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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