The global art market has long attracted scrutiny over its vulnerability to money laundering, as artwork provides a covert channel for illicit funds to pass through the financial system.
With high-value pieces travelling easily across borders and selling privately through intermediaries, criminals can discreetly disguise illegal assets as legitimate transactions, claims SmartSearch.
This opacity is fuelled by highly subjective pricing, meaning art can be deliberately under- or overvalued to conceal illicit funds. Complex ownership structures and private exchanges further obscure the identities of buyers and sellers. Historically, oversight has been light compared with sectors such as banking, despite the scale of activity. The Art Basel and UBS Global Art Market Report 2025 estimates that sales reached $57.5bn in 2024, making the sector increasingly attractive to financial crime.
For decades, laundering in the art industry was centred on physical works, but new channels have emerged. Digital assets such as non-fungible tokens (NFTs) and trade in cultural artefacts have created new blind spots. NFTs are appealing because their value is subjective, ownership can be hidden, and rapid transfers are possible. Illicit trade in antiquities, often linked to corruption and conflict, has also intensified risks.
Several attributes explain why art has become a target for laundering. First, pieces worth millions can move easily between jurisdictions, serving as collateral or investment vehicles. Secondly, pricing is subjective, making it simple to manipulate transaction values. And with shell companies, nominees and trusts common in art transactions, true ownership can be hard to trace. Provenance records are frequently incomplete or disputed, compounding the challenge.
Beyond laundering itself, the art market has been linked to the financing of serious crimes and extremist groups. The Financial Action Task Force has highlighted cases where terrorist networks exploited archaeological heritage in regions such as Syria and Iraq to raise funds. According to its reporting, access to antiquities and cultural objects gave groups such as ISIL and Al-Qaeda significant revenue streams.
Where regulation has been introduced, its impact has been notable. Mexico’s 2012 anti-money laundering law caused reported declines of up to 30% in gallery business, exposing how heavily illicit buyers may have influenced activity. Since 2020, the EU and the UK have brought art intermediaries, dealers and auction houses under anti-money laundering supervision. Canada followed in 2019, while the US implemented regulatory requirements for the sector in 2021. Global art sales have since reversed growth, declining from $67.8bn in 2022 to $57.5bn last year, with high-value dealers reporting the sharpest drops.
However, compliance is difficult. Forged works and inconsistent global regulations make due diligence challenging. The subjective nature of pricing makes it difficult to distinguish genuine value from inflated costs designed to disguise illicit fund flows. Meanwhile, anonymity — often considered desirable by collectors — remains a core risk factor.
To mitigate exposure, art market participants must now conduct customer due diligence, identity checks, ultimate beneficial ownership verification, sanctions and PEP screening, source-of-funds assessments, and suspicious activity reporting. With frequent repeat customers, ongoing monitoring is essential to ensure risk levels are updated over time.
Technology solutions are streamlining this burden. SmartSearch offers a digital compliance system designed to support art dealers in meeting regulatory obligations. Its platform verifies identities using biometric and document analysis, screens parties against global watchlists, and automates sanctions monitoring. Where risk indicators arise, SmartSearch performs enhanced due diligence, including adverse media checks and profiling for PEPs, SIPs, RCAs and sanctioned parties.
The system also uses open banking data to assess source of funds, while securely storing records for audit purposes and continuously monitoring risk levels. As rising regulatory scrutiny converges with deep-rooted opacity in the art world, SmartSearch positions itself as a tool for helping the sector meet its obligations, safeguard reputations and support a more transparent market.
Find more on RegTech Analyst.
