The art and antiquities market is highly vulnerable to money laundering and terrorist financing due to anonymity in transactions, lack of regulatory oversight, and difficulty in tracing ownership.
Option A (Correct): Art storage in tax-free zones can be used to obscure ownership and avoid AML scrutiny.
Option C (Correct): Using third-party art advisors can facilitate anonymous transactions and shield beneficial ownership.
Option D (Correct): High-value art sold on social media without proper provenance raises ML/TF risks due to lack of financial oversight.
Why Other Options Are Incorrect:
Option B (Incorrect): Paying fair market value does not indicate illicit activity-underpricing or rapid resale are bigger red flags.
Option E (Incorrect): Authenticity verification is common in legitimate art transactions and is not a direct ML/TF red flag.
Red Flags for Art & Antiquities Money Laundering:
Frequent high-value art transactions with no clear business purpose.
Use of intermediaries to conceal beneficial ownership.
Rapid resale of newly purchased art at below-market prices.
Best Practices for AML in the Art Market:
Conduct enhanced due diligence (EDD) on high-value art transactions.
Monitor transactions involving politically exposed persons (PEPs).
Report suspicious transactions linked to high-risk art traders.
Reference:
FATF Report on Money Laundering in the Art & Antiquities Market
6th EU AML Directive (6AMLD) on High-Value Asset Transactions