booming, Art Newspaper (Sept. 26, 2025), https://www.theartnewspaper.com/2025/09/26/why-risk-advisories-are-booming-art-market. ↑
  27. Attorney General James and Acting DTF Commissioner Hiller Secure More Than $6 Million from Sotheby’s for Tax Fraud, N.Y. State Att’y Gen. (Nov. 14, 2024), https://ag.ny.gov/press-release/2024/attorney-general-james-and-acting-dtf-commissioner-hiller-secure-more-6-million. ↑
  28. Margaret Carrigan, Christie’s Settles $16.7m in Tax Claims with New York District Attorney, Art Newspaper (Apr. 9, 2020), https://www.theartnewspaper.com/2020/04/09/christies-settles-dollar167m-in-tax-claims-with-new-york-district-attorney ↑
  29. See, e.g., Emmanuel Mathis & Adrian Wardzynski, Leveraging anti-money laundering measures to improve tax compliance and help mobilize domestic revenues, Int’l Monetary Fund, IMF Working Paper WP/23/83 (2023), at 8–12. ↑
  30. Peter D. Hardy & Siana Danch, Leveraging AML Measures to Combat Tax Crimes: A Guest Blog, Ballard Spahr (July 11, 2023), http://moneylaunderingnews.com/2023/07/leveraging-aml-measures-to-combat-tax-crimes-a-guest-blog/. ↑
  31. See Money Laundering, Legal Information Institute, https://www.law.cornell.edu/wex/money_laundering (last visited Feb. 12, 2026). ↑
  32. Anna Louie Sussman, Major Art Market Players Band Together to Shake Industry’s “Shady” Image, Artsy (Feb. 6, 2017, 7:31 PM), https://www.artsy.net/article/artsy-editorial-major-art-market-players-band-shake-industrys-shady-image. ↑
  33. Hugo Miller, Geneva Art World Pens Anti-Money-Laundering Guide Amid Scandals, Bloomberg (Jan. 25, 2017, 6:01 PM EST), https://www.bloomberg.com/news/articles/2017-01-25/geneva-art-world-pens-anti-money-laundering-guide-amid-scandals. ↑
  34. Graham Bowley & William K. Rashbaum, Has the Art Market Become an Unwitting Partner in Crime?, N.Y. Times (Feb. 19, 2017), https://www.nytimes.com/2017/02/19/arts/design/has-the-art-market-become-an-unwitting-partner-in-crime.html. ↑
  35. Ava Benny-Morrison, Rich Russians’ Art Buying Is Target of U.S. Crackdown on Trade-Sanction Cheats, Bloomberg (Feb. 1, 2023, 8:00 AM EST), https://www.bloomberg.com/news/articles/2023-02-01/hunt-for-sanction-cheats-targets-art-buying-by-rich-russians. ↑
  36. Isabel Vincent, How Larry Gagosian Courted Russian Oligarchs to Build Art Gallery Empire, N.Y. Post (Mar. 11, 2022), https://nypost.com/2022/03/11/larry-gagosian-courted-russian-oligarchs-to-build-art-empire/. ↑
  37. See Patrick Radden Keefe, How Larry Gagosian Reshaped the Art World, New Yorker (July 24, 2023), https://www.newyorker.com/magazine/2023/07/31/larry-gagosian-profile. ↑
  38. Rajat Gupta, Inflection point: AML, sanctions and compliance, Int’l Compliance Ass’n (Feb. 12, 2024), https://www.int-comp.org/insight/inflection-point-aml-sanctions-and-compliance/. ↑
  39. Counter Terrorism Sanctions: FAQ 812, U.S. Dep’t of the Treasury, https://ofac.treasury.gov/faqs/812. ↑
  40. Treasury Designates Prominent Lebanon and DRC-Based Hizballah Money Launderers, U.S. Dep’t of the Treasury (Dec. 13, 2019), https://home.treasury.gov/news/press-releases/sm856. ↑
  41. Currency Transaction Reports: Improvements Could Reduce Filer Burden While Still Providing Useful Information to Law Enforcement, GAO-25-106500 (Dec. 2024), https://www.gao.gov/assets/gao-25-106500.pdf. ↑
  42. Anti-Money Laundering Act of 2020, FinCEN, https://fincen.gov/system/files/shared/20210615%20AMLA%20FinCEN%20One%20Pager_FINAL.pdf. ↑
  43. See Christie’s, supra note 23; Bonhams & Butterfields Auctioneers Corp., Comment Letter on Anti-Money Laundering Regulations for Dealers in Antiquities, Docket No. FINCEN-2021-0006 (Oct. 25, 2021). ↑
  44. Art Market Faces AML Scrutiny Under New Bipartisan Senate Bill, AML Watcher (Aug. 5, 2025), https://amlwatcher.com/news/art-market-faces-aml-scrutiny-under-new-bipartisan-senate-bill/. ↑
  45. Treasury Department Announces Suspension of Enforcement of Corporate Transparency Act Against U.S. Citizens and Domestic Reporting Companies, U.S. Dep’t of the Treasury (Mar. 2, 2025), https://home.treasury.gov/news/press-releases/sb0038. ↑
  46. See, e.g., Matthew Sargent et al., Tracking and Disrupting the Illicit Antiquities Trade with Open Source Data, RAND (May 12, 2020), https://www.rand.org/content/dam/rand/pubs/research_reports/RR2700/RR2706/RAND_RR2706.pdf, at xii. ↑

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Disclaimer: This article is for educational purposes only and is not meant to provide legal advice. Readers should not construe or rely on any comment or statement in this article as legal advice. For legal advice, readers should seek a consultation with an attorney.

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