AML CHALLENGES
• Collaborative – Conflicts of interest are mitigated through the participatory design process.
• Global – Unlike legislation, which is territorial, guidelines and codes of conduct can transcend national boundaries, resulting in a more flexible approach better adapted to serving a global market, such as the art market.
The Responsible Art Market Initiative
To contribute to the discussion on best practices and compliance in the art market, January 2017 saw the launch of the Responsible Art Market Initiative( RAM) together with its online platform. 4 This non-profit industry initiative was formed in Geneva in November 2015 5 under the auspices of the University of Geneva’ s Art-Law Centre and the Geneva-based Art Law Foundation and it is the first of its kind.
RAM exists to support art market actors providing them with a practical and ethical compass to navigate the increasingly complex and fragmented legal framework within which they are required to operate. It aims to do this by:
• Raising awareness amongst art market actors of risks which they face in conducting business;
• Consolidating and sharing existing industry best practices; and
• Doing so through practical guidelines and tools that can be easily understood and implemented.
Risk-based AML / CTF guidelines
RAM’ s first set of guidelines tackle the issue of money laundering and terrorist financing threats in the art market. They adopt a risk-based approach and emphasize the importance of art businesses knowing their clients and being alert to red flags.
The guidelines are supplemented with a quick reference guide, easy-to-use red flag lists and country guides providing an overview of the AML regimes applying in different jurisdictions. 6 RAM’ s red flag lists are tailored to art trans actions and they focus on three areas of inquiry: the client, the artwork and the transaction itself.
Client red flags include:
• Agents acting for undisclosed buyers or sellers
• Offshore companies, trusts and foundations
Artwork red flags include:
• An artwork presented with limited or no documentation or provenance
• Sellers who refuse or are reluctant to provide written evidence of provenance
• An artwork, which is an antiquity or whose source country is or has been in recent conflict
Transaction red flags include:
What makes RAM unique is its collabora tive, interdisciplinary approach
• Clients who knowingly wish to sell at an artificially low or inflated price
• Sellers who are unwilling or unable to provide adequate proof of ownership for items they wish to consign for sale
• Buyers who insist on making multiple low-value cash payments for a single or series of connected transactions
RAM sees its practical, self-regulatory approach as complementing existing state-imposed regulation. Its guidelines are designed to be accessible to the entire market, including small art businesses and individual dealers and collectors who do not have the financial resources to spend on large compliance departments or expensive lawyers.
A different approach
What makes RAM unique is its collaborative, interdisciplinary approach. RAM’ s founding members span the entire spectrum of the art market, from international auction houses( Christie’ s) and individual dealers( Seydoux & Associés) to services providers( the Geneva Freeport and SGS art services), specialist art lawyers and academics from the University of Geneva’ s Art- Law Centre and Geneva-based Art Law Foundation, as well as law enforcement.
This cross-industry participation ensures issues are addressed holistically from various perspectives. By cooperating to share and internalize existing best practices throughout the industry, RAM aims to have a greater impact when it comes to reducing risks for art businesses and collectors alike, thereby increasing public trust and confidence in the market.
Since launching, RAM has generated a positive response and global interest. It intends to build upon this, expanding its platform to address topics of specific concern to the art market with the constant goal of identifying and sharing responsible practices in the art market.
Conclusion
As the tide of regulation turns toward the art market, with the birth of initiatives such as RAM, perhaps it is time to transition to more collaborative and complementary methods of tackling financial crime.
For more information, visit http:// www. responsibleartmarket. org. RAM will be holding its next annual conference in February 2018 in Geneva, Switzerland.
Mathilde Heaton, lawyer and art law consultant, Art Law Advisory, coordinator of the Responsible Art Market Initiative and researcher at the Art-Law Centre, University of Geneva, Geneva, Switzerland, mathilde @ artlawadvisory. com
4 http:// www. responsibleartmarket. org
5
RAM is the outcome of the November 13, 2015, conference organized by the University of Geneva’ s Art-Law Centre and the Geneva-based Art Law Foundation titled“ Money Laundering in the Art Market: A reality?”
6
All the materials are available for download from RAM’ s website: http:// www. responsibleartmarket. org.
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